NACHA Reports More Than 12 Billion ACH Payments in 2004

The growth was largely driven by the rapid expansion of ARC -- the accounts receivable check conversion application -- which experienced a nearly six-fold increase in volume to more than 1.25 billion payments. The nations financial institutions originated 21.6 percent more ACH payments than in 2003, the industrys best performance since 1991 when Direct Deposit was first being promoted nationwide. The number of these payments was 11.06 billion, a jump of nearly 2 billion over 2003, and valued at $25.5 trillion. The remainder were originated by the Federal government -- 952 million ACH payments in 2004, up 3.0 percent, and valued at $3.1 trillion. ACH payments include Direct Deposit of payroll, Social Security benefits and tax refunds, Direct Payment of consumer bills, e-checks, business-to- business payments, and Federal tax withholdings. The nations financial institutions and its customers experience billions of dollars in benefits annually due to ACH payments. Annual ARC volume grew by more than 1 billion payments, and accounted for 54 percent of all ACH transaction growth in 2004. In just its third year in the marketplace, ARC has surpassed the 1-billion-payments-threshold faster than any other payment application in the 33-year history of the ACH Network. Internet-initiated ACH payments represented a second area of growth. In 2004 American consumers initiated 967 million ACH debit payments via the Internet (known as WEB), valued at over $300 billion, and a 40.4 percent increase over 2003. NACHA estimates that 80 percent of these debits are to pay bills via companies or billing services web sites, 18 percent are to transfer funds, and 1 percent are to make purchases. In addition, Americans initiated 115 million ACH credit payments, valued at $47.8 billion, via their financial institutions or billing services web sites. Combining these two methods shows that U.S. consumers used the Internet to initiate more than 1 billion ACH payments valued at $350 billion. Direct Deposit and Direct Payment Direct Deposit is still the most widely used ACH payment. The number of Direct Deposits in 2004 increased by 5.3 percent to more than 4.2 billion payments. Direct Deposit is used for payroll, expense and travel reimbursement, pension and annuity payments, interest payments, retirement and mutual fund distributions, Social Security, Veterans and other government benefits, and tax refunds. The average dollar amount of a Direct Deposit was $1,263. NACHA estimates that more than 71 percent of the private-sector workforce in the U.S. uses Direct Deposit to get paid. The number of Direct Payments in 2004 increased by 6.7 percent to 3.0 billion payments. A Direct Payment is a pre-authorized debit that uses the ACH Network, and is typically used for recurring consumer bills such as mortgages, loans, utilities, investments and charitable contributions. The average dollar value of a Direct Payment was $759. Financial EDI and B2B Payments Financial electronic data interchange (EDI) on the ACH Network grew by 21.6 percent in 2004. In 2004 there were 764 million EDI-formatted remittance records accompanying ACH payments. Financial EDI is the electronic exchange of payments, payment-related information or financial-related documents in standard formats between business partners. The number of financial EDI payments was 213 million in 2004, up 17.1 percent over 2003.