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Are Checks Dead? What Business Owners Should Know About the Future of Check Payments

January 7, 2025

The Business Journals reported recently that Target, Whole Foods, Aldi, and Old Navy are no longer accepting personal checks for customer purchases.¹ While large retailers likely have a variety of reasons for eliminating or reducing check payments, as a business owner or CFO, you have certainly experienced pain points in recent years with this long-standard payment method.

Changing Usage Trends

In our personal lives, the ubiquity of real-time payment apps such as Zelle™ makes checks seem as antiquated as VHS tapes. The Federal Reserve reports numbers to back that sentiment – consumer check usage dropped over 30% between 2000 and 2021, declining at a rate of 7.2% per year since 2018.²While the Fed reports ACH debit and credit transfers during the same period have increased 259% and 581% respectively, for businesses of all sizes the use of checks persists.³Paper checks continue to make up over a third of all B2B payments.⁴

While businesses have long accepted check transaction lag times as the cost of doing business, even when transitioning to electronic payment options many continue to utilize mail or email for remittance information documenting explanations and instructions. This process is inefficient and requires duplicative work for the information to live in all relevant systems.⁵

Luckily, technology has evolved to meet the B2B payment needs of businesses through new payment rails like FedNow and Real Time Payments (RTP). Dallas Capital Bank was an early adopter of RTP giving our clients the flexibility, convenience, and security of instant payments. Unlike checks, RTP provides the ability to:

Send or receive payments 24 hours a day, 7 days a week
Time payments precisely with funds available immediately and relevant payment information flowing across the same secure network
Take more control over your business’ cash flow⁶

Faster payments available through instant payment capabilities have huge potential to positively impact all payment categories, however a majority of those surveyed by the Association for Financial Professionals (AFP) believe B2B transactions will benefit the most. Interestingly, of those surveyed, North American respondents were much less likely to state they believe faster payments have had an impact on their organizations compared to 92% of respondents from international organizations. This is likely reflective of the dependence of US organizations on utilization of checks and other long-standing payment methods compared to international countries with highly enhanced payments systems in place who are seeing the impact of faster payments on their businesses.⁷

Check Fraud is on the Rise

And while check usage continues to decline rapidly, 26% of organizations surveyed by AFP continue to utilize check payments.⁸ As a consumer or business owner, every time you hand over a check, you’re handing over your personal or business information and putting yourself/your business at risk of fraud. Check fraud was reported more than 680,000 times in 2022, an increase of 94% over the previous year.⁹

While other payment methods are not immune to fraud attempts, the controls in place significantly reduce the instances of fraud as compared to checks. In both 2020 and 2021, 66% of organizations experienced check fraud.¹⁰

Options to Protect Your Business

While a world without checks is unrealistic, Dallas Capital Bank offers options businesses can utilize to reduce fraud risk and create operational efficiencies. Electronic payments, including ACH, RTP, and Zelle™ (Zelle™ for business available soon), are highly recommended.

Obviously, clients can only use payment methods accepted by their vendors so it’s important to have conversations about available payment avenues so that both parties operate with the most efficient and lowest risk options.

If your business would benefit from moving away from check payments, we’re here to help you assess your options to optimize efficiency, safety and profitability.

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