Is the paper check dead? Let me check.

“Checks are going away.”
Every payment expert in 2009

“Check volumes are disappearing!”
Customer to business check processors in 2014

“What’s a check?”
Every millennial in 2017

We’ve been hearing it for years: Checks are going the way of the dodo bird. In many instances, that’s absolutely true.

The Institute of Finance & Management (IOFM) reports that by 2020 over 55% of businesses will receive the majority of their payments electronically. As savvy consumers we already know the benefits afforded to us by “going electronic”. We sign up for paperless billing. We log into our bank’s mobile app to pay those bills. We wave our phones in front of readers attached to cash registers when we buy our morning coffee. We send money to our friends with the click of a few buttons – and none of these examples involve writing out an actual check.

For the most part, organizations that receive consumer payments have seen a significant decline in the number of checks they receive. According to a recent small business payment survey, 64% of consumers write fewer than three checks per month, and 58% are asked by their customers to accept alternative methods of payments. This is a done deal – for consumer-facing organizations the customer experience is key, and that means multiple payment options.

For firms that deal largely in the business to business world however, the numbers tell a different story. B2B check payments are declining, nobody is denying that…but how fast are they going away?

The Federal Reserve publishes a quarterly review that includes details on how many commercial checks it processes every day. In 2006 that number was an average of 42.5 million, but by Q4 of 2015 it had sunk to 21.9 million. A 50% drop in ten years is nothing to balk at, but I’m more interested in what has happened since. From Q4 2015 to Q4 2016 that number only dropped to 21.7 million. That means that the industry is approaching a plateau where the tidal wave of migration has already happened, and we’re left with slow trickle as more and more payers dig their heels in.

Faced with a shift in how payments are received, organizations need to be prepared to continue to manage the paper items. Otherwise while the volumes may be going down headaches will only increase!

So….how quickly will B2B checks disappear?

Check back with me.

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