It is time to say so long to that limitless void created when a check gets dropped in the USPS. It's a long goodbye, but not one to cry over. ACH has finally overtaken check usage in the United States. The Federal Reserve published a study in December 2019 analyzing the consumer, business, nonprofit and government payments from 2018, and for the first time, ACH debit transfers have exceeded the number of check payments in the US. The transition to ACH is welcome for both members who realize its convenience, and for credit unions, who can see the opportunity in leveraging ACH data from their core to meet more of their member's financial needs.
Check payments have been on a steady decline over the past decade, but 2018 saw a rapid fall of over twice the rate in previous years since the decline started. ACH overtaking checks cannot be solely credited towards checks' decline. ACH has witnessed its own success, rising 6% per year between 2015 and 2018. No doubt fueled by 2016's same-day ACH implementation in credit unions, ACH payments are considered safer, more cost-effective, and more convenient than traditional paper checks. In the third quarter of last year, same-day ACH use spiked 54% according to NACHA (National Automated Clearing House Association). NACHA expects to see 250 million same-day ACH transactions reported for 2019 when totals are tallied. With adding more settlement windows, augmenting features and making funds available sooner, the numbers are expected to continue to rise.
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With increased awareness of fraud and scams in general, one of the drivers for members moving away from paper checks is security. With paper checks, there are many opportunities for compromise, from lost mail to full view access to account and routing numbers. Not to mention the increased chance for human error with checks adds to the security perception. ACH practically eliminates many of the security risks that checks pose.
Of course, the biggest driver away from checks is convenience. Members won’t have to carry checkbooks around, nor spend time and money on stamps and mailing. Missing a payment deadline is a thing of the past with recurring billing options... ACH payment options often offer the flexibility of choosing to make a one-time payment or set up recurring billing. The process is faster and easier to manage for both members as well as businesses accepting ACH payments.
For credit unions, the increase in ACH payments can be seen as an opportunity. With extensive reporting available from within the credit union core, credit unions can see the different types of ACH payments members make, especially recurring payments that would indicate these are directed to various loans, such as car loans. Mining the ACH data can help CU's target market loan refinancing options to members currently making payments to possible higher interest auto loans or mortgages.
The future is bright with faster payments, reduced fraud, and more in-depth reporting - and pretty soon you won't have to wait at the mailbox to get paid again...ever.
