Fintech/Bank Venture Attempts to Eliminate Checks – Again

Check Processing ImprovementsAmerican Banker reports on JPMorgan’s new venture in which they hope to deploy fintech to help business clients eradicate paper checks.

The bank is working with Bill.com, the largest U.S. business-to-business payments network, to enable customers to send and receive electronic payments and invoices, according to Stephen Markwell, a product strategy head for JPMorgan’s commercial bank. The New York-based lender will pilot the service in early 2018 and plans to offer it to more business and commercial clients later in that year, Markwell said.

We’ve heard this drumbeat before, haven’t we? “The death of checks” seems to to be long overdue. As we reported a few weeks back, The Association for Finance Professionals (AFP) has data showing that B2B paper check transactions remain at roughly 50% in spite of a multitude of recent advances in payments technology. The White Paper also points out that, according to the 2016 AFP Electronic Payments Survey, B2B payments by check actually increased by 1 percentage point from 2013 to 2016.

New initiatives like this in general would be better off not trying to target a particular payment; rather, promoting the value proposition which it provides the market. That’s what clients are most interested in.

Interestingly, charges are not yet revealed, which will not inspire confidence in smaller businesses who are averse to increasing costs, as well as larger businesses for whom a change of this sort takes quite a bit of time to enact (AFP’s Manager of Treasury and Payments, Magnus Carlsson, discussed these issues in a recent video.)

We believe an easier pill to swallow is a service like eCheck from Deluxe. For a businesses community — big and small — concerned about cybersecurity, the prospect of a payment with fraud prevention built-in is hard to resist. And, perhaps even more importantly, eCheck’s compatibility with a variety of existing accounting software makes it a palatable move for small- and mid-sized businesses that cannot bear huge expenses, as well as large businesses for whom software changes are akin to turning around a battleship (i.e. it takes a long time.)

We wish JPMorgan luck, of course – – but past data and current behaviors seem to conspire against their plan.

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