Digital payments: the green alternative to paper checks

Tuesday 9 August 2022 11:54 CET | Editor: Vlad Macovei | Interview

BNY Mellon’s Carl Slabicki explores the challenges of processing paper checks and how digital alternatives are proving to be the logical way forward for US payments.


Why do you think digital payments are a worthy alternative to paper-based payments? 

Transitioning from paper-based to digital processes is by no means new – it is something that has been happening in sectors the world over. And when you consider the benefits of digital payments, the ‘why?’ is evidently clear. In an increasingly digital world, paper-based processes not only seem out of place, they often are; falling far short of the capabilities that digital transactions can provide. 

Each year, 2.3 billion checks are written by customers of US corporations paying their bills. To put the scale of the effort involved into perspective, it is important to consider the many steps involved in sending a check. A corporation will print the bill, seal it in an envelope and mail it to the consumer. Upon receipt, the consumer will open the letter, write the check, seal it in an envelope and mail it back to the corporation. Provided the letter arrives – and provided all the details were filled in correctly by the consumer – the payment processing itself can then begin, with settlement typically following a few days later. This process is repeated 2.3 billion times each year in the US. 

Now let’s consider the digital alternative. The entire payment process is moved online – no more printing out bills, no more walking to the post box and no more writing checks. It can all be done at the click of a button, creating an end-to-end experience that is faster, more efficient and more convenient for both parties. The icing on the cake is that these solutions exist and are being used by clients every day. That means digital payments are not only a worthy alternative, they are a viable, readily accessible one too. 

Recently, BNY Mellon announced an initiative to reduce check-based payments. What is the reasoning behind this move and what do you seek to accomplish?

In an increasingly real-time world, the business benefits of moving to digital payments – be it the greater speed, efficiency or security – are undeniable. But that is not the only reason we are such strong advocates for this transition. 

One of the other key considerations is the impact paper-based payments have on the environment. If we again consider the processes involved in sending a check, one fact is apparent: from the bill and envelopes to the paper check itself, a lot of paper is involved in processing these payments. In fact, as part of our initiative, we calculated that the annual volume of checks processed for consumer bill-pay in the US equates to approximately 455,000 trees being cut down.

The need to move towards environmentally sustainable practices is gathering momentum, with policy measures relating to mandatory sustainability reporting increasingly coming into force around the world. Within this context, adopting digital payments is a way for clients to reduce the carbon footprint of their businesses. As industry leaders in payments, it is our job to help facilitate these efforts. 

Our aim, therefore, is twofold: we want to highlight the inefficiencies of paper-based processes while, at the same time, making a positive impact on the environment. It is a win-win for all.

How are you looking to incentivise the shift to digital payments? 

Checks are embedded at the heart of the US payments infrastructure, and we don’t expect checks to completely vanish any time soon. But that is not to say progress is not being made. Clients have already reduced the number of checks they send to BNY Mellon for processing by 8.5% since 2019 – and we are doing everything we can to ensure this trend continues.  

First and foremost, to encourage the adoption of digital payment services, we are offering certain fee waivers, fee holidays and price discounts to select clients – helping them to offset the cost of the transition. 

At the same time, we are also exploring an innovative carbon-tracking tool. The tool uses a crowdsourced, research-driven carbon footprint formula to measure and monitor the environmental impact of a client’s paper payments. Upon discovering the environmental impact of their payments, should a client want to accelerate its paper to digital payments strategy, our experts can then help guide them away from dependency on paper-based, manual processes and towards digital options. 

Though there is still a long road ahead, we are hopeful that more and more clients will take the leap to digital payments in the months and years ahead – and we will be right there with the tools and incentives to make it happen.  

About Carl Slabicki

Carl Slabicki is the Co-Head of Global Payments for BNY Mellon’s Treasury Services. Carl is responsible for our  Payables and Receivables product group that delivers specialised solutions to optimise payment flows for our multi-segment corporate clients, our bank clients in a white-label capacity and our strategy to  partner with fintechs. Carl serves on the Board of Directors for Nacha and the Managing Board for The Clearing House. He is the Chair of Early Warning Services’ Wholesale Payments Advisory Committee, the Chair of The Clearing House’s RTP Business Committee, and a member of the ABA Payment Systems Administrative Committee. 

About BNY Mellon

BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations, or individual investors, BNY Mellon delivers informed investment and wealth management services in 35 countries.


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Keywords: ESG, green finance, digital payments, online banking
Categories: Banking & Fintech
Companies: BNY Mellon
Countries: United States
This article is part of category

Banking & Fintech

BNY Mellon

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