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The economic slump seems to be driving more companies to demand checks from their customers for payment instead of cards, iStream Financial Services Inc. notes in American Banker, a CardLine sister publication. The Brookfield, Wis.-based company cites the rising value of the items it processes as evidence of this trend; iStream says values are rising because it is handling more business-to-business payments as checks, which are cheaper for its clients to accept than cards. "In many cases, with B2B, they're not going to accept you paying by credit card when you just took 2% [in interchange fees] out of a $30,000 payment," says Fred Joachim, iStream president. "Not gonna happen, especially if I've known you for five, six, eight, 10, 20 years. … What's happened is, wherever you thought checks were dying–yeah, they're dying on retail," but not B2B. The average check payment iStream processed last year rose 16% from the previous year, to $1,495, and the company says nearly 80% of its volume now comes from B2B payments. "What's happening, especially in a known business, if you pay by check, the owner of the business is saving a minimum of 1% of the value of that item," says Joachim. It is plausible that businesses are shifting toward checks in tight economic times, but some analysts question how much clout small and midsize companies –iStream's primary customer base–would have to influence large corporate clients, which have turned increasingly to cards because of the financial and management control they provide. Joachim acknowledges that the shift toward checks has not swept all businesses, such as those dealing with new clients on a regular basis and need the security that card payments provide. Card payments still hold value for new relationships, as the risk in accepting a check from an unknown party is higher than from a longtime business partner, he says. Once a relationship is established, businesses have been pushing their clients to drop cards for the less-expensive check. "Especially with the economy going the way it is now, people are looking for a least-cost payment with no risk, and as long as you know who it is," the check is "a good way to go," Joachim says.
