CrossCheck Blog

CrossCheck Blog

Check Processing & Payments Information

Paper Checks: The Rumors of My Demise Are Greatly Exaggerated

Posted by Joe Gargiulo | Fri, Sep 08, 2017 @ 09:04 AM

paper checksOne third of Americans believe “traditional paper checks will die within five years,” state the results from the July 2017 Viewpost survey about the future of payments. Nevertheless, there is compelling evidence to the contrary as aptly framed by Mark Twain in a letter from 1897: “The report of my death was an exaggeration.”

Sources refuting consumer guestimations include the preliminary edition of the 2016 Federal Reserve Payments Study, the most prestigious report among the four profiled here.

2016 Federal Reserve Payments Study

According to the Fed, the undisputed heavy weight among the contenders is ACH Network payments, tipping the scales at a hefty $41.64 trillion in value.

Second — in the red, white and blue trunks — is the much maligned check, weighing in at $26.83 trillion in value. That figure represents nearly five times the combined value of credit cards ($3.16 trillion) and debit cards ($2.56 trillion dripping wet). Who’s talking trash now?

In reality, checks may have lost favor among some consumers, but they continue to be the preferred method of business-to-business (B2B) payments and specific consumer purchases mentioned below. That point is underlined by the average value of each transaction from the Federal Reserve study:

  • $2159 — ACH network transfers
  • $1416 — Interbank check payments
  • $93 — Credit card payments
  • $37 — Debit card payments

SMB Technology Adoption Index

Using data from Q3 2016, the SMB Technology Adoption Index (a quarterly report by and Sage Payments Solution) states that 97 percent of small and medium-sized businesses (SMBs) responding to the survey “still rely on paper checks to make and accept B2B payments — a one percent improvement since Q1. … Yes, 97 percent.”

The SMB index also posted the following:

  • Checks still rule — SMBs that deal with customers in person are 98 times more likely to accept checks than payment via mobile wallets.
  • EMV is starting to rule — Nearly 53 percent of SMBs do not accept EMV-enabled credit and debit cards, 8 percent lower than the previous quarter.
  • Consumers always rule — 31 percent of merchants in customer-present situations and 26 percent of retailers in remote environments have adopted new payment technology because of consumer demand.

2013 AFP Electronic Payments Survey

Released by the Association of Financial Professionals and sponsored by JPMorgan, the 2013 AFP Electronic Payments Survey also disproves the early demise of the check.

A related article in echoes the theme of the SMB Technology Adoption Index, asking the lead-in question: “It’s becoming an increasingly popular question, but why are so many companies and their vendors so hesitant to give up using checks to settle their transactions?”

The simple answer is that many vendors lack the ability to accept electronic payments, so companies continue paying with checks. Some of those vendors are also spooked by the specter of paying transaction fees for card payments, furthering the dependence on paper checks.

The study states that the typical organization makes half of its payments by check. Additional data from the index completes the saga:

  • 92 percent of organizations use paper checks to pay major suppliers.
  • 70 percent of organizations are struggling to convert to electronic payments.
  • 11 percent of organizations use mobile technology to initiate payments.
  • 32 percent plan to do so over the next five years.
  • 20 percent of companies make a majority of their payments electronically.

If all of the above evidence is not compelling enough, the index maintains that B2B check payments increased by one percent between 2013 and 2016.

ePayables 2016: Eyes on Prize

Using 2015 data, the 48-page research study by 2015 Ardent Partners indicates that 37 percent of B2B payments are made using checks. The resiliency of the paper check has been attributed to their familiarity and ease of understanding among businesses in conjunction with the ability to conduct check payments without investing time and money in adopting alternative methods.

Paper Checks Summary

paper checksThe common denominator among the studies is the fact that checks continue to be a popular solution for SMBs to make and accept payments despite emerging electronic alternatives.

CrossCheck services several industry verticals that rely on check processing programs such as Check Guarantee or Multiple Check to help increase sales revenue and mitigate risk while saving time and money.

Merchant groups using Multiple Check include new and used auto dealerships (parts and service, too), building supply centers, motorsports dealerships (motorcycle, boats and ATV), furniture stores, auto tire and repair shops, HVAC and contractors, floor covering stores, dental and veterinary practices and specialty retailers like music stores.

Find out what they already know — accepting checks is a revenue generator. Download our free guide about Multiple Check to learn more.


Complimentary Consultation

Topics: Small Business

Written by Joe Gargiulo

Marketing Specialist Joe Gargiulo has 25-plus years in marketing, communications and copy writing. As a writer, he enjoys connecting story leads to all aspects of the human experience.