ACH payments continue to be a popular choice with your peers for electronic payments, and traffic continues to increase on the ACH network.
The ongoing COVID-19 pandemic has been one of the major drivers for increasing ACH activity. Over two-thirds (68%) of CFOs said that the rise in ACH activity at their companies has been mostly due to the pandemic, according to data from PYMNTS.com and The Clearing House.
Data from Nacha even further demonstrates the shift away from paper checks toward ACH payments. There were 154 million more payments made over the ACH network in Q1 2022 compared to Q1 2021, said Jane Larimer, president and CEO of Nacha.
Same Day ACH has also grown more popular, especially since the dollar limit on payments was increased to $1 million in March of this year. In fact, over $290 billion in payments were made using Same Day ACH in Q1 of 2022.
B2B ACH payments
Overall, the amount of business-to-business payments has skyrocketed – and there’s been a 15.5% increase in B2B payments over the ACH network. In all, 1.4 billion B2B ACH payments were processed in the first quarter of the year.
Businesses are using ACH payments for various purposes, from paying tax bills to handling subscriptions and insurance premiums.
The ease of making ACH payments has changed the business landscape moving forward. A/P and A/R departments that used to just write checks likely won’t return to that system after shifting to electronic ACH payments. Not only are electronic payments faster, they’re also easier to manage for recordkeeping purposes.
ACH & Payroll
Plus, direct deposit over the ACH network has helped your Payroll department save hours of time and get checks to employees faster.
Although direct deposit value actually decreased over the ACH network in Q1 2022, that’s likely due to the lack of stimulus payments. Because most of those were made using direct deposit, traffic reached historic levels in 2020 and 2021. The addition of new jobs post-pandemic made the decrease in direct deposit volume less severe in the first quarter of this year.
You want to be sure your A/P and A/R teams are making as many transactions as they can over the ACH network, especially ACH payments to vendors and contractors. But don’t forget to have Payroll monitor employee direct deposit rates, as the higher those are, the more money and time you can save.
Ultimately, the goal is to do much of your business through electronic methods like ACH payments as possible and cut as few paper checks as you can – to both vendors and employees.