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June 24, 2024 • Issue 24:06:02

Inching away from checks

and toward e-payments

The business community's reliance on checks is especially
costly given that checks are the most common form of fraud
businesses have to contend with.

While it may seem strange that businesses are more in-
clined to let customers pay electronically while relying on
checks to disburse, it's not surprising. I recall many years
ago being told by a cash manager that companies prefer to
collect money at the speed of light, but when it comes to
doling out funds they would rather use dog sleds.

Checks in the mail
Consumers have a whole different mindset. When was the
last time you wrote a check? Ask a thirty-something to
By Patti Murphy write you a check and they'll probably look at you like you
have three eyes.
.S. businesses are rapidly adopting faster and
instant digital payment services, according to It's a generational thing, of course. An eighty-something
the Federal Reserve Payments Insight Brief: Digital friend, who has no understanding of online and mobile
U wallets emerge on businesses' radar for improved payments, sent me a check a few months ago. As of this
customer experience and cost efficiency. writing, it still hasn't arrived. Was it stolen? Probably not.
I'm betting it just got lost. But if that check had been from
More businesses also are using the ACH, the Fed's noted. one company to another, the outcome could've been costly.
Use of same-day ACH was up 45 percent over 2022. Use of Think of the float implications alone.
the more traditional next-day ACH option grew by 17 per-
cent year-over-year. And then there is fraud.
One in five (20 percent) companies surveyed by the AFP re-
That's all good news for proponents of electronic payments. ported check fraud due to interference with the U.S. Postal
Yet according to the Association for Financial Profession- Service, up from 10 percent in 2022.
als, 81 percent of businesses still use paper checks for at
least some bill payments. What's more, 70 percent of U.S. Low-level criminals and sophisticated crime rings alike
companies don't plan to scrap their check writing habits, are taking advantage of this old-time way of paying bills.
the AFP reported. Thieves have been reported to be attacking mail carriers

Checks clearly are on the decline—from over 40 billion in
2000 to 14.5 billion in 2018, according to the Federal Re-
serve. And from the looks of it the majority of them were
written by businesses to each other and to customers. Re- Contributed articles inside by:
cently, I almost threw into the recycling bin an envelope Allen Kopelman .....................................................................................14
that included a refund from a vendor—a check for several
hundred dollars. That's how unaccustomed I am to receiv- Max Sinovoi ............................................................................................16
ing checks. Goran Bosankić .....................................................................................26

Traci Skala ................................................................................................28

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