Why Paper Checks are Still Relevant to Your Business
In today’s world, making payments and transferring funds can be done at your fingertips. With the rise in eCommerce in recent years, digital payment methods have become a gateway allowing merchants to go past geographic boundaries.
Amidst the growing paperless society, paychecks seem slow and old. However, they remain relevant to your business.
Surprisingly, according to estimates, businesses lose anywhere around $20 to cut, mail and process a paper check within their network. However, to our surprise, 50 percent of business demand on paper checks the payment method.
Despite the many advantages of electronic payments, why do most businesses still use paychecks for 50% of their bill payments? Well, the answer to it is simple. No payment system is best for every situation. Just like the two sides of the coin, online banking and paper checks come with their pros and cons.
What are Paychecks?
It is essential to have a simple understanding of paper checks before moving forward. It is a piece of paper that is connected to a bank checking account.
The payer would write the name of the recipient on the check, fill in the dollar amount that they will pay, place a date on the check and then hand it over to the recipient. The recipient will take that check to their bank and will hand it over to the teller and obtain the funds.
It is a much slower process than using an application and electronically sending funds, right? Yes, it is but as noted above, there are quite a few benefits.
Why Are Paychecks Still a Dominant Payment Method?
There are a few reasons to explain why businesses still cling to paper-based payment systems and why they still have a place in today’s dominated marketplace.
Even though most businesses accept online payment, there is no guarantee that all of your upstream and downstream suppliers will offer paperless involvement. So, for the safer side, paper checks are the only way to make a payment.
2- Easy Person-to-Person Payment
There are some convenient ways to send money individually, including PayPal or Payoneer. Although, despite their convenience, a personal paycheck is a convent and accessible way to pay an individual.
3- Maintaining Better Records
According to the Federal Reserve Bank of Philadelphia, paper checks are likely to become obsolete by 2026. It is quite an eye-opener for most businesses that still stick to paychecks. However, unlike today’s modern banking systems, paychecks help in keeping better records in the file.
4- Processing Fee
Businesses are required to pay up to a 5% processing fee in every credit card transaction. Most small businesses cannot afford the processing fee even though this may be a small amount for bigger businesses such as building contractors or medical offices.
5- Full Control over the Payment Process
While e-banking is a fully monitored method that keeps a track record of the cost structures, a paycheck is a far more dependable payment medium. A paycheck gives the business the freedom to make the payment process themselves.
Paychecks offer benefits that are not available with other payment options-
Despite the rise in eCommerce, paychecks remain a dominating payment landscape. It is because of its unlimited benefits. It has more privacy and is relatively safer than electronic checks.