The US’ largest processor of automated
clearinghouse (ACH) transactions will soon emerge out of the merger
of the ACH platforms of Bank of America (BoA) and Wells Fargo &
Company. The joint venture (JV) between the two banks, to be named
Pariter Solutions, (Latin for together), is expected to begin
payment processing operations in late 2009.
clearinghouse (ACH) transactions will soon emerge out of the merger
of the ACH platforms of Bank of America (BoA) and Wells Fargo &
Company. The joint venture (JV) between the two banks, to be named
Pariter Solutions, (Latin for together), is expected to begin
payment processing operations in late 2009.
“Pariter Solutions breaks down traditional,
proprietary processing models,” said Stephanie Sturgis-Griffin, a
senior vice president at Wells Fargo and the JV’s CEO designate.
“Collaborating on market-leading payment capabilities and product
solutions is the right thing to do for our shareholders and
customers.”
proprietary processing models,” said Stephanie Sturgis-Griffin, a
senior vice president at Wells Fargo and the JV’s CEO designate.
“Collaborating on market-leading payment capabilities and product
solutions is the right thing to do for our shareholders and
customers.”
Among benefits envisaged are greater investment
in innovation, broader product capability and capacity for higher
volumes of cross-border payments.
in innovation, broader product capability and capacity for higher
volumes of cross-border payments.
Already two of the US’s largest ACH payments
processors, BoA ranks first and Wells Fargo second for receiving
payments, according to industry body the National Automated
Clearing House Association (NACHA). For payment originations BoA
and Wells Fargo rank second and third, respectively.
processors, BoA ranks first and Wells Fargo second for receiving
payments, according to industry body the National Automated
Clearing House Association (NACHA). For payment originations BoA
and Wells Fargo rank second and third, respectively.
In 2007 NACHA reported that the two banks
received a combined total of 2.1 billion ACH payments, more than
three times more than their nearest rival Wachovia which received
643 million payments.
received a combined total of 2.1 billion ACH payments, more than
three times more than their nearest rival Wachovia which received
643 million payments.
Originations by BoA and Wells Fargo totalled
2.53 billion, though this still lagged first placed JP Morgan Chase
which originated 3.42 billion payments and received 469
million.
2.53 billion, though this still lagged first placed JP Morgan Chase
which originated 3.42 billion payments and received 469
million.
ACH transactions have emerged as a serious
challenger in the electronic payments market and according to the
US Federal Reserve achieved the highest compound annual growth rate
(18.6 percent) of all non-cash payments over the past five
years.
challenger in the electronic payments market and according to the
US Federal Reserve achieved the highest compound annual growth rate
(18.6 percent) of all non-cash payments over the past five
years.
“ACH payment volume continues to double every 5
years with increases experienced across all transaction
categories,” said NACHA’s CEO Elliott C McEntee, commenting on the
release of 2007 ACH market volumes.
years with increases experienced across all transaction
categories,” said NACHA’s CEO Elliott C McEntee, commenting on the
release of 2007 ACH market volumes.
According to NACHA 16.97 billion ACH
transactions were originated by financial institutions in 2007, up
13.3 percent compared with 2006.
transactions were originated by financial institutions in 2007, up
13.3 percent compared with 2006.
The total value of transactions was $32.9
trillion. Of the total volume inter-bank originations accounted for
12.93 billion transactions, an increase of 14.3 percent, while
those that remained within a single bank totalled 4 billion, up
10.1 percent.
trillion. Of the total volume inter-bank originations accounted for
12.93 billion transactions, an increase of 14.3 percent, while
those that remained within a single bank totalled 4 billion, up
10.1 percent.
The most widely used type of ACH payment,
direct deposit, displayed steady growth in 2007, rising 6.2 percent
to 5 billion transactions. Growth in other sectors was far more
spectacular.
direct deposit, displayed steady growth in 2007, rising 6.2 percent
to 5 billion transactions. Growth in other sectors was far more
spectacular.
One of these was accounts receivable cheque
conversion (ARC) into ACH electronic format where transactions
increased by 23 percent to 3.5 billion.
conversion (ARC) into ACH electronic format where transactions
increased by 23 percent to 3.5 billion.
ARC accounted for 33 percent of financial
institutions’ ACH transaction growth in 2007.
institutions’ ACH transaction growth in 2007.
Another particularly strong growth area was
internet-initiated ACH payments that NACHA estimates grew by 26
percent to 2.3 billion.
internet-initiated ACH payments that NACHA estimates grew by 26
percent to 2.3 billion.
NACHA estimates that 85 percent of
internet-initiated ACH payments are to pay bills via companies’ or
billing services’ websites, and 10 percent to transfer funds.
internet-initiated ACH payments are to pay bills via companies’ or
billing services’ websites, and 10 percent to transfer funds.
Looking ahead NACHA predicts that by 2010 ACH
transaction volumes will reach 25 billion and their total value
will reach $50 trillion.
transaction volumes will reach 25 billion and their total value
will reach $50 trillion.
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