Why this old-fashioned payment method still dominates small businesses

It could also be hard to consider, but in 2026, most small business owners use paper checks.

Research shows this. According to a Study 2024 According to the Atlanta Federal Reserve, as much as 83% of small businesses – those with annual revenue of as much as $10 million – use paper checks. Another study from a third-party payment processing company had similar results (75%). And Mineral Tree, a world payment processing company, said that within the last 12 months alone, 57% of firms paid greater than 1 / 4 of their suppliers by check.

My own experience confirms this. I visit and speak with countless small business owners yearly. And while many depend on electronic payments with certain providers, most still process checks the identical way they’ve for years – even many years. You would think that things would change because the younger generations take over? No.

How can so many business owners still use paper checks nowadays? Is this ignorance? No, just good business practice.

It’s not obscure. There are obvious reasons to follow paper checks. For example, there are each the initial and longer-term service costs in addition to the short-term disruption of switching to a totally electronic payment system in comparison with the return on investment if this will not be the case. Many entrepreneurs lack the interior resources to implement such a project. Others don’t desire to upset their suppliers. And then there are the easy demographics: The majority of small businesses are run by older entrepreneurs—those over 50—who should not only stuck of their ways, but in addition unwilling to shake things as much as fix something that, to them, is not broken.

But pretty much as good as these reasons are, there are even higher the reason why so many small business owners follow paper checks.

It’s actually higher security

Although the Atlanta Fed study While I actually have said that using paper checks comes with greater risk and frequency of fraud, I actually have found that these risks may be easily mitigated, and in actual fact, a few of my smarter, more financially aware clients are mitigating them.

A very good system of internal controls ensures that every one checks are locked in a vault and are only released from custody during an inspection run. Even then, good financial managers keep a detailed eye on their check numbers.

The checks then undergo an approval process where they’re manually matched to the invoices and two signatures are required for withdrawals above a certain quantity. All of which means that when a check is finally mailed, it has been checked against source documents, reviewed, signed, and verified by multiple people in a company to make sure the transaction has been seen by quite a few eyes.

This slows down the withdrawal process and provides people time to take into consideration a transaction before the cash goes out. My customers who pay electronically often arrange their system with fewer of those processes, leaving them susceptible to incorrect payments.

What about cheating? This is well defended by a preferred service called Positive Pay, which is sold by most banks. This is where an organization provides the bank with an inventory of payments (including check numbers, payee, amount and date) upfront and the bank only pays out money if the check presented matches this list. Most bankers I do know tell me that this service works just as well – if not higher – when presenting manual checks than it does for electronic payments, which may be vulnerable to potential malware or hackers.

Speaking of malware and hackers, businesses that rely entirely on electronic payments proceed to face data breaches and hacks. Electronic payment systems (ACH, wire transfers, online banking) are prime targets for fraud, and plenty of attacks bypass the bank entirely by exploiting people and processes. A 2025 Payment Fraud Study The Association of Financial Professionals Payments Fraud reported that 79% of companies experienced actual or attempted payment fraud in 2024. A Current FBI report found that electronic payments are central to losses for each business owners and banks, with cyber fraud accounting for 83% of all reported financial losses and wire transfers and ACH payments being key channels for successful fraud cases.

Where paper checks really win

These are all good the reason why an organization will probably want to follow a manual check processing process. But that is not the foremost reason I see this so often with my clients. The reason is straightforward: higher money management. Or should I say higher float management?

Because once you submit a payment to a bank, your money shall be deducted out of your account immediately, even when it still takes a couple of days to succeed in the supplier. The bank makes its money, but the businesses miss out on the additional days of interest, which may be significant depending on how much money you’ve.

There can also be the control factor. Quite a couple of business owners I do know wish to pull out checks and put them in a drawer. As for her books, the cash is not any longer in her account. But it hasn’t left the bank yet, which could possibly be very essential for firms facing money flow problems or in the midst of a dispute. Once a check is shipped by post, it takes a couple of working days for it to succeed in the supplier after which be cashed. All of those extra days give the business owner the chance to extend their money flow a little bit without incurring interest costs or having to resort to other sources of financing.

All of those reasons explain why so many business owners still process checks the old-fashioned way: with paper. It could violate general conventions. But they should not fallacious.

It could also be hard to consider, but in 2026, most small business owners use paper checks.

Research shows this. According to a Study 2024 According to the Atlanta Federal Reserve, as much as 83% of small businesses – those with annual revenue of as much as $10 million – use paper checks. Another study from a third-party payment processing company had similar results (75%). And Mineral Tree, a world payment processing company, said that within the last 12 months alone, 57% of firms paid greater than 1 / 4 of their suppliers by check.

My own experience confirms this. I visit and speak with countless small business owners yearly. And while many depend on electronic payments with certain providers, most still process checks the identical way they’ve for years – even many years. You would think that things would change because the younger generations take over? No.