The Rapid Pace of Payment Transformation

From Paper Checks to Electronic Payment Solutions

Today, most government financial professionals are focused on smooth, streamlined treasury department operations wherever possible. This isn't always an easy task, as day-to-day duties tend to be interrupted by the need to address exception items and larger organizational changes. How do these groups manage all of their responsibilities while keeping up with the rapid pace of change in the payments industry? Many are working to speed the rate of retail payments, that is to say, payments from consumers to businesses or organizations. A component of increasing that speed involves weaning the U.S. off of paper checks—a task a bit more difficult than it may seem, as The Federal Reserve (Fed) "believes more aggressive action may be necessary to wean the U.S. off of paper checks."1

As the Fed, banks and industry workgroups continue to forge new initiatives focused on shifting payments from paper checks to electronic payments, how are government financial professionals preparing for the migration away from paper? Some are allowing constituents to pay various taxes, fees and fines using online payment portals. Forward-thinkers with the right technical infrastructure and IT resources are making sure the payment portal connects to their back-office systems. This way, as payments are processed and accepted, organizations can automatically apply the cash to the outstanding receivable and update the general ledger.

But the justification behind shifting from paper to electronic isn't solely about efficiency and operating costs—it's also about security. According to the 2014 Association for Financial Professionals (AFP) Payments Fraud and Control Survey, 60 percent of organizations were exposed to actual or attempted payments fraud in 2013. Paper checks continue to lead as the payment type experiencing the most fraudulent attacks. The survey reports that 82 percent of respondents indicate paper checks were targeted at their companies. These results bring to light the need for government organizations to assess their current payment practices and make sure they have the right products and processes in place to protect their assets and their constituents' assets from fraud.

The Government Financial Officers Association (GFOA) published a list of banking best practices for government organizations, one being shifting to electronic payments. According to GFOA,2 for government organizations who use electronic payments, advantages include, but are not limited to:

As for the best electronic disbursement methods, Fedwire, Automated Clearing House (ACH) and Purchase Cards topped the list.

Is your organization ready to make the shift from paper to electronic? Here are some questions
to consider:

  1. Do your constituents walk in to your locations to pay bills?
  2. Do they mail payments?
  3. Do your constituents have access to the resources required to initiate payments online
    (i.e. their bank's website, a debit or credit card, access to the internet at home)?
  4. Have you given your constituents enough incentive to adopt electronic payment channels?

The shift away from paper checks for payment acceptance and disbursement is just the beginning. Your next frontier will likely be addressing constituent demand for payments on their ever-advancing mobile phones. Either way, the first step is the most important—offering an alternative to paper checks. This will allow you to focus on the next payment transformation around the corner.

As you consider the current state of your payments environment, you can count on J.P. Morgan for help as you map out your payment strategy for your organization.

Executive Director – Commercial Bank Treasury Services

James Lock is a Treasury Services Solutions Specialist for J.P. Morgan Commercial Banking. He works with higher education leaders to understand and address the strategic treasury concerns of higher education institutions. His areas of expertise include cash management, mobile payments, card technology, operations efficiency, account structure rationalization, risk mitigation and constituent satisfaction.

James has 24 years of treasury, government and consumer banking experience, with 14 years in relationship management and business development roles. Prior to joining J.P. Morgan in 2000, James began his career at another large financial institution, quickly advancing to develop technology-based treasury solutions for the U.S. federal government, including several closed-loop, card-based payment systems.

A graduate of Regent University, James holds a BS in Organizational Leadership and Management and is also a Certified Treasury Professional (CTP). In addition, he is a Certified Smart Card Industry Professional with special concentration in card payment technology (CSCIP/P). This certification demonstrates his broad knowledge of smart card technology including contact and contactless EMV, Near Field Communications (NFC) and other mobile payment methods leveraging integrated circuit card technology. He is an active member of the national Association for Financial Professionals and the local AFP of Atlanta chapter, where he serves as Treasurer and Board Member. In addition, he serves on the Smart Card Alliance Payments Council.


  1. Diechler, AFP, Feb 6, 2014


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