Businesses (finally) ditch paper checks
Paper checks have remained stubbornly popular with small and midsize businesses, even as consumer payments have gone high-tech. The widespread adoption of real-time payments could change that.
Many businesses have continued to use checks for bookkeeping purposes, and for the transparency that comes with physically attaching a check to an invoice. With the adoption of faster payments, however, companies will have the tools they need to modernize their accounts receivable systems.
With the help of their banks, businesses will be able to link invoices with the relevant, real-time digital transactions, according to J.P. Jolly, global head of financing and channels at Bank of America.
Offering real-time commercial payments will be crucial to banks that want to gain market share, Jolly said.
“If you want to be a deposit-taking institution for your clients, you have to at some point provide this alternative,” he said.
Charles Ellert, payments strategy leader at Verizon, underscored the point. He said the telecom behemoth currently receives a large portion of its business payments through wire transfers. But when real-time payments become available, businesses of all sizes will likely jump on the opportunity use a potentially cheaper and more efficient option.
“I just know in my gut I know these folks are probably paying $35 to send us a wire, because they want the finality of the process,” Ellert said. “It just eats me alive that they are paying those fees to send us money."