Cash flow is not just the purview of enterprises. It’s as important to individuals as the biggest corporate juggernaut.
And in the latest installment of Data Drivers, statistics show that the recently launched Same Day ACH initiative has got businesses, and consumers, moving to manage cash flow on a daily basis, across a variety of use cases. In an interview with PYMNTS’ Karen Webster, Jan Estep, CEO of NACHA, delved into some of the more significant data points tied to Same Day ACH.
That’s the dollar value of Same Day ACH transactions that NACHA saw across the network through the month of October. As to what NACHA had expected to see during that initial four weeks of adoption, Estep said: “We didn’t have a good sense of exactly what the dollar value would be across the network, but certainly the range of payments that we saw was just about what we were expecting.” That $5 billion in value came through 4 million transactions — as in different, individual payments across the Same Day ACH conduits.
Drilling down into the 4 million transactions, a significant carve-out — 1.9 million and nearly half of all payments — came from direct deposit, or payroll, transactions. This has certainly proven to be a heavy use case, said Webster, and Estep said that payroll, in reference to ACH, “can be called the grandaddy of them all … because payroll has certainly been around for quite a while. But when you look at that 1.9 million in direct deposit [across Same Day ACH] … it’s a bit more than what I thought. But you have to think of what’s in direct deposit,” she cautioned, “beyond payroll.” It includes benefit payments, too, and in a B2C environment, it could also include payments such as from an insurance company, said Estep.
The use case for same-day pension payments, she continued, shares some similarities with payroll, as they are both types of scheduled payments. But if missed, those payments can be rectified rapidly. In fact, noted Estep, the very first day of the ACH same-day availability, “we heard from one of the large financial institutions whose customers missed a pension file delivery. They were so glad to have Same Day ACH to make the delivery of the payment on the day it was due to the recipient.”
This is the percentage of payments made through P2P transactions using same-day payments. That’s represented by “web ACH credit transactions,” said Estep. This is a new transaction type, said Estep, with a debut just two years ago. In traditional ACH, she said, P2P payments make up only 1 percent of the network, but as a percentage of same-day transactions, it ratchets up to a whopping 13 percent. “So, there are quite a few instances,” she said, “where people are saying, ‘I want to get my money from my account to your account on the same day.”
One caveat: Don’t read too much into one month of data, said Estep, as percentages of use cases may shift over time. Despite the likely variability, she said, “we really felt across the board that ACH would be very valuable,” as firms and consumers would look to pay bills, even on the last day possible, if funds were (and are) available. “A business could pay an invoice on the due date,” she said, “in an effort to better manage their liquidity.” And, she projected, as individuals and enterprises are equipped with these tools to manage payments on a same-day basis, “I think we will continue to see volume grow.” Interest is growing in the B2B arena, she said, as 36 percent of the volume overall came from B2B transactions, an example where firms may be holding onto payments until the last minute that they are due.
Another use case, early on: Merchants with a certain number of credit card transactions can (and did) opt to be funded the same day, “a unique value proposition that acquiring firms can offer to their merchants.”
“The context,” she surmised, “is really up to the users of the network.”