Cheque usage continues to decline for business-to-business (B2B) payments in US and Canada (North America), falling to an all-time low of 33% since AFP (Association for Financial Professionals) began tracking this data in 2004, according to the 2022 AFP Digital Payments Survey.
B2B cheque payments have dropped 9 percentage points in North America since 2019. This is consistent with the steady decline in cheque usage reported by organisations over the past two decades. Since 2004, cheque usage has fallen by over 40 percentage points.
Within North America, when paying major suppliers, the gap between paper and digital payments has widened to 13 percentage points, with 39 percent of organisations using ACH credits while 26% continue to use cheque.
This gap has increased by 11 percentage points since 2019, when the gap between ACH and checks was only two percentage points.
Developments in real-time payments are particularly important for businesses in the US since many other countries already have highly enhanced payment systems.
The UK has had great success with its Faster Payments System. The European Union introduced the Single Euro Payments Area (SEPA) a few years ago and has continued to develop instant payment: SEPA Instant Credit Transfers.
Over 60% of financial professionals are optimistic about the impact of real-time payments on their organisations, with 24% expecting the impact to be very positive and 38% anticipating the effect will be somewhat positive.
37% of respondents are not expecting Faster Payments to have any impact, and a very small share 2%) believes that they will have a negative effect on their organisations’ payments strategy.
There are also challenges. With real-time payments, current routines will have to change to accommodate systems that operate on a 24/7/365 basis. This could cause staffing issues for off business hours and new procedures for funds that can arrive at any time.
Additional key findings:
- Speed is critical for B2B payments. A majority of all survey respondents (54%) report that speed is the primary driver when choosing a payment method. And 62% of all survey respondents report that B2B transactions will benefit the most from faster/real-time payments.
- A third of all survey respondents (33%) report they are unfamiliar with ISO 20022 — the global standard on which new payment systems rely.
- Awareness of ISO 20022 is higher in regions outside of North America, with only 29% of respondents indicating that they are unfamiliar with the standard, compared to 36% in North America.
“In the face of wide-ranging disruptions around the world, financial professionals continue to improve their payments processes and become more nimble in response,” said Jim Kaitz, president and chief executive of AFP.
“Given that digital payment methods are more efficient and have a much lower risk for fraud, it is encouraging to see that digital payments are on the rise.”
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