![\"Retail](\"https:\/\/dmsretail.com\/RetailNews\/wp-content\/uploads\/2022\/05\/RETAIL-ONLINE-TRAINING-728-X-90.png\")
<\/a><\/p>\n<\/p>\n
Each year, the smallest U.S. companies \u2014 solo practitioners, landscapers, dog walkers or those with a few employees \u2014 handle trillions of dollars of payments via paper checks sent through the postal system.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Lest one thinks this centuries-old payment method is disappearing in the age of the digital wallet and instant payment clearing, it is not. In fact, paper <\/span><\/span><\/span><\/span><\/span><\/span>check use has surged<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>, with more than 90% of businesses using them, according to a report from the Association for Financial Professionals issued in April.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cThey\u2019re not ready for change,\u201d said Dan Holt, co-founder and chief executive of BillGO, a startup that tries to resolve cash-flow problems for small companies by converting incoming paper checks into digital payments. About 33 million U.S. small businesses receive $6 trillion annually in paper-check payments, Holt said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n The company, based in Fort Collins, Colorado, has 154 employees and has raised about $187 million over the past decade since its founding. BillGO <\/span><\/span><\/span><\/span><\/span><\/span>counts 75,000 customers and partner institutions in its payment network, called <\/span><\/span><\/span><\/span><\/span><\/span>BillGO Exchange<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n The platform integrates with bank infrastructure and works with various software tools such as QuickBooks and NetSuite to coordinate incoming payments with invoices and reconcile those. That can accelerate payments from an average 10-day waiting period to as little as one business day, BillGO says.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Holt spoke with sister publication Payments Dive on June 27. This conversation has been edited for clarity and brevity.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Dan Holt<\/p>\n Permission granted by BillGO<\/p>\n \u00a0<\/p>\n<\/figcaption><\/figure>\n DAN HOLT:<\/span><\/span><\/strong> The number one reason they sign up is cash flow. You\u2019re taking something that takes ten days to get to me. You\u2019re giving it to me \u2014 it\u2019s in my bank account the next day. Number two, the part that\u2019s been fascinating to me: we\u2019ve probably made a million reach-outs \u2014 whether calls, emails, whatever \u2014 the one thing that is very consistent is we have not found a single small business that has not had check fraud, an NSF (insufficient funds) or some type of a loss related to their payments with checks.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n We\u2019re going to keep seeing checks easily for 20 years. No doubt about that. I don\u2019t think we\u2019re out of it faster than that. We are unique here in the U.S. I don\u2019t think there\u2019s another country in the world that has 10,000 banks and credit unions. The complexity of that, along with the complexity that we have with all of these different software providers that provide embedded payments. How are all those providers going to connect with all these other businesses? They don’t, and so what ends up happening is, if you use an application like Bill, or use an application like QuickBooks, say you want to make a payment, on a business side, 40% of the time it goes out as a physical check. You don\u2019t even know that it\u2019s happening because you\u2019re working with an application that seems digital, but the payment routing, there\u2019s not a connection.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Anybody that\u2019s receiving a payment from the government that was a check, you\u2019re going to be forced into going digital, right? And I think it creates momentum. Now, how much are they going to be able to pull off? I don\u2019t know. The government says a lot of things, and I take it a little bit with a grain of salt, because it takes a long time. Not saying it won\u2019t happen, but it just takes a long time.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Something that is still blowing my mind today is the percentage of people that choose virtual card over ACH. We started BillGO Exchange as ACH only. We found, as we talked with a lot of potential customers, they didn\u2019t want the ACH. Why? Because (payments) all come in so differently, and they don’t have a good way to reconcile it back and forth. Whereas their merchant acquiring system to accept card is already integrated into their accounts receivable. What fascinates me is 95% of our small businesses choose virtual card over ACH.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n If you\u2019re a small business, you\u2019re manually going to your bank and checking for every single ACH, and then you\u2019re trying to reconcile it. And then, when we send you a card, and we send you the invoice data as well, that then can be automatically reconciled, and we have the ability to help them reconcile their ACH, but they still choose (the) card. Something that we found is people have had issues with ACH and chargebacks and things of that nature. There\u2019s more trust in the card network. Now, of course, The Clearing House would hate for me to say this, and so would the Federal Reserve, but Visa and Mastercard would love me saying this: we found that at the actual small business that (network) brand is very valuable and they trust it a lot.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n This is not new, and they\u2019re struggling to get people to sign up for it. You know, we also love our points. When we make a payment, it’s really a business-to-business payment. This is coming from BillGO to them. But on the consumer side, we\u2019re still seeing people choose their card, whether it’s debit, credit, they choose their card. They have more trust in it. Most people are not comfortable with some retailer just having access to their bank account.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Yep. And if you\u2019ve ever experienced how this works in banking, if you’ve ever experienced a chargeback on ACH, the bank does not give you the money right away. They wait 60 days. They don\u2019t have to give it to you. Visa, Mastercard give it back to you first. Same with American Express, Discover, they give it back to you right away, and then, if it\u2019s validated, they would actually charge you. Whereas the bank, it\u2019s the opposite. I take the money out and then you can dispute it, but I\u2019m not giving it back to you (immediately).<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n There\u2019s always the fraud side, that always worries me. Security and a breach, anything of that nature. It\u2019s also, I would say, us not moving fast enough to take advantage of this opportunity. I mean, think of $6 trillion in checks \u2013 we\u2019re just scratching the surface. We don\u2019t even have 1% market share. I hate saying that, but it\u2019s real.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/p><\/div>\nPAYMENTS DIVE: What incentivizes a small business owner to change their operation and incur the cost of your platform?<\/span><\/span><\/span><\/span><\/span><\/h4>\n
![\"Dan](\"https:\/\/imgproxy.divecdn.com\/GQRlNuWYUwU237H8NlrTn4KGU_ACX1bv8IHnI4Q6C5E\/g:ce\/rs:fit:1600:0\/Z3M6Ly9kaXZlc2l0ZS1zdG9yYWdlL2RpdmVpbWFnZS9EYW5fSG9sdF92Ml9SMV8xLmpwZw==.webp\"\/)
<\/div>\n<\/div>Will we have checks in 10 or 20 years? What\u2019s your estimate on when their use begins to wane?<\/span><\/span><\/span><\/span><\/span><\/h4>\n
What effects do you expect from the executive order <\/span><\/span><\/span><\/span><\/span>migrating the U.S. government<\/span><\/span><\/span><\/span><\/span><\/span><\/span> from paper checks this year? Will that decrease private sector check use?<\/span><\/span><\/span><\/span><\/span><\/h4>\n
How do you approach virtual cards and is small business adopting that technology?<\/span><\/span><\/span><\/span><\/span><\/h4>\n
And what accounts for that?<\/span><\/span><\/span><\/span><\/span>\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/h4>\n
Interesting. What does that say about the future of pay-by-bank, which a lot of people are pushing at the retail level, the Starbucks, the gas station, etc?<\/span><\/span><\/span><\/span><\/span><\/h4>\n
I guess there\u2019s a fear of loss?<\/span><\/span><\/span><\/span><\/span><\/h4>\n
What worries you about the business?<\/span><\/span><\/span><\/span><\/span><\/h4>\n