It’s 2025, and but a lot of America’s companies are nonetheless caught previously, stubbornly clinging to paper checks. The issue with doing funds the identical method they’ve achieved because the 18th century? Fraudsters, at all times on the lookout for a simple goal, are more and more utilizing twenty first century expertise to perpetrate check-based fraud and scams.
In line with the most recent PYMNTS Cash Mobility Tracker, a collaboration with Ingo Funds, examine fraud is skyrocketing. Companies that refuse to go digital are virtually inviting criminals to money in.
Whereas real-time funds, digital wallets and synthetic intelligence (AI)-driven safety promise a safer monetary future, checks stay a obvious weak spot in America’s fee system. Regardless of their well-documented safety dangers, checks nonetheless account for almost 40% of all B2B funds. And 70% of corporations utilizing checks haven’t any plans to ditch them within the subsequent two years.
The explanation these corporations haven’t ditched the paper?
Many understand checks to be low-cost or “free,” however guide processing creates hidden bills. Time, labor and delayed fee cycles add to those prices, and fraud losses solely amplify the monetary burden.
The fee? A jaw-dropping $24 billion in estimated losses from examine fraud in 2023 — double what it was simply 5 years in the past.
Small Companies Are Fraud’s Greatest Losers
Some companies mistakenly consider checks supply larger management over money circulate since they’ll decide when to situation a examine quite than counting on automated clearing timelines. Nevertheless, this perceived management comes at a steep safety price.
Criminals are stealing checks from mailboxes, forging signatures and even promoting examine particulars on shady Telegram channels. The development of examine fraud is outpacing the decline in examine utilization, making a paradox the place companies that proceed utilizing checks face an rising chance of fraud. The report cites information indicating that 9 out of ten bankers have witnessed a surge in examine fraud in recent times, with 28% of banks reporting a greater than 50% improve in fraud instances over the previous three years.
However whereas large banks can soak up fraud losses, small and medium-sized companies (SMBs) are getting crushed. In line with the PYMNTS Intelligence report findings, almost 1 in 4 SMBs fell sufferer to examine fraud final 12 months. Not like giant companies with devoted fraud groups, SMBs waste hours chasing down fraudulent transactions — time that might be spent rising their enterprise.
Banks and FinTechs have spent the final decade constructing quicker, safer digital fee techniques, however companies are nonetheless dragging their toes. In line with the report, synthetic intelligence (AI)-driven safety is already serving to 35% of corporations detect fraudulent transactions, but corporations stay hesitant to totally embrace digital funds.
Among the many key causes for persevering with to depend on examine funds are the chicken-egg reliance on established companies practices paired with a scarcity of digital infrastructure. Organizations are reluctant to overtake legacy fee techniques, preferring to stay with acquainted strategies, and a few SMBs lack the technological sources to implement and preserve digital fee options.
Sarcastically, some companies concern the safety dangers of digital funds, though they’re far safer than paper checks.
In the end, as AI-driven safety measures, real-time rails and instantaneous fee networks proceed to mature, the necessity for paper checks as a enterprise fee device is quickly diminishing. For corporations nonetheless reliant on checks, the time to transition is now. The longer companies wait, the larger the dangers they face in an evolving monetary panorama the place fraudsters are already a step forward.
