Paper Checks: Can’t Live With ‘Em, Can’t Live Without ‘Em

Who’s buying checks today?

Plenty of people, it turns out. Enough, in fact, to help lift the top line at one of the biggest companies in the business of printing them out for the first time in nearly a decade.

In its full-year earnings call Thursday (Feb. 3), Deluxe Corp. reported that the checks segment’s revenue increased just over 6% year over year, thanks in part to robust ordering from the businesses that still rely on paper checks and winning business from collectibles retailer The Bradford Exchange.

At the same time, the checks segment’s adjusted pretax earnings inched down 0.01% due to expenses related to the onboarding of new customers, inflation and planned investments, including print-on-demand technology.

Looking ahead, though, the company said it doesn’t expect that growth to continue as more and more businesses and consumers turn to quicker digital alternatives to pay the bills.

“Based on high renewal rates and new businesses won in 2020 and 2021, we anticipate checks to decline in the low-single-digits for 2022, better than the anticipated industry secular declines,” Scott Bomar, senior vice president and chief financial officer, said during the call.

Businesses Pay Other Businesses With Checks

In a blog post on the Deluxe website, the company explained that businesses pay other businesses with checks because they want a paper trail, they want to control cash flow by delaying payment, and they don’t want to pay credit card usage fees.

The company’s biggest recent competitive win was The Bradford Exchange, which sells collectibles, memorabilia and consumer products, including checks featuring unique designs. Deluxe President and CEO Barry McCarthy noted that the company is one of the largest non-bank distributors of personal checks.

Increased Payments Growth

During the call, company executives reported that not only the checks segment, but also the payments, cloud solutions and promotional solutions segments of the company showed year-over-year, sales-driven growth during the fourth quarter.

As a result, the company achieved its full year of reported sales-driven growth for the first time in nearly 10 years.

“Importantly, for the first time in our 106-year history, we expect payments to equal checks as our largest business by revenue as we exit 2022,” McCarthy said.