From direct deposit payroll to B2B transactions, Automated Clearing House (ACH) payments have become the preferred standard for companies and employees around the globe. Throughout its 40-year history, users have continued to embrace ACH payments for their convenience, speed and reliability.
ACH payments are also more environmentally friendly than traditional paper-based checks. Because payments happen through electronic transfers across the ACH network, neither senders nor recipients are required to invest in materials such as paper, ink or postage (although it's worth noting that standard checks can be digitized and converted into an ACH payment).
As an added benefit, the ACH network permits recurring billing — freeing businesses from sending out invoices month after month.
Given these benefits, it's not difficult to see why ACH payments have enjoyed such tremendous popularity. In recent years, the National Automated Clearing House network has enjoyed 3.8 percent transaction growth annually, with more than 4.48 billion transactions in the first quarter of 2014 alone.
ACH Payments Could Become Even More Popular in the Future
Experts predict ACH payment growth could accelerate if the network successfully transitions from next-day settlements to same-day settlements.
Driving this transition is increased demand for faster transactions — especially as paper-based checks continue to decline and American employees increasingly embrace direct deposit payroll:
- Paper checks cost businesses anywhere from $4 to $20 to process, after factoring in employee hours, delays and postage
- Direct deposit payroll grew by 5.4 percent from 2012 to 2013
Same-Day ACH Settlements Are Fast, but Are They Fast Enough?
Moving from next-day processing to same-day processing is a radical shift for a payment technology that has existed for nearly four decades. But some industry insiders question whether this shift is fast enough.
Whereas the new rules will create two separate settlement windows per day, other countries offer even more payment opportunities throughout each 24-hour cycle.
According to former PayPal executive, Rene Pelegero, the U.S. still lags behind some of its European and Latin American counterparts. He questions, “Why not [five] times a day as Colombia does it? Why not settle continuously as the Swiss and other countries do?”
And perhaps he's got a point. But if the National Automated Clearing House Association (NACHA) successfully rolls out the proposed semi-daily rules, it may decide to increase the frequency of settlement windows in the future.
In the meantime, employees can expect to receive their payroll checks earlier than they used to. And both companies and banks can settle their accounts 12 to 24 hours faster than before. The benefits of this increased speed will likely encourage NACHA to explore ways to mimic turnaround times already in place elsewhere around the world.
Want to Learn More about ACH Payments?
Green, secure and convenient, ACH payments are quickly approaching settlement speeds more commonly associated with credit cards and online banking.
To begin taking advantage of these benefits, use the free resource links below to learn more, or click on the Get Started Today! button: