ACH Payments : Changing Users and Changing Uses

Declining paper check usage, growing reliance on credit cards, and the rapid expansion of debit cards are all well-known aspects of the rise of electronic payments, but less focus has been placed on automated clearing house (ACH) transactions. This Policy Analysis Paper describes the changing ACH landscape, and considers the degree to which this growth and change have heightened one risk issue in particular: the susceptibility of ACH payments to fraud. The paper begins by summarizing overall trends in ACH payments and factors underlying the growing demand. This description of the ACH landscape also focuses on the emergence and rapid recent growth of a new set of ACH debit transactions, referred to as “e-checks” that, unlike traditional ACH debits, do not rely on established customer-originator relationships