BNY Mellon is leading efforts to reduce check-based payments as sustainability goals and environmental concerns take root across the globe. To support US clients’ transition from paper to electronic transactions, the bank is leveraging a series of digital innovations and financial benefits.
These initiatives include the exploration of carbon-tracking tools that could show clients the true environmental cost of their paper payments, as well as price discounts on certain digital payment solutions and waivers of some upfront implementation fees for select clients that commit to the digital journey.
With roughly 2.3 billion checks written annually by customers of US corporations paying their bills, equivalent to about 455,000 trees, there is an opportunity to make an impact. Checks are not just environmentally unfriendly; they may also come with potential mail delays. By comparison, digital payment channels provide a host of efficiencies, including reduced risks of fraud, faster access to liquidity in a rising interest-rate environment and an improved client experience.
Clients have already reduced the amount of checks they send to BNY Mellon for processing by 3% in 2020 and by 8.5% from 2019 levels, with those check volumes falling to 291 million last year.
“Alternatives to checks are readily available – and have been for a long time,” says Eric Boughner, Chairman of BNY Mellon Pennsylvania. “While we will continue to support checks, we are now – more than ever – focused on offering new and enhanced solutions that can help drive the paper-to-digital journey for our clients, as well as supporting them in their wider sustainability efforts.”
The shift comes as global regulators and policymakers are increasingly issuing guidance on a potential framework for mandatory reporting of climate risk. Moving from paper to electronic payments is a straightforward step toward those sustainability goals, but the business reasons for displacing checks are just as clear as the environmental ones.
“Recent innovations in digital payments are shining a brighter light on the inefficiencies of check processing,” says Carl Slabicki, BNY Mellon’s Co-Head of Global Payments. “The business reasons, coupled with the environmental impact, make embracing electronic payments a clear imperative and we are leading the way with tools and incentives to make that happen.”
The moves are part of the bank’s wider digital strategy in its Treasury Services unit. Recently, the company launched a first-of-a-kind, real-time electronic bill and payment solution enabling US businesses to present digital bills to their consumer clients in real-time and receive instant payments via the consumers’ preferred online and mobile banking channels.