Cheques may be costing your business, more than you think. It’s Time To #KillTheCheque
With an annual decline in cheque use of 7 percent across the nation, Payments Canada predicts that, by 2020, virtually every business and government office in Canada will have switched from cheques to electronic payments, including prepaid. Companies can eliminate issuing costs, reduce time investment, cheque fraud, cashing costs and more by switching to an electronic payment platform.
Issuing and processing paper cheques to employees is a costly process. By switching to prepaid payroll cards, companies can save as much as $223 per person. When a business has to constantly mail out cheques, the fees add up. With prepaid, you only need to mail a card once. There is also a substantial cost to replace lost or stolen payroll cheques. In the U.S., those numbers add up to over $50 million annually.
In-house payment operations incur heavy costs as a result of the multiple steps required to create and send out cheques. Studies have shown that creating a cheque costs $0.82 vs. $0.13 for electronics payments. HR management software company PaySavvy determined the total cost of issuing one cheque is $17 when you take into account secondary costs. Secondary costs include bank fees for issuing cheques, fraud protection, cheque reconciliation services, retrieval of transaction history and cheque images. Businesses also incur additional expenses for supplies and equipment such as magnetic ink character recognition (MICR) printers, envelopes, postage, supplies, and more. All of these costs add up, and can prove extremely costly for industries that produce and distribute a large number of cheques.
While the majority of people have banks, there are still many people who use expensive alternative financial services providers to cash cheques such as payday lenders. Electronic payments can solve this payment issue less expensively and more securely. Prepaid cards provide consumers, businesses and governments with the efficiency, security and flexibility of electronic payments by leveraging a payment tool that is nearly universally understood and accepted. Open-loop products can be used anywhere the card network (i.e. Mastercard or Visa) is accepted, including online.
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