SMBs Need to Cut the Check Before Checks Cut Them

It’s 2025, and yet many of America’s businesses are still stuck in the past, stubbornly clinging to paper checks. The problem with doing payments the same way they’ve done since the 18th century? Fraudsters, always looking for an easy target, are increasingly using 21st century technology to perpetrate check-based fraud and scams.

According to the latest PYMNTS Money Mobility Tracker, a collaboration with Ingo Payments, check fraud is skyrocketing. Businesses that refuse to go digital are practically inviting criminals to cash in.

While real-time payments, digital wallets and artificial intelligence (AI)-driven security promise a safer financial future, checks remain a glaring weak spot in America’s payment system. Despite their well-documented security risks, checks still account for nearly 40% of all B2B payments. And 70% of companies using checks have no plans to ditch them in the next two years.

The reason these firms haven’t ditched the paper?

Many perceive checks to be low-cost or “free,” but manual processing creates hidden expenses. Time, labor and delayed payment cycles add to these costs, and fraud losses only amplify the financial burden.

The cost? A jaw-dropping $24 billion in estimated losses from check fraud in 2023 — double what it was just five years ago.

Small Businesses Are Fraud’s Biggest Losers

Some businesses mistakenly believe checks offer greater control over cash flow since they can determine when to issue a check rather than relying on automated clearing timelines. However, this perceived control comes at a steep security cost.

Criminals are stealing checks from mailboxes, forging signatures and even selling check details on shady Telegram channels. The growth of check fraud is outpacing the decline in check usage, creating a paradox where businesses that continue using checks face an increasing likelihood of fraud. The report cites data indicating that nine out of ten bankers have witnessed a surge in check fraud in recent years, with 28% of banks reporting a more than 50% increase in fraud cases over the past three years.

But while big banks can absorb fraud losses, small and medium-sized businesses (SMBs) are getting crushed. According to the PYMNTS Intelligence report findings, nearly 1 in 4 SMBs fell victim to check fraud last year. Unlike large corporations with dedicated fraud teams, SMBs waste hours chasing down fraudulent transactions — time that could be spent growing their business.

Banks and FinTechs have spent the last decade building faster, safer digital payment systems, but businesses are still dragging their feet. According to the report, artificial intelligence (AI)-driven security is already helping 35% of firms detect fraudulent transactions, yet companies remain hesitant to fully embrace digital payments.

Among the key reasons for continuing to rely on check payments are the chicken-egg reliance on established businesses practices paired with a lack of digital infrastructure. Organizations are reluctant to overhaul legacy payment systems, preferring to stick with familiar methods, and some SMBs lack the technological resources to implement and maintain digital payment solutions.

Ironically, some businesses fear the security risks of digital payments, even though they are far more secure than paper checks.

Ultimately, as AI-driven security measures, real-time rails and instant payment networks continue to mature, the need for paper checks as a business payment tool is rapidly diminishing. For companies still reliant on checks, the time to transition is now. The longer businesses wait, the greater the risks they face in an evolving financial landscape where fraudsters are already a step ahead.