Posted by Checkbook on Jul 06, 2020
5 Reasons Why Paper Checks Are Hurting Your Business
Beginning in 2011, the U.S. Department of Treasury began to discontinue Social Security benefits through paper checks. In 2010, it was estimated that issuing a paper check cost about 92 cents more than a direct deposit method. Now, almost a decade later, elimination of paper checks can unquestionably assist businesses and individuals in reducing large costs. This conversion to a simple online check payment system can address countless number of issues.
Potential of Check Fraud:
One of the leading issues of Paper Checks is check fraud. According to the American Bankers Association, in 2018, check fraud accounted for 47 percent of industry deposit account fraud losses in the United States. Check fraud can be a simple process through signature forgery, theft, counterfeiting, etc.
In the simplest form, checks can be stolen from mailboxes, edited and cashed. The U.S. Postal Inspection Service reported over 2,078 arrests for mail theft in the fiscal year of 2019. Check fraud can also be committed easily with a personal computer, printer, and simple design skills. This can go undetected and pass off as real checks. And with increasing use of mobile depositing of paper checks, consumers are even more likely to become victims of check fraud.
Consumers and businesses can easily become victims of fake or fraudulent checks. A criminal can easily provide a paper check that contains fake information such as a nonexistent bank or bank account. Imagine how much money Apple could be losing per day if at least one customer walked into each Apple Store location with a fake check and left the store with a brand new iPhone.
In addition to postage fees to mail paper checks, more of the burden stems from the time of delivery. According to USPS, First-Class Mail may take anywhere from one to three business days to reach its destination. It would be costly for an organization to lose a business deal simply due to delivery inefficiencies such as long delivery times or, in the worst case, lost mail.
Upon receiving paper checks through delivery, individuals then have to resort to mobile or branch deposit. Despite having the “modern” option of mobile deposits, consumers are further burdened by the additional one to three business days that it takes for banks to process checks.
It is difficult to schedule the timing of paper checks as it is almost impossible to control when the check will be processed or cashed. It is also impossible to “schedule” a paper check for some time in the future. Therefore, individuals and organizations may have to worry about accounts having insufficient funds or may hold inefficient amounts of money in accounts.
It takes time for individuals and organizations to realize that checks are fraudulent or rejected by banks. Victims who are slow to detect check fraud may lose money and reputation at rapid speeds.
Lack of Transparency:
Some individuals and organizations who are aware of potential check fraud may be reluctant to accept paper checks. This may make it difficult to make large payments even if cash is an accepted form of payment. In addition, due to mail delivery or other complications, the trail of a paper check may be lost. This could be costly to an organization’s reputation. An organization can hugely benefit from the capability to track payment processes across vendors and business divisions.
Unlike digital systems, access to paper check information may not always be available anywhere and at any time. This information may also require unnecessary human workers to link information to accounting systems, such as QuickBooks. When it comes time to taxes and audits, it may be a huge headache to locate copies of past payment information in checks.
Lastly, and most obviously, paper checks, similar to paper receipts, are wasteful to the environment. Checks require tons of trees and waters, and eventually, are simply discarded to landfills after they are processed by banks. In addition, filing and copying paper check information may further contribute to the generation of greenhouse gases and paper clutter.
The Digital Check:
Change is absolutely necessary to overcome the costs, risks and inefficiencies of paper checks. There are millions of monetary transactions that can be secured at low costs. An end-to-end online solution, the Digital Check, utilizes encryption to safely deliver payments in a cost-effective manner. In addition, senders of digital checks are able to fully integrate transactions with accounting systems. Recipients have different options to receive money instantly. With Checkbook, it is easy to say goodbye to Paper Checks and hello to Digital Checks.
What is ACH?
ACH or, Automated Clearing House, is a widely used digital technology for transferring funds from one bank account to another.
How Do Marketplaces Work?
Online marketplaces provide easy platforms where consumers can seek specific products or services. These products and services are offered through third-party vendors, purchased by remote customers, and transacted through the online marketplace provider.
The Exorbitant Costs of Sending Paper Checks
The total economic loss here is insane, especially just to transfer money from one person to another.