ith a decline in the overall volume of paper checks and an increase in electronic payments, the payments landscape is changing, driven largely by the automated clearing house (ACH) network.

Electronic Transactions Association (ETA) defines the ACH network as "the nationwide network for the electronic transfer of funds." It's the network driving direct deposit, electronic bill presentment and payment (EBPP) and electronic check payments. The ACH connects the financial institutions from which funds originate and are received, and there are eight primary entities in the ACH network, including the Federal Reserve.

Recent data from research and advisory firm Financial Insights (FI) indicates that the ACH will grow at a compound annual growth rate of 13% from 2003 - 2008, reaching $47.2 trillion in total dollar volume. And by 2008, check conversion will consist of 20% of all ACH transactions.

In a report titled "The Changing ACH: Market Analysis and Forecast, 2003 - 2008," FI analyst Aaron McPherson predicts that the network's future growth, however, will depend on the development of new payment applications, particularly check conversion for corporate, or business-to-business (B2B), checks.

"Banks must be more aggressive about developing new ACH-based services, both in order to prevent encroachment by larger banks and non-banks, as well as to replace revenue being lost from check processing and cash management services," McPherson said in a statement.

"Business-to-business payments have the most promising growth prospects, but also represent the greatest challenge to banks to adapt. The ACH has the potential to accelerate the consolidation of the banking sector, by handing the largest and most aggressive banks the tools to steal market share from rivals."

In light of this news, you might want to brush up on your understanding of the ACH and its processes. NACHA - The Electronic Payments Association recently published its "2005 ACH Rules: A Complete Guide to Rules & Regulations Governing the ACH Network." The book is $33 for members and $55 for non-members.

To order a copy, visit http://pubs.nacha.org/ .