The end of the line for paper checks

Here at GoCardless, we've long championed the move towards modern, efficient payment methods. Which is why a small cheer rippled across our offices when we saw the recent Executive Order mandating the phasing out of paper checks for all Federal government disbursements. This isn't just an administrative update; it has the potential to be a pivotal moment in the modernization of payments across the US, particularly within the business-to-business landscape.

For too long, businesses in the US have been tethered to outdated payment methods like checks. First introduced in the 17th century, it’s safe to say that after 350 years paper-based IOUs should be consigned to the annals of payment history! As the White House highlights, they are inherently insecure and riddled with inefficiencies - Treasury checks are 16 times more likely to be reported lost or stolen, returned undeliverable, or altered than an electronic funds transfer.

Yet, over 40% of B2B payments are still made using checks. Which means businesses are incurring unnecessary costs, delays in receiving monies they are owed and significant administrative overheads. Imagine how much better businesses could spend the time and energy required to manually process these checks - opening the mail and reading them, adding them to banking and invoicing systems, not to mention driving to the bank and waiting in line to physically deposit them.

Inefficient, time-consuming and costly methods of receiving payments are the default setting for most organisations. But they shouldn’t be accepted as a cost of doing business. Instead we should be challenging the status quo and helping businesses to realize there are better ways to take payments, which will help them to manage cash flow and grow their business.

The future of payments lies in faster, more secure, and more efficient electronic methods. Sometimes it takes a ‘moment’ to nudge people. In the UK introducing contactless payments on London’s famous “Tube” network, provided the ‘moment’ to make such payments mainstream. This Executive Order may have set the stage for a similar ‘moment’ that will see us ditch checks and adopt electronic payments once and for all.

Payment networks like ACH are essential for businesses (and government) who are looking to make the move to online payments. Payments across the ACH network grew 6.7% in 2024 hitting 33.6 billion transactions with a value of $86 trillion. From our perspective, it’s ACH Pull that offers businesses a much better alternative to checks and even traditional card payments. Instead of the payer deciding when and how they pay, ACH Pull enables businesses to collect payments directly from their customers' bank accounts, with the customer’s consent, whenever they are due, leading to faster payment cycles and improved cash flow.

This is precisely where GoCardless comes in. Our platform offers seamless automated collection of payments via ACH Pull, with direct integration into your existing banking and billing platforms. Forget the cumbersome process of chasing paper checks and manually reconciling payments. GoCardless empowers businesses to take control of their receivables, reducing the time and resources spent on managing payments by a significant margin. Businesses using GoCardless report a 21% improvement in efficiency and 59% less time spent managing payments.

This Executive Order sends a clear signal about the direction of travel for payments in the US. By mandating electronic payments for the Federal government, it will undoubtedly increase awareness and drive adoption of digital payment methods across the board. This could be the tipping point we need to finally move away from the archaic practice of relying on paper checks, unlocking significant benefits in terms of security, efficiency, and cost savings for businesses throughout the United States. GoCardless is ready to help businesses embrace this modern era of payments and leave the outdated world of checks behind.