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More Growth in Store for 2021: ACH Networks

March 13th, 2021

The volume of payments through ACH wire transfer increased in 2020 by over 8% since the previous year to a record 26.8 billion. It’s also the 6th year in a row where payment volume went up by a billion.

Much of the increase is due to the pandemic and the shift to direct transfers like ACH direct deposit and billing. Not that these are new ideas for businesses, but the lack of time spent in the office creates the impetus for employees to be paid digitally. ACH transactions have been the dominant B2B payment preference since 2019.

The Federal government has been using ACH check processing for a while. Last year, the US government sent out two separate stimulus checks to all Americans, much of it through ACH payments..

Why Automated Clearing House?

It used to take 2-3 business days to get payments cleared through the banking system, and now it’s largely done on the same day. Cash flow can be a problem for companies buying and selling all day. Not to mention, high debt industries like construction will grind to a halt without quick access to their accounts. Today, most processing is finished at the close of business with Same Day ACH transactions. As credit cards come with high fees and high amounts of successful fraud, some of the best echeck and ACH payment processing companies are taking additional steps using end-to-end encryption to both protect the consumer and the company from fraud risk.

The future of ACH direct deposit

Employers use ACH direct deposit because it keeps easy records and the fees are small. It’s also easy for employees to access their accounts when work is closed or when cashing a check isn’t an option. The US government is likely to put at least one more stimulus package together for 2021. Add to that all the tax refunds hitting banks before the summer. The best and most effective way to distribute regular payments is via secure electronic checks (aka ACH payments).

The future of ACH payment processing

For something to adopted for a broad range of users, it has to be functional and cost-effective. It’s the same reason the e-books will eventually outpace hardcover books as the preferred option for readers. Adoption is slow at first, and then as business realize the value of leveraging electronic ACH payments, adoption accelerates quickly.

The Coronavirus pandemic provided the sudden impetus for a lot of digital commerce to take off. The ACH network allows for easy tracking and full security. It’s accepted by major banks everywhere and is generally cheaper than alternatives. It’s great for invoicing and recurring payments because the debits are automatic.

The future of payment security

The National Automated Clearing House Association (NACHA) is the regulator for compliance on secure transactions. The rules say any banking transaction must use a “commercially reasonable” encryption method if sent through the internet. Merchants also need to verify routing numbers and verify the identity of the buyer. As a trusted ACH payments processor, VCI takes care of the security concerns to make ACH transactions easy to manage.

The future is sure to include more types of ACH payments and ACH debits than already exist. As we move toward a cashless society, the options for digital exchanges will grow. See the advantages that ACH transactions can have on your receiving and invoicing departments.

The pandemic didn’t shift the direction of buying and selling as much as ramp up the need for more ACH transactions. It forced a conformability with ACH payments and ACH deposits that wasn’t there before.