Recent research from the Association for Financial Professionals (AFP) finds that business-to-business payments by paper cheque increased slightly from 2013, bucking the previous downward trend in cheque use.
But before you re-order cheques, consider that 70 per cent of respondents to the 2016 AFP Electronic Payments Survey believe it is “very likely” or “somewhat likely” that their organizations will convert the majority of their payments to electronic within the next three years.
They are also optimistic about the impact of faster payments on their organizations. 94 per cent consider it important that faster payments are “smart” and are able to carry extensive remittance information.
The survey also finds that:
While it’s true that a small rectangular piece of paper doesn’t cost much on its own, all the associated costs that come with issuing a cheque are significant. Distribution and payment costs such as bank charges on cheque clearing, account administration, reconciliation and storage costs (filing and processing after the fact) add up.
Scotiabank’s Cheque Cost Issuance Model shows that costs can be anywhere from $15-25 per cheque. In some cases it’s as high as $50 per cheque. Postage is another cost that is significantly higher when issuing cheques – plus they are entirely reliant on the snail-mail system.
Three Types of Prepaid Visa Cards for Business (left to right): Scotiabank standard card (no branding), branded logo card, and completely custom prepaid card.
Prepaid credit cards are a cost-effective alternative to cheques and are widely used by businesses for reimbursing expenses, employee recognition, channel sales, issuing insurance/health benefits, and many other applications. For example, the Canadian government uses prepaid cards as an alternative to cheques and direct deposit, since they are cheaper to process.
Here are more reasons why prepaid cards are better than cheques:
Contact us today to learn how prepaid cards can help your organization move to electronic payments!