Ditching paper checks for digital disbursements: 5 use cases

Paper checks still show up regularly in people’s mailboxes. They’re a go-to not only for personal debts but also for businesses that need to pay their employees, vendors, and customers. Mobile banking apps have streamlined the check cashing process, allowing customers to deposit checks with the snap of a smartphone camera. But many people are still willing to sign their checks, physically visit a branch location or ATM, and deposit them in person.

With so many advancements in FinTech, it’s hard to believe that paper checks are still issued to the extent that they are. Although not as popular as they used to be, pre-COVID, Americans did write out14.5 billion checks in 2018, and as of 2019,  42% of B2B payments were still made by check. But the global pandemic may finally accelerate the demise of paper checks. In its aftermath, some 31 percent of surveyed consumers indicated they are ditching paper checks in favor of digital payments. Solutions like Zelle® have emerged to facilitate person-to-person payments without the need to write physical checks. And businesses are increasingly interested in adopting solutions that can reduce, or eliminate, their dependence on paper checks.

For businesses, this ongoing dependence on paper checks can be time-consuming, costly, and not to mention consumer-unfriendly. The costs of writing a paper check can vary anywhere from $1 to $10, depending on the nature of the business and the transaction. These costs not only include the physical components of paper checks – the printing, fulfillment, and postage – but also the employee hours spent managing the check issuing process. Add to that the financial and operational headaches of managing who has cashed outstanding checks and when, and it becomes clear that moving toward digital payouts can have a significant positive impact on business operations.

 

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