How Cloud Companies Are Killing Checks

While consumers keep making more of their daily finances digital—from online banking to Apple Pay—many U.S. companies remain wed to paper. The typical American pays 35 percent of her bills with checks, but most businesses complete more than half their transactions that way, according to researcher Crone Consulting. The federal government, banks, and the largest companies have invested in the servers, software, and staff needed to make transactions more efficient. Smaller businesses have held off, but there are signs that’s starting to change.

Between preparation, approvals, postage, and the costs of dealing with occasional fraud, a business has to spend $5 to $25 to issue a paper check, compared with $1 to $2 for the same payment made electronically, estimates Crone. In the past few years the European Union and governments in Latin America have begun to require or encourage businesses to switch to digital invoices. There’s been no such pressure in the U.S., which accounts for two-thirds of the 22 billion checks written each year, according to researcher Celent. “The U.S. is 20 to 30 years behind other countries in moving away from paper,” says Celent analyst Gareth Lodge.