Check Use Hits Record Low for B2B Transactions, Study Finds

Check use for business-to-business transactions has hit an all-time low, but they’re still a popular payment method thanks to entrenched processes and a lack of IT resources, according to new data from the Association for Financial Professionals.

The trade group’s survey of 379 treasury and finance professionals found that only 42% of business-to-business transactions were via check — about half of what they were in 2004, when 81% of those transactions involved checks.

“The use of electronic payments — such as ACH debits or credits — has increased, particularly payments to major suppliers, and they have become almost as popular as checks. Once set up, electronic payments can offer greater speed, less friction and, in many cases, can outweigh the benefits of using checks, thus making them more viable options in the modern payments landscape,” the study noted.

Shortages in IT resources, a lack of integration between electronic payments and the cost of changing internal processes are still buoying check use, it added.

“Although new technology is appealing, treasury and finance professionals tend to stick with what works for them, and their vendors,” Association for Financial Professionals President and CEO Jim Kaitz. “Check and ACH transactions have been around for a long time for a reason. That said, it is encouraging that check usage is in decline, as electronic payments methods are much more efficient, and have a much lower risk for fraud.”

Cross-border payments are especially entrenched in traditional methods, with 68% of organizations still using wire transfers. The statistic highlights the challenges in changing payments processes even when newer methods are more efficient and less expensive, the study said.

Seven in 10 respondents said a lack of a standard format for remittance information was a barrier to e-payments adoption, and 42% said they were unfamiliar with the ISO 20022 payments standard, which an increase from 34% in 2016.

Financial professionals aren’t completely turning their backs on electronic B2B payments, however. Over 60% of the survey respondents said they believed faster payments will have a positive impact on their organizations, and 37% said they wanted to stay current with the technology or even adopt technology early in order to reap early benefits. About a quarter (24%) said they planned to be aware of new developments so they are better prepared.

Financial professionals in the survey also said, however, that within the next three years they expected most payments to suppliers would be electronic.

About 7 in 10 respondents (72%) said application programming interfaces will have the greatest impact on the payment world, followed by open banking payments initiation (60%).