Scott Lang wants folks who are using NACHA's automated clearing house network (ACH) to watch their language, particularly when discussing the actual service. "Different organizations were using different terms [for 'direct payment via ACH'], says Lang, senior vice president of association services for NACHA.
To fix that problem, NACHA, a nonprofit that manages the ACH network on behalf of 10,000 financial institutions, has launched a micro site and campaign get financial institutions, merchants, and other stakeholders in the ACH network to use the phrase "via ACH" in their marketing materials, on their websites and in in-store displays.
"Direct deposit has a very high awareness rate," Lang says. "[With other payments] we're finding that participants are using their own words to describe ACH payments, such as 'e-check' or 'easypay,'" Lang says.
He says NACHA is not asking businesses to drop branding or other product names, but to incorporate the "via ACH" verbiage into their language so it's clear that the service is distinct from other options, such as wire transfers, non ACH digital payments, or competitive alternatives. "We would ask them to use something like 'easy pay via ACH.' Over time that reinforces the value of the ACH network," he says.
Lang hopes reducing imprecise language will boost usage of ACH payments among consumers and small businesses such as local merchants, where there's been a particular lag in adoption of ACH payments.
"It's my own experience that small business owners don't understand the difference between ACH, wire transfer and electronic funds transfer," says Nancy Atkinson, a senior analyst for Aite. "To the businesses, it's just an electronic payment. There's an issue with small business generally speaking, where people are looking for something that's easy and inexpensive. ACH can be a cost-saving option, but businesses have to understand it enough to make that happen."
NACHA also faces increased competition from consumer to business payments startups such as Dwolla. The presence of alternative methods further complicates the business payments landscape and encourages NACHA to make sure merchants and other businesses don't mistakenly conflate different methods of digital payments. "Being consistent will help us [compete with other options]," says Lang. "There are going to be cases where ACH payments are more advantageous and cases where they're not. The more information a business has, the better armed it is to make a decision," Lang says.
Lang would not say if he thought there would be higher adoption of ACH payments at small businesses if there were common language being used. "Perhaps it would be higher…but this new initiative will accelerate the clarity of language, and better communicate the message that ACH is a safe and reliable in a clear way as opposed to using jargon and industry terms," he says.
Overall ACH volume is growing at a much slower, single-digit pace in the past couple of years, as opposed to the double digit growth of the prior decade.
Aaron MacPherson, a practice director for IDC Financial Insights, says that while most mobile payment schemes use ACH as their default settlement mode, the overall mobile payments market is still relatively small compared to other modes. "The issue that NACHA is facing is what they do with legacy applications such as direct deposit or direct debit," he says.