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Business-to-business (B2B) payments are showing particularly strong growth in the United States, indicating that the pandemic has changed businesses' payments habits in the long run, recent findings of the U.S. ACH association say.
In the third quarter of 2021, there were 1.4bn B2B payments processed on the ACH Network, with a value of $13.6trn, which represents an increase of 18.8 percent compared with the same period in 2020, the National Automated Clearing House Association (Nacha) found.
The steady growth in B2B payments and the record level of healthcare claim payments contributed to an overall 7.7 percent increase in payment volume during the last quarter.
A record number of 109.4m payments were made in healthcare, a sector that accounts for about 20 percent of the U.S. economy. This represents a 15.8 percent increase in healthcare claim payments that went to medical and dental facilities and practices.
“The B2B numbers tell a straightforward story of businesses switching to ACH payments during the pandemic and not looking back,” said Jane Larimer, Nacha president and CEO.
Businesses have recognized the benefits and efficiency of using the ACH Network in contrast to “paper,” Larimer added, referring to cash and checks.
Paper checks payments have shrunk significantly in the United States during the last decades, as digital ACH transactions provide a faster and more convenient method. VIXIO research shows that the U.S. is by far the largest check user globally. There were 13.5bn checks in the U.S. in 2019, equivalent to more than two-thirds of the global total. Although this number appears to be falling fast, in part due to growth of business usage of ACH.
Businesses want to get paid promptly, and waiting for payments in the mail can increase costs for businesses, the association explained. They are more convenient than paper checks and allow for payments to be made and received with minimal disruptions. Businesses benefit from the convenience of electronic B2B payments because these payments allow for straight-through processing to accounts payable and accounts receivable. In addition, electronic payments reduce costs to businesses and increase the speed of funds availability.
“There is a lot to like about B2B payments by ACH,” Larimer told VIXIO.
U.S. businesses have increasingly been using ACH to make and receive B2B payments. Since 2011, there has been 2.24bn B2B ACH payments made and the volume nearly doubled to 4.42bn in 2020, according to Nacha’s ACH Volume and Value Statistics.
Same-day ACH, which launched in 2018 and allows participating financial institutions to clear and settle on the same day, continued to grow with 142.8m payments valued at $236bn in the third quarter of 2021. This is up 52.1 percent in volume and 90.4 percent in value from the same period last year.
Same-day B2B payment and dollar volumes also grew “robustly,” according to Nacha, showing a nearly 120 percent and 160 percent rise, respectively.
The ACH Network overall processed nearly 27bn payments in 2020, with a value of almost $62trn.
Funded by the financial institutions it governs, Nacha is an association of regional ACH associations. Although Nacha administers the ACH Network, the infrastructure is operated by the Federal Reserve and The Clearing House.
