NACHA And The October (Faster Payments) Surprise

If you build it, they will come. And pay the very same day.

NACHA, the payments association behind the ACH network, said Tuesday that 3.8 million same-day transactions occurred in October, the first full month after the initial Sept. 23 launch.  The total value of those same day payments came to $4.9 billion.

In an interview with PYMNTS’ Karen Webster, Jan Estep, NACHA’s president and CEO, said that “we had a lot of questions right after [same day ACH payments] launched, asking us ‘what is the volume,’ and we felt it was a bit more responsible to wait for the first full month.”

Right out of the gate, said Estep, the usage of the payments has been “as expected,” with a great range of variety, “which I think demonstrates the capability built on the ACH network” which Estep added “really builds upon the foundation” for both consumers and businesses to make their payments faster.  In reference to use cases, emergency payroll stands out as a significant slice of the initial ACH faster payments, with the direct deposit category coming in at 49 percent of volume, or 1.9 million transactions.  And, agreed Webster and Estep, B2B payments at 36 percent of volume (and $2.8 billion of value) might signal that smaller firms are adopting new ways to manage their cash flow.

Consumer bill payments, at 61,000 transactions, seems to be embraced by these individuals as a way to, as Webster termed, manage their financial balance sheets, with payments made the day bills are due, with attendant assurance that payments go through upon request.  That service [bill payments, in general, though not same day], added Estep, has also been around for decades. Though not new, this has encouraging signs with October’s volume for same day payments. The same day payments in this consumer tranche, said Estep, have found a home in online bill payments, adding to consumer choice, and to liquidity in general.

Is this all a case of current users adopting, and adapting to, same day availability of fund flows?  “We’ll know only over time,” said the CEO.  Two years ago, industry observers predicted that 60 percent of the same day ACH transactions would come from existing users.  Incremental use, she added, may indeed signal replacement of checks and other payment methods.  Key indicators will come as the volume changes and the total value of transactions swings higher, she said.