In today’s rapidly evolving world, many businesses are looking for more efficient and cost-effective ways to process their payments — and we can help! Utilizing Automatic Clearing House (ACH) for your dividend distributions as an alternative to the traditional paper check will optimize the payment process. ACH payments are an increasingly popular method for shareholders to receive their dividend payments as an alternative to the traditional paper check. ACH has seen steady growth in popularity; in 2023, ACH payment volume increased 4.8% from the previous year, and payment value grew 4.4%. According to the National Automated Clearing House Association, “2023 marked the 11th consecutive year in which ACH Network value has increased by more than $1 trillion.”

The Association for Financial Professionals published a 2023 AFP Payments Fraud and Control Survey of over 450 Treasury practitioners and stated that 65% of organizations were victims of payment fraud attempts or attacks in 2022. Checks continue to be the payment method most vulnerable to fraud, with 63% of respondents reporting that their organizations faced fraud activity via checks. Of those who were victims of payment fraud in 2022, more than a quarter of organizations were able to successfully recover at least 75% of the funds lost. However, nearly half were unsuccessful in recovering any of the stolen funds. Given these sobering statistics, it is no wonder the popularity of ACH versus traditional paper checks has seen so much growth. The benefits of receiving a payment via ACH versus a paper check are self-evident. The following are some benefits of ACH:

• Lower costs: The cost of ACH versus printing and mailing physical checks can be significantly less expensive. These cost savings are also realized in the transaction costs associated with processing paper checks versus ACH payments. ACH payments do not require the materials, resources or time it takes to print, mail and track paper checks. And for the environmentally conscious folks, let’s not forget the environmental benefits of ACH over paper checks.
• Convenience: ACH payments are convenient for your shareholders. Shareholders aren’t having to wait to receive their check in the mail, which is subject to delays from weather and potential mail carrier problems at post offices around the country. Shareholders can set up ACH instructions one time and receive their payments electronically for all subsequent distributions. They no longer need to deal with trips to the bank to deposit their checks.
• Security: For obvious reasons, ACH credits are more secure than paper checks because they are electronic and do not require physical delivery or handling. It isn’t surprising that checks are more susceptible to fraud. There are several ways that a check can be compromised or defrauded. Checks can be easily intercepted in transit, tampered with or lost, either in the mail or by the shareholder. Checks contain the full account number, routing numbers, payee’s name, and address fully visible on the check, leaving the information vulnerable to fraud. ACH payments are encrypted and processed through secure networks. ACH payments can’t get lost in the mail or by the shareholder; they cut out all intermediaries, thus reducing the risk of fraud and tampering.
• Faster processing time: ACH payments are processed electronically, unlike a paper check, which has to go through the mail, which reduces processing time tremendously. Typically, ACH payments can be completed within 1 to 5 business days, while paper checks can take a week or more to clear, not including the time it takes to actually receive the paper check in the mail.
• Shareholder satisfaction: Keeping your shareholders happy is priority number one for you and for Continental Stock Transfer & Trust Company. We often field inquiries from shareholders requesting ACH, and most shareholders prefer this over traditional paper checks. Offering ACH provides your shareholders with a secure, fast and convenient method of receiving their dividend distribution. In 2018, for the first time, the number of ACH transfers ($16.6 billion) exceeded the number of check payments ($14.5 billion). According to the Federal Reserve, from 2015 to 2018, the number of check payments fell 7.2% per year, and the value of check payments declined 4% per year.