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Calculate the ROI of Migrating to Electronic Payments

18 September 2012  |  4118 views  |  2

Check printing is expensive. It is time consuming, labor intensive, and comes with the added costs associated with paper stock, ink, and postage. There is no doubt that migrating to electronic payments can reduce costs and improve operational efficiencies.

I often get asked though, what is the return on investment (ROI) for migrating checks to an electronics payments process?  Here is an example. 

An average sized corporation processing 2,500 checks per month with an average cost of $1.51 per check can expect the following benefits:

  • With a 50% migration to ACH, the corporation could save about $1,575 per month, or $18,900 per year.
  • Even better, a corporation with an average check amount of $1,100 that migrates just 25% of its paper checks to virtual cards can expect immediate cost savings of $944, along with a monthly rebate of $8,594, yielding a monthly net difference of $9,538, or $114,456 per year.

The costs savings of migrating to ACH alone are significant, but the additional revenue a corporation can earn by migrating just a portion of their checks to a virtual card program is staggering.

Corporations can also feel good about these cost savings and the additional revenue because they are also helping the environment. In the same scenario as above, in which a corporation has saved tens of thousands of dollars, the elimination of thousands of printed checks and paper envelopes also saves trees, water, gasoline, greenhouse gases, and more. It’s not every day that a corporation can save and earn money while also helping to sustain our environment.

Have you calculated the ROI of migrating your checks to electronic?

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Comments: (3)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 20 September, 2012, 11:41

Impressive as these figures are, they only account for the "benefit" of migrating from checks to ePayments. Unless I'm missing something, there are no figures for migration "costs" in terms of new software, changes to existing software, ACH charges, manpower retraining, etc. Since ROI = (Benefit-Cost)/Cost*100%, how can we infer anything about ROI in the absence of cost? On the other hand, I know of a midsized online university in the USA which carried out a detailed business case for migrating from checks to ACH and gave up on the migration when the payback period worked out to over 8 years.

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A Finextra member
A Finextra member | 21 September, 2012, 16:47

Outsourced payment execution solutions have a far quicker ROI because there are no licensed software costs and no retraining required.  Business processes can remain unchanged.  Additionally, rebates generated by virtual card programs turn cost centers into revenue centers. 

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 21 September, 2012, 17:22

TY for clarifying. I hadn't thought of outsourced payment execution solutions. Can you cite a few opex-only, zero-capex solutions?

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