Can using checks in your business be more costly? An article in PYMNTS recently explored why so many people still use checks for B2B payments. They said that “checks still account for nearly 40% of U.S. B2B payment volume.” Many companies do not want to make the switch either. But why is this?
They believe it’s because many companies are under the false belief that checks are cheap when, in fact, they can be very costly for businesses. In fact, they mentioned how check fraud is on the rise and how it ended up “costing businesses an estimated $24 billion in 2023.” This is almost doubled from five years ago. Also, in “a 2024 survey, 15,417 Bank Secrecy Act reports were tied to mail theft-related check fraud over a six-month period, amounting to $688 million in fraudulent transactions.” In addition, they mention that SMBs tend to be more vulnerable.
Why do crooks like to target checks? Checks make things a little simpler for these swindlers. Overall, they tend to be a less challenging target. They’re easier to get a hold of, edit, and forge. Digital payment systems, on the other hand, have more advanced security, such as multi-factor authentication, encryption, and real-time verifications. These multiple layers of security help reduce fraud risks and make things more difficult for the fraudster. It’s similar to how a predator will go after the weakest in the pack; crooks will target the easier mark. When it comes to B2B payments, that equates to check fraud.
But fraud isn’t the only thing costing these companies money, as PYMNTS also points out. There are other fees added to the mix. By processing things manually, it adds time, creates more labor, and can delay payments. That, plus the greater potential for fraud, can hurt a business’s finances.
Change can be scary for many businesses. Businesses adapt a way of doing things; if it’s working well enough, they’re not always eager to adopt something new. They know this avenue, and moving to something else can seem a little overwhelming. This can be another reason why some businesses don’t jump ship from checks to digital payments. However, it’s obvious that writing checks can set businesses up for a greater chance of fraud and could be costing businesses more money than they realize.
If you’re still considering or ready to make a move now, please reach out to Richmond Financial Services. Let’s talk about your payment processing plan and how we can reduce the risk of fraud and increase payment processing time with the right system.
