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AFP survey finds cheque use for B2B payments drops to a new low

Cheque usage in North America continues to decline for business-to-business (B2B) transactions, falling to an all-time low of 42%, according to the 2019 Association for Financial Professionals (AFP) Electronic Payments Survey, underwritten by J.P. Morgan.

B2B cheque payments have now fallen by nearly 50% since 2004, when they were at 81%. Cheque usage has also shown a steady decline since 2013 and 2016, when approximately half of the average organisations’ payments were made using cheques.

But even though cheques are slower to process than electronic payment methods and are more susceptible to fraud, they continue to dominate B2B transactions, signalling the challenge in changing internal processes. Other barriers treasury departments face in moving away from cheques are a lack of IT resources, and difficulty convincing business partners to shift towards sending/receiving e-payments.

The majority of survey respondents remain optimistic about the impact of faster payments on their organisations. Over a third (37%) are looking to stay current with new developments and potentially aim for an early adoption to reap early benefits, and 24% plan to be aware of new developments so they are better prepared. And despite the challenges of moving away from cheques, B2B transactions are by far seen as benefiting the most from faster/real-time payments (60% of respondents).

“Although new technology is appealing, treasury and finance professionals tend to stick with what works for them, and their vendors,” said Jim Kaitz, president and chief executive of AFP. “Cheque and ACH transactions have been around for a long time for a reason. That said, it is encouraging that cheque usage is in decline, as electronic payments methods are much more efficient, and have a much lower risk for fraud.”

The survey of 379 treasury and finance professionals also found that, despite an array of new developments, wire transfers still dominate the cross-border payments landscape. Fully 68% of organisations’ cross-border payments are made by wires, highlighting the challenge in making changes to payments processes even if current systems are inefficient and costly.

“By leveraging learnings from this study, organisations are better positioned to improve treasury efficiency, take advantage of new business opportunities and reap the benefits of payment innovations," commented Joe Hussey, North America Payables and Receivables product executive at J.P. Morgan Wholesale Payments.

Other findings in the survey include:

  • Most financial leaders believe that, of all the emerging technologies infiltrating the payments world, application programming interfaces (API) will have the greatest impact (72%), followed by open banking payments initiation (60%).
  • A majority of respondents cite a lack of a standard format for remittance information as a barrier to e-payments adoption (70%).
  • 42% of respondents reported that they were unfamiliar with the ISO 20022 payments standard, a surprising increase from 34% in the 2016 survey.
  • Credit cards (48%) and non-converted cheques (40%) are the most common methods used for by businesses to receive payments from consumers.

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