The decline of the check-printing business started when electronic payments began displacing paper checks 25 years ago. The Federal Reserve's network of check-processing centers shrank from 45 to just one by 2003.
But the legacy check-printing firm Deluxe reports its check-printing volume suddenly began rising in recent months. In each of the last three quarters, Deluxe check revenue has increased by 6% to 7% over the previous year, countering what seemed like an irreversible trend.
"We're not used to seeing growth in our check business," said Tracey Engelhardt, Deluxe's division president for checks and chief of operations. Minneapolis-based Deluxe has spent the last several years repositioning itself as a firm specializing in payments, marketing and business technology.
"When we first noticed an increase in check orders, we thought it was a blip, but after three quarters it's clear that a combination of factors are driving more check usage," Engelhardt said.
Mystified by the recent quarter-over-quarter increases after years of declining check-printing volume, Deluxe surveyed a cross-section of customers ordering checks and found a mix of potential reasons for the increase, which was stronger on the business-check side, Engelhardt said.
One factor driving demand for checks was the Paycheck Protection Program. Businesses frequently wanted to keep those loans in a separate account to simplify their bookkeeping, and many opened new accounts in 2020 to accommodate those funds, according to Engelhardt.
But instead of closing those accounts when the PPP loan program ended, nearly 80% of small-business customers Deluxe surveyed said they planned to reorder checks for those accounts, Engelhardt said.
Another factor appears to be the surge in remote work that took hold in 2020 and 2021, which caused many consumers to move temporarily or permanently, depending on their job.
"Even though people aren't using checks as much, they still seem to want their current address to match the one on their checks," Engelhardt said.
There has also been a general surge in small-business applications in recent years. A record 5.4 million new businesses filed applications in the U.S. last year, up from 4.4 million in 2020. The surge marked an increase of nearly 25% over 2019, according to the U.S. Census, which tracks business applications.
Two other developments helped accelerate Deluxe's check-printing demand. Early in 2021 Deluxe won a long-term contract to provide checks for Truist Financial, one of the nation's largest banks, which was created through the 2019 merger of BB&T and SunTrust Banks.
Early this year Deluxe also announced a deal with HP (formerly Hewlett-Packard) to add digital and print-on-demand check services, which has sped up order cycles, Engelhardt said.
Though banks recently reported a spike in check fraud, Engelhardt said Deluxe has not seen a corresponding increase in demand for its high-security checks, which feature a hologram designed to help deter criminals from altering checks.
Deluxe doesn't expect this rise in check orders to continue for more than another quarter or two, however.
At least one bank, Fidelity Bank in Edina, Minnesota, confirms a post-pandemic deceleration in business checking accounts.
Fidelity "saw a jump in new business accounts in 2020 and early 2021 during the height of PPP activity, from both new and existing clients," said Mike Heil, senior vice president of commercial lending at the bank.
Many of Fidelity's existing customers opened new accounts to segregate PPP funds, but in the last year the bank has returned to more typical rates of new-account openings, Heil said.
"We expect check demand will go back to its secular decline," Engelhardt said, noting that Deluxe is using the windfall from selling more checks to invest in its other, faster-growing businesses of digitizing checks and providing cloud-based data-driven business marketing services.
Vericast (the new name since 2020 of former check-printing behemoth Harland Clarke) has not seen an overall rise in check demand. The San Antonio firm, which counts many of the nation's top banks as customers, said check demand collapsed in 2020 at the beginning of the pandemic due to consumer and small-business uncertainty.
Last year Vericast began to see check writing return to "a more normal state," a spokesperson said.
