What It Will Take To Really Kill The Check?

Checks are among the most surprisingly durable payments products — at least when it comes to the world of B2B transactions.

In terms of consumer payments, the check has long since been ditched by all but the diehards. As of the 1990s, paying with paper was already in its death throes, displaced by debit cards, which did everything a check could do but faster, cleaner and more securely.

And a little over a decade ago, when OnPay Solutions Chief Operating Officer and Founder Juliet Negrete-Anderson was first considering the opportunities in B2B payments, her thought was that by the mid-2010s, paper checks in business transactions would go the way of their consumer payments counterparts. The holdup, she told Karen Webster for the latest edition of the PYMNTS Founder Series, breaks down into two main areas.

The first, she said, is control. There are a lot of chief financial officers and company controllers who have spent a long time locking down their check-based processes, who have been less than excited at the prospect of remodeling those processes around digital. The second, said Negrete-Anderson, is the perception of difficulty that goes along with the upgrade. Checks, for all their flaws and expenses, have one major advantage: They are easy and well-understood. To pay by check, one only needs to have a name and an address.

“The perception is that if you are going to change to electronic payments, it will be a huge burden,” she said. “And to be clear, it absolutely can be a burden, if a firm makes the wrong choices and heads down an unproductive path. Electronic methods require more information, which means there needs to be a process around communication and verification, which could easily be a problem for firms if they don’t find the right partner to help with that.”

OnPay Solutions, founded in 2009, aims to be the right partner by offering payors a platform that gives them a single point of integration to easily make and manage digital payments in a way that cuts through the clutter of a paper check, without requiring CFOs and controllers to give up all control over the process.

Breaking Down The Silos

While there is a host of professional journeys into payments entrepreneurship, Negrete-Anderson was unique in that she started in the outside field of corporate communications. But that role gave her a front-row seat to the wild world of accounts payable (AP) management and the variety of baked-in inefficiencies, not to mention the many connections into the burgeoning payments ecosystem building up in her home base of Florida.

Those connections eventually led to an opportunity to take over management of a payments software solution firm called ProCheck, which specialized in helping businesses manage check, ACH and virtual card payments. She jumped at that opportunity, she told Webster, albeit perhaps without fully understanding what she was getting into.

“I knew ProCheck was a foundation, but I thought it was going to be a fixer-upper when I took over,” Negrete-Anderson said. “It turned out to be a little bit closer to a tear-down that needed to be rebuilt.”

Once she entered the business, she realized that all of the products ProCheck offered were essentially siloed from one another — the check process was different from the ACH process, which was different from the virtual card process. Essentially, she noted, the firm ripped all of those siloes down, added wire transfers as a payments method and rebuilt it all into a single solution called OnPayConnect. That platform, said Negrete-Anderson, offers a single gateway point to all the banks the company’s clients do business with, and provides an easy way for customers to send payments to payees.

Instead of pulling the funds and having a third party issue payments on a company’s behalf, Negrete-Anderson said, OnPay Solutions is allowing the firm to keep the control in-house with a single system that allows it to easily deal with all types of payments.

“We believe in letting firms maintain control of their funds, and we want to give them a platform to do that in a more efficient and effective way than they are likely to come up with in-house,” she noted.

Only with choice and ease will the digitization of B2B payments have a fighting chance of making real progress in the 2020s, Negrete-Anderson said.

Moving The Market

There are still tens of billions of paper checks circulating in the ecosystem today. As much progress has been made heading into 2020, there is a lot of work left to do, according to Negrete-Anderson. Payors are the center of gravity when it comes to moving this market, and for them to change, there must be an obvious improvement that is relatively easy and straightforward.

For smaller players in the market — the small businesses and service providers — Negrete-Anderson said she believes that sell will be fairly easy. None of these folks have calcified processes or any great commitment to managing payments. In fact, she noted, many small businesses and individual proprietorships would be just as happy to hand them off, focus on their specialty area and never think about it again.

When one climbs into the middle and enterprise tiers of the market, however, the picture starts getting more complex — and there are valid fears that it could take months or years to do the kind of planning necessary to execute such a massive change. The real challenge going forward is making it clear that while the fears are valid, the means to address them are vastly improved over what they were just five years ago.

“Next, I think we have to do a better job of letting firms know that there are solutions like ours that can achieve these advances in a shorter period of time, with a fewer number of resources and with a lot of support that will get them through that process,” said Negrete-Anderson.

Luckily, she noted, before she was a payments entrepreneur, she was a communications leader — which means she knows a thing or two about getting the word out.