In 1762, British banker Lawrence Child started printing paper checks. At the time, they were a revolutionary way to make payments more efficient and organized, quickly becoming a trusted tool for managing finances.

More than 250 years later, paper checks are still in use. But their best days may be behind them. In today’s business environment, where speed and control are essential, paper checks can hold businesses back. They introduce risk, slow down receivables and add operational overhead. They’re also a common target for fraud, and errors like bounced or miswritten checks add extra costs.

Despite the drawbacks, as The New York Times put it, “Paper Checks Refuse to Die¹.”

For business leaders, these issues raise the question: Do paper checks still make sense for our operations, or is it time to make a change?

In this article, we’ll help you decide if paper checks still fit your business model. We’ll cover key benefits and drawbacks to consider, explore digital payment options and share tips on how to make the transition easier for your vendors and customers.

Is it time for your business to rethink paper checks?

Target made headlines in 2024 by stopping its acceptance of paper checks², a move, no doubt, based on careful consideration of security, operational costs and evolving customer preferences.

Whether you’re leading a $60 billion retailer or a $10 million regional operator, payments impact the way you run day-to-day operations. By evaluating how paper checks fit into your business model, you can make informed decisions that support long-term growth and financial stability.

Here are key factors to consider.

Industry norms and customer expectations
Industries have their own payment habits. In sectors like contracting, property management and religious organizations, paper checks are still common, up to 25% of total payments^{3, 4, 5}. In many cases, it’s long-standing back-office habits and vendor expectations keeping them alive.

Digital options are evolving, and many customers now expect faster, more convenient ways to pay. To decide whether paper checks still fit your business, analyze your customer base and industry patterns.

Ask yourself:

• What is the true cost of check float on our cash flow?
• How does manual reconciliation affect our month-end close timeline?
• Are checks introducing friction into our vendor or customer experience?

Operational costs of processing paper checks
Paper checks may seem inexpensive at first, but check processing introduces friction across the payment lifecycle. From manual reconciliations to exception handling and fraud reviews, the labor burden compounds across accounts payable, accounts receivable and other treasury functions.

Digital payments, on the other hand, streamline the process with faster reconciliation and automated tracking. Compare your current costs for processing paper checks against the potential savings from digital-only payments to see if checks are worth the expense.

Ask yourself:

• How much time do team members spend processing paper checks each month?
• What is the cost of errors, lost checks or manual intervention?
• Would digital payment tools reduce the burden on financial operations?

Fraud and security risks
Checks remain a prime target for fraud, especially as incidents of business email compromise and counterfeit checks increase. With sensitive banking details printed on each check, businesses often need to dedicate significant time and resources to monitoring, investigating and resolving fraud, slowing down treasury operations and increasing reputational and financial risk.

By contrast, digital payments offer built-in security features, including encryption, multi-factor authentication and real-time monitoring, which help prevent unauthorized transactions and improve overall risk management.

Ask yourself:

• Have we experienced check-related fraud? What was the impact on operations and cost to resolve?
• Are our internal controls and resources sufficient to effectively detect and prevent check fraud?
• Could transitioning to digital payments help lower our fraud exposure and streamline oversight?

Scalability
As businesses grow, fragmented or manual payment processes can quickly become a constraint. Manual check handling slows cash visibility, increases error risk, and often complicates integration with ERP and treasury systems. Moving to a digital-first payment infrastructure improves reconciliation, enhances control and better supports expansion and treasury automation.

Ask yourself:

• Can our current check process keep pace with rising transaction volumes?
• How much staff time is spent managing checks, and could that time be redeployed to higher-value work?
• Would more automated, integrated payment systems position us to scale more effectively?

Alternatives to Paper Checks

Businesses today have access to an extensive range of digital payment options that provide flexibility for organizations and customers. As checks become less common, offering modern alternatives helps you stay competitive and strengthen vendor and customer relationships.

Here are a few options to consider:

• ACH Transfers: Ideal for recurring payments like vendor invoices or payroll.
• Real-Time Payments (RTP): A faster alternative to ACH, providing immediate funds availability and confirmation, well-suited for time-sensitive transactions.
• Credit Card or Debit Card Payments: Offers customers a familiar and fast way to settle bills.
• Virtual Cards: Comerica Commercial Card™ provides a virtual card account number without issuing a physical card. This streamlines the procure-to-pay process for all types of business expenses.

• Mobile Payment Apps: Allows on-the-go payments for service-oriented or remote businesses.
• Wire Transfers: Best for large, high-priority payments requiring immediate processing.
• Comerica Integrated Payables™ and Comerica Integrated Payables Web™: Built for paying vendors, employees and other payees all from one secure source.
• Comerica Integrated Receivables^®: Helps organize receivables with a platform powered by AI and machine learning. Reduce time-consuming reconciliation and costly errors.

How to Move Away from Paper Checks Without Losing Customers

Transitioning away from paper checks doesn’t have to be disruptive. Start with a cross-functional roadmap that includes finance, procurement and IT. Establish clear internal controls for securely capturing and validating vendor and customer payment information to mitigate fraud while maintaining service levels.

The key is understanding your stakeholders’ concerns and addressing them thoughtfully. That includes your customers and vendors.

Follow these steps to keep your team, vendors and customers aligned and confident as you modernize payments:

Step 1: Understand Stakeholder Concerns

What’s holding some customers or vendors back from using digital payments? Often, it’s about trust, habits or convenience, not just cost.

Start by gathering feedback directly — through surveys, informal conversations or account managers — to uncover specific hesitations. Once you understand the “why” behind their preferences, you can start to categorize the common concerns.

Here are a few you’re likely to encounter:

• Comfort with tradition: Long-time partners may see no reason to change a system that’s “always worked.” They may view digital payments as unnecessary or complicated.
• Security worries: Some might fear online fraud or data breaches, viewing paper checks as the safer option.
• Technology gaps: Not every stakeholder feels confident navigating apps or online platforms. This can be especially true for more established firms or clients with legacy systems.
• Perceived costs: There’s often a misunderstanding that digital payments come with hidden fees or extra charges, even when that’s not the case.

Step 2: Build a Customer- and Vendor-Focused Plan

Next, it’s time to meet your stakeholders where they are. This is an opportunity to build trust and show them how the switch to digital payments can make their lives easier. Consider offering a flexible solution, like Comerica Easy Pay™, where your customers can choose which digital form of payment works best for them.

Educate and inform. Many stakeholders are hesitant to adopt digital payments because they don’t fully understand the benefits or how they work. Create simple, easy-to-follow guides that explain the key advantages, such as faster payments, added security through encryption and automated receipts. Use examples of successful transitions from other businesses to highlight positive outcomes.

Address concerns head-on. If stakeholders are worried about security, demonstrate the safety measures in place, like encryption, two-factor authentication and fraud monitoring. If they’re concerned about costs, provide a clear breakdown of fees (if any) and compare them to potential savings from reduced processing times and fewer errors.

Consider incentives for early adopters. A small reward can go a long way. Consider offering discounts, loyalty points or fee waivers for those who switch to digital payments within a certain time frame.

Use multiple communication channels. Don’t rely on a single method to communicate the change. Share updates and educational materials through email, social media, your website, invoices and in-person interactions. This ensures your message reaches all stakeholder segments and gives them multiple opportunities to ask questions or seek support.

Provide a reasonable timeline. Give your stakeholders ample time to prepare for the change to digital-only payments. Regularly communicate when the transition will take place. Send reminders of the date(s) to help ensure customers have plenty of opportunities to learn about new payment types. They may need to set up online accounts, order credit cards or make adjustments to their internal payment systems before they are ready to make the switch.

Step 3: Offer personalized support throughout the transition

Even with the best communication, some stakeholders will need extra help adjusting to new systems. Simple, personalized support can help ensure a smooth transition without overwhelming your team.

Provide clear instructions. Create easy-to-follow instructions, tutorials or demo videos to walk customers through setting up and using digital payments. Offer printable guides for customers or vendors who prefer physical instructions or checklists.

Offer a point of contact. For high-priority relationships or those with more complex needs, designate a dedicated support rep or team who can walk them through the digital payment process and answer questions one-on-one. This can be especially helpful for less tech-forward customers or businesses with more complex payment systems.

Test and troubleshoot as needed. Walk partners through a test transaction before they fully switch to digital payments. This gives them a risk-free way to get comfortable with the process while allowing you to address any issues proactively.

Check in after the switch. After the transition, check in to make sure stakeholders are satisfied and aren’t encountering unexpected issues. A quick follow-up call or email can go a long way in reinforcing positive experiences and keeping lines of communication open.

Modernize Your Payment Strategy with Comerica

Upgrading your payment systems doesn’t have to be complex, especially with the right partner. Comerica’s commercial banking team can help you modernize your approach with guidance and proven tools and solutions tailored to your business’s unique needs.

For example, Comerica’s Positive Pay helps your business catch check fraud early through activity monitoring and timely notifications. And with ACH Positive Pay™, ACH transactions are reviewed before they hit your account.

Ready to move away from paper checks? Talk with your Comerica Treasury Management Officer today to explore digital payment strategies that strengthen your financial operations and improve the experience for your customers and vendors.