Apr 25, 2013 Dave King
ACH cards and other automated electronic payments have become largely popular among businesses in recent years, especially as these options are often more affordable and efficient than traditional accounts payable and receivable methods. However, cybercriminals have targeted these types of payments more regularly, leading to massive incurred losses stemming from stolen financial data.
Simply ignoring the electronic payments revolution could put enterprises at a substantial competitive disadvantage in the coming years, as more reports indicate that the market landscape is moving toward a completely cashless outlook. The trick is to strike a balance between convenience and security, enabling electronic payment processing while maintaining firm governance over accounts payable and receivable.
Many companies have been successful in this effort, streamlining the payments process while avoiding loss of financial data and the subsequent hurt reputations or other damages. Maintaining strong oversight regarding accounts payable and receivable after launching an ACH or other electronic payment initiative will ensure businesses remain steadfast and successful in the modern landscape.
ACH payments continue to rise
The Electronic Payments Association (NACHA) recently released latest statistics related to ACH transaction volumes in 2012, revealing that the market matured substantially over 2011's figures. According to the organization, ACH payment volumes increased by 4.19 percent between 2011 and 2012, growing to 21 billion transactions last year.
While the number of transactions grew markedly, the value of ACH payments increased more quickly, rising 8.76 percent between 2011 and 2012, and accounting for nearly $37 trillion transferred. Paper check usage decreased as a result, dropping 6.75 percent last year, while native electronic payments grew 6.38 percent year-over-year.
"This data clearly shows that consumers and businesses choose electronic payment options over paper checks," Janet Estep, president and CEO of NACHA, explained. "Direct deposits and direct payments via ACH provide the convenience, control and flexibility that end users want. As end user needs evolve, the ACH Network will continue to enable the innovation necessary to meet the changing needs of ACH Network participants."
Online payments and ACH card transactions also enjoyed healthy gains last year, with the latter accounting for 7 billion financial transfers. One of the most common first steps into ACH payments has been direct deposits for payroll, as companies have viewed this as a method of driving efficiency and reducing errors.
NACHA explained that direct deposit payments made through ACH protocols increased 5.4 percent between 2011 and 2012, representing 5.1 billion transactions.
Fighting fraud and theft
Enterprises, banks, alternative financial services providers and government officials need to take broader and swifter steps toward total education of all employees related to best practices of handling financial data. A recent Bank Info Security article outlined some of the ways in which financial institutions and businesses can become more protected against the threat of fraud.
Companies can capitalize on the convenience and popularity of electronic payments while simultaneously mitigating a variety of risks by establishing strict document retention and destruction plans and ensuring that all staff members understand and follow the policies.