Digitizing the payments ecosystem

Business owners stand to benefit from the efficiencies granted by real-time payments; check digitization enables business owners to make payments faster, more efficiently and more securely than ever before. So why are 65 percent of small- and mid-size businesses in the U.S. still using paper checks to manage their day-to-day payments?  Deluxe ships more than 150,000 packages of checks each day and processes $2T in payments annually in our receivables automation business, giving us firsthand knowledge on why businesses are still reliant on checks and the challenges with digital solutions currently available in the market. 

As an industry, we assumed people would convert to electronic payments because of cost savings. Yet today, the majority of business payments are still made by check, suggesting that the cost of processing checks is not the issue (and maybe never was). Below are just some of the existing challenges that must be addressed (and solved for) to further accelerate the payments ecosystem’s digital revolution.

Embedded payments

Innovation in payments have always been about removing friction. Our collective patience continues to diminish, taking us to a place today where payments are expected to happen instantaneously and with minimal effort —as easy as flipping on a light switch. Today, companies can embed payment functions into their offerings, providing a seamless user experience between product and payment. Whether it’s booking a rideshare or ordering dinner—technology has allowed us to do more without ever thinking about “making a payment.” For digitization to take hold, we must make all payments as frictionless as possible. 

Data, data, data

Another critical aspect here is data. At Deluxe, we see payments as money + data. The two must be connected because one is ineffective without the other. Businesses spend extraordinary effort and time connecting these, with entire departments dedicated to receivables and another for payables. For digital payment options to replace the paper check, remittance information must be delivered electronically along with the payment, with minimal effort on both sides. 

The power of payment networks

The concept of a payment network is nothing new. VISA and MasterCard, for example, have more than a half-century of experience operating a reliable and efficient network for credit card transactions. But that only covers a fraction of the ways a person or business makes a payment.

What is new and exciting are the next-generation capabilities available in today’s leading payment networks. Directories link payees with their corresponding information, enabling a payment to route to the intended recipients faster and more accurately. A network synthesizes multiple directories, bringing scale, efficiency, and ease to the process of making payments. Fundamentally, a strong payment network moves a business away from the legwork (or guesswork) of collecting, storing and updating payee information, and lets the accounts payable team focus on more strategic activities. 

These are just some of the challenges we’re solving with the Deluxe Payment Exchange, which has the potential to transform B2B payments. Comprised of medical, small business and lockbox directories, as well as partner directories, this infrastructure uses a directory of payee email addresses to transfer payments and any accompanying correspondence, making it fast and easy for payers and payees.  

Learn more about the Deluxe Payment Exchange by visiting this page or watching this video. 

You can also download The Power of Payment Networks ebook.