With checks in fast decline, banks must transform U.S. corporate payments structure.(Headline)

While paper checks are the primary method of business-to-business payments in the U.S., new research from TowerGroup argues that a "tipping point" is fast approaching. After years of anticipation of a "checkless" society, a combination of electronic payment types are poised to replace the check as the primary vehicle for transferring funds between two commercial parties.

TowerGroup cites several indicators of this approaching sea-change, including recent Federal Reserve estimates of non-cash payments and several major corporate surveys, as well as the influence of globalization and the long-term impact of Check 21 legislation.

"With the growth of corporate electronic payments poised to explode, we are rapidly reaching a critical point in the transformation of domestic cash management," said Susan Feinberg, senior analyst in the Wholesale Banking research service at TowerGroup and author of the research. "Many business-to-consumer payments are already made electronically, and a majority of U.S. corporations indicate plans to migrate the bulk of their business-to-business payments to electronics within three years."

Given this, Feinberg added, "there is a growing urgency for banking executives to reorient their check-centric product management and development focus, to facilitate payment and remittance processing in a complex world of rapidly converging payment methods."

Highlights of the research include:

* Pundits have alternately predicted or mocked the concept of a checkless society in the U.S. for over 30 years. While TowerGroup is not prepared to sign the death certificate for the corporate check any time this decade, its heyday has clearly passed.

* Traditional cash management ...