The days of paper-based checks are numbered. The United Kingdom has already begun phasing out paper checks completely. And even in the United States, the federal government will no longer issue Social Security payments via the postal system.
In place of paper-based checks are electronic payment options that offer:
- Faster transaction speeds (usually within days, sometimes within seconds)
- Greater reliability (no more lost checks or invoices in the mail)
- Increased fraud protection (fewer bounced checks)
Two of the fastest-growing electronic payment options to emerge are electronic checks (e-checks) and mobile ACH payments. In Q1 of 2014 alone, these two payment technologies grew by an impressive 10 percent, representing nearly 900 million separate transactions. By contrast, check-writing at point-of-purchase registers plummeted 12 percent.
The Secret behind E-Check and Mobile ACH Payment Growth
It's not difficult to understand the growing popularity of e-checks. As mentioned above, electronic checks are instantaneous. And compared to their paper-based counterparts, they are considerably cheaper and more convenient for consumers and businesses alike:
- American shoppers don't like writing checks. In retail environments, consumers must remember to physically bring their checkbooks. And mailing checks requires occasional trips to the post office.
- American (and British) businesses don't like paper-based checks either. After factoring in postage, materials and delays, processing each check costs anywhere from $4 to $20.
But how do you explain the rise in mobile ACH payments — especially in comparison to more traditional ACH options?
Part of the answer lies in convenience and speed. Most Automated Clearing House (ACH) transactions begin as paper-based checks. Thereafter, users digitize and convert these checks before feeding them into the electronic ACH network. But mobile ACH payments don't have to go through this conversion step. They begin and end digitally, allowing for immediate use.
Further fueling this trend (for both payment types) is the rise of mobile and computer usage worldwide. With 3G-enabled laptops, tablets and smartphones, it's possible to send and receive money, anytime and anywhere. This is in sharp contrast to paper-based checks that require a physical presence or willing intermediary (i.e. the mailman).
The Future of Mobile ACH and E-Check Transactions
The future for these two electronic payment systems looks pretty bright. With growing climate change concerns, consumers and businesses increasingly appreciate the environmental benefits of payment options that don't rely on paper.
And with mobile ACH payments in particular, the speed advantages outlined above will only become more pronounced. Already, the National Automated Clearing House Association (NACHA) is working to reduce the turnaround time for future ACH transactions. Rather than wait for next-day settlements, businesses and consumers can have their money on the very same day. When that happens, you can expect quarterly growth for ACH payments to dwarf the 10 percent increase already witnessed in Q1 2014.
For more information on electronic checks and mobile ACH payments, use the free resources below: