Technology

Electronic Payments 10 Times Cheaper Than Checks

A new survey appears to support the cost-saving case for businesses to shift from check to ACH and other forms of electronic payment.
Matthew HellerOctober 12, 2015
Electronic Payments 10 Times Cheaper Than Checks

Using paper checks to make payments is considerably more expensive for businesses than some electronic payment methods, according to a new survey.

The Association for Finance Professionals said in its inaugural 2015 Payments Cost Benchmarking Survey that the estimated median cost of a check transaction is $3.00, compared with a range of between $0.26 and $0.50 per automatic clearing house (ACH) credit transaction and $1.50 for a purchasing card transaction.

More than two out of three finance professionals who responded to the survey reported that their organizations would replace paper checks with electronic payments if there were a cost benefit of doing so. More than one-third (36%) of organizations would shift to electronic payments if the cost savings were up to 10% and an additional 32% would make the move if the savings were greater than 10%.

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“The report findings reinforce what we hear every day from our clients — that check-based payments are costly and inefficient and automation is a critical to support business growth,” Jessica Moran, general manager of cloud payment solutions at Bottomline Technologies, said in a news release. Bottomline Technologies underwrote the survey.

Not surprisingly, public companies were more sensitive to cost. Nearly half (46%) indicated they would replace paper checks with electronic payments if the cost savings were up to 10% and only 25% plan to continue using checks regardless of cost.

By comparison, one-third of private organizations would continue to use checks regardless of costs and 37% would transition to electronic payments if checks saved them up to 10%.

According to the AFP, nearly 80% of organizations are in the process of transitioning their business-to-business payments from paper checks to electronic payments.