Checks vs. e-payments: Which should credit unions offer? - Member Access Processing

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The payments industry has evolved significantly over the past several decades. As more options are offered to consumers, it’s important that credit unions change with the industry to remain relevant and competitive.

However, there are also times when technology has taken a big leap forward, but consumers aren’t ready to make such a change. In these cases, credit unions need to strike a healthy balance between offering traditional options as well as more advanced ones.

Credit unions face the question of whether they should offer e-payments or checks to their business members. The answer, of course, is to offer both.

Why e-payments are a must

The biggest argument in favor of relying on electronic payment platforms as opposed to checks is security. Checks are continually the payment method most frequently targeted by fraudsters. According to the 2016 AFP Payments Fraud and Control Survey from the Association of Financial Professionals, 71 percent of surveyed businesses said someone either attempted to or succeeded in committing check fraud against their company in 2015.

Nearly everyone is familiar with what checks are and how they work – this is what makes them such an attractive target for criminals. Additionally, they continue to be the most popular payment method among American businesses.

The second argument for swapping checks for an e-payments platform is cost savings. The cost to process one paper check is typically between $4 and $8, PaymentsSource pointed out. Between the many invoices a business processes on a monthly basis, it could be possible for a company to save several thousands of dollars every month.

Finally, e-payments are easier. A white paper from NVoicePay pointed out that many times, companies will have different payment methods for different creditors. This can quickly become a web of complicated payments methods that aren’t consistent between vendors and lenders. Accounting staff need to work hard to keep everything straight as the chances of making a mistake increase. But when a company uses e-payments for all of its needs, the process becomes much simpler and easier to understand.

Each of these reasons is compelling more businesses to make the switch from paper checks to e-payments. A survey from the Association of Financial Professionals found that 70 percent of surveyed businesses plan to make that change in the next three years. As such, it’s important that credit unions have e-payment platforms ready and available for their forward-thinking business members.

However, it’s also essential that credit unions are aware that there are plenty of businesses that aren’t quite ready to make the change.

Why checks are a must

Though there are many irrefutable advantages of e-payments over paper checks, there’s still a big need for credit unions to continue to offer this payment option. A survey from the Association of Financial Professionals found that check use went up between 2013 and 2016. Additionally, the typical company will receive 44 percent of its B2B payments in paper check form.

Even though the benefits of e-payments are obvious, many companies continue to rely on checks. Why?


One of the biggest factors in keeping checks around is business owners’ familiarity with them. Many companies have been using checks for payments since they open their doors for the first time, Treasury & Risk explained. Because of this, business owners who like to stick to their routine aren’t keen on changing things.

“Checks are ubiquitous,” Nancy Atkinson, a senior analyst at technology research and advisory firm Aite Group, told Treasury & Risk. “Everybody on both the payer and the receiver side knows what to do if they receive a check or write a check. It’s habit, it’s what there’s a comfort level with, and it’s difficult to change behavior in those regards.”

In addition to sticking with the way things have always been done, the switch from checks to e-payments can seem daunting to someone who hasn’t gone through the process before. It would require updating software, changing daily processes and communicating with vendors about the new way to exchange payments.

Lack of affordable or integratable options

Less than 2 percent of American businesses take advantage of bill pay solutions offered by their financial institution, according to PaymentsSource. One major factor in this trend could be that many institution-offered solutions don’t jive well with a business’ specific accounting needs. They don’t integrate well into payments systems or workflows already in place, and they lack in remittance data.

If a business were to venture outside the realm of bank- and credit union-offered platforms, there are available solutions, but they are generally much more than the typical small business can afford. Thus, many small American businesses lack a way to integrate an e-payments solution that works for their business and is affordable.

Because of these reasons, it’s crucial that credit unions continue to offer paper checks to their business members. But it’s also important that credit unions make an effort to explain the benefits of switching to e-payments, and help them do so. Credit unions can help by showing them how e-payments would benefit their business and by helping them set up the system. They can also help by finding out what needs their business members have and tailoring e-payment solutions to these requirements.

Checks most likely will stick around for a few more years. However, credit unions can play an important role in shifting payments from checks to more secure methods.