Why Small Businesses Still Rely on Paper Checks
- Many small businesses still favor paper checks for familiarity, control, and perceived low cost
- This reliance hides higher true check costs and exposes firms to growing fraud risk
- Advanced check fraud detection lets businesses keep checks while significantly reducing fraud exposure
In spite of a steady rise in digital payments, many U.S. businesses—particularly smaller ones—still lean heavily on paper checks for everyday transactions. A recent post from the Federal Reserve Bank of Atlanta unpacks why this “old” payment rail remains so resilient.
According to the Atlanta Fed’s summary of the 2024 Federal Reserve Payments Insight Business Study, nearly 80% of “Very Small” firms (under $1 million in revenue) and 83% of “Small” firms still use paper checks for business payments.
The post highlights several reasons for this persistence.
- Familiar, paper-based approval workflows and signatures feel more controllable to small-business owners than abstract digital rails.
- Upgrading to modern payment systems often demands new platforms, staff training, and process redesign, while many of the benefits—faster funds availability and better cash visibility—accrue to the payee, not the payer.
- Checks also conveniently carry remittance details (like purchase orders and invoice copies), simplifying reconciliation.
- The check “float” offers a de facto liquidity tool, giving owners a few extra days to manage tight cash cycles.
- Finally, businesses often perceive checks as cheaper than card or digital payments, even though one cited study pegs the true average cost of a paper check at about $4 versus $0.28 for an electronic payment.
We recently discussed whether or not SMB will follow in the footsteps of the US Government to eliminating the use of paper checks We concluded that, for widespread adoption, the path forward requires operational readiness—not just new standards and guidelines, but real solutions that enable both sending and receiving digital payments efficiently and securely. If one side wants to use digital payments but the other is unwilling to accept that payment channel, then the fallback will continue to be checks.
This even applies to p2p payments. Paper checks continue to serve an important purpose—particularly in situations where digital options fall short. Alternative payment methods aren’t always universally compatible or reliable. For example, when two people don’t share the same payment app, the simplest fallback is often a mailed check.
This kind of universal acceptability—independent of platforms or technology—helps explain why paper checks remain a dependable and enduring form of payment.