Is It Time to Retire Paper Checks?

While digital payments have surged in popularity, many businesses—especially in industries like collections—still rely on paper checks. But with the Federal government moving to phase out paper checks, it’s worth asking: Does accepting paper checks still make sense for your business?

The Case for Paper Checks

Despite their decline, paper checks still offer some advantages:

• Lower transaction costs: While credit cards are faster, they also involve a 2-3% fee per transaction.
• Harder to reverse. Once a check clears, it’s more difficult for consumers to dispute or reverse compared to ACH or credit card payments.
• Fewer limits: Paper checks allow higher transaction amounts without the per-day or per-transaction limits common with cards or ACH.
• Minimal infrastructure requirements: Firms with legacy systems may prefer paper checks to avoid investing in new software, compliance tools, or staff training.
• No need for a merchant account. High-risk businesses, or those on the MATCH list, may have challenging obtaining merchant accounts necessary for digital payments.

The Downsides of Paper Checks

However, the disadvantages increasingly outweigh the benefits:

• Slower processing: Checks can take days to arrive and clear, delaying cash flow.
• Bounced checks: If a consumer’s account doesn’t have enough funds, checks can be returned, triggering fees and more collection work.
• Higher fraud risk: Paper checks are vulnerable to forgery, alterations, and theft.
• Operating inefficiency: Processing checks requires manual handling, which can increase labor costs. Banks may charge fees for certain check services.
• Lost or stolen in transit: Mailing checks increases the risk of delay, fraud, or loss.
• Decline in consumer preference: Most consumers now prefer consumers prefer digital payment options like credit cards, ACH, or online portals. Offering checks as a payment method may not align with modern payment preferences.
• Compliance challenges: Storing and securing paper checks can create regulatory headaches around data security and dispute management.

Alternatives to Paper Checks

If your business is ready to modernize, here are more secure and efficient alternatives.

ACH Payments

ACH payments are direct bank-to-bank transfers, often used for bill payments. ACH offers lower processing fees and chargebacks compared to credit cards. They can be set up for one-time or recurring payments.

eChecks

eChecks are a digital version of a paper check that uses the ACH network for processing. They’re faster than paper checks, don’t require physical handling, and still familiar to consumers who prefer checks.

Credit Cards

With credit cards, funds are typically transferred within 1–2 business days. Consumers are familiar with and comfortable using credit cards.

Debit Cards

Debit cards offer real-time authorization, which ensures funds are available at the time of the transaction and reduces the risk of non-sufficient funds.

How to Transition From Checks to Digital Payments

Ready to make the shift? Here’s how to do it right.

1. Offer the right mix. Provide a range of digital options: ACH, credit, and debit to meet different consumer preferences.
2. Choose a trusted processor. Work with a provider like HealPay who understands high-risk industries like collections, supports PCI and Nacha compliance, and offers flexible, secure payment tools.
3. Communicate the change. Let consumers know their options via email, letters, or payment reminders. Fortunately, most consumers are already familiar with using digital payments.
4. Make it easy. Offer mobile-friendly portals, pay by phone options, and IVR so every consumer can pay the way that works best for them.
5. Phase out gradually. Keep checks available during the transition but slowly de-emphasize them. Use language like “We now accept faster, more secure digital payments!” to encourage adoption.

Ready to Modernize Your Payments?

HealPay makes it easy to transition from paper checks to digital payments. Whether you need ACH, cards, IVR, or an all-in-one portal, HealPay’s tools are designed for high-risk industries like collections—and built to improve your cash flow, reduce risk, and make payments easier for your consumers.

Let’s future-proof your payment strategy—schedule a demo with HealPay today.