B2B payments lift Same Day ACH, even as checks persist
Eliminating checks from corporate payments will take many more years, but Nacha’s latest data suggests the B2B category is playing a key role in Same Day ACH's growth.
Same-Day ACH B2B payments through the first nine months of this year generated 37 million transactions, up 50% over a year earlier, according to Nacha. During the same time period, routine ACH-powered B2B payments reached nearly 3 billion transactions, up about 12% from a year earlier.
Same Day ACH payments, which launched three years ago, still account for less than 2% of all ACH payments. But Same Day ACH payments' growth rate is accelerating, recently surpassing 1 million daily transactions. Same Day ACH B2B payments account for about 20% of that volume, according to Mike Herd, senior vice president of ACH network administration at Nacha.
“Same Day ACH B2B payments are seeing steady, organic growth as more companies get away from using paper checks,” Herd said.
Overall Same Day ACH payment volume has surged, reaching 66.6 million transactions during the third quarter, up 54% from a year earlier. Nacha forecasts that Same Day ACH payments in 2019 will total 250 million transactions.
ACH payments as a whole reached 6.2 billion transactions during the third quarter, up 9.5% from a year earlier, Nacha said.
One of the factors driving strong adoption of regular and Same Day ACH payments — including for B2B — is the availability of detailed remittance information that may be attached to ACH payments, according to Herd.
“There’s a longstanding myth that ACH payments don’t carry a rich amount of transaction detail, but that hasn’t been true for many years,” he said.
Another common misconception is that Same Day ACH has drastically sped up consumer access to payroll funds. In fact, about 93% of U.S. consumers on standard salary payrolls already receive those funds via direct deposit on payday via routine ACH channels, Herd said.
Same Day ACH is more commonly used by companies paying contract or gig economy workers, and its use in these scenarios is growing, he said.
“There are many use cases for Same Day ACH, but in payroll it comes into play when specific payment types are required for temporary workers or emergency payroll — that's one area where we’re seeing strong demand for Same Day ACH,” Herd said.
Same Day ACH payments are priced higher than standard ACH, but they are competitive with other payment options, according to Herd, who added that Nacha doesn't set ACH prices.
As Same Day ACH gains momentum, various real-time payments initiatives like FedNow are creating new opportunities and dilemmas for payers, Herd noted.
“Trying to keep pace with all the developments in the market now and make business decisions based on what we know today, and what may be available a year from today, could be daunting and unsettling for some players. The challenge for payers will be understanding the pace of change and analyzing what’s offered versus what is needed,” Herd said.