Here’s Why Digital Disbursements Are Better Than Checks for Insurance and Benefits Companies

Nov 30, 2023

Wondering why digital disbursements make way more sense than using physical checks?

That’s what we’re going to talk about in this article.

Specifically, we’ll cover a few key points, like:

  • The inefficiency of using paper
  • What consumers think of digital versus physical disbursements
  • The company costs involved in using physical checks (and how they can be eliminated)

And more!

Okay, let’s get started.

What’s wrong with using paper?

Companies have been using physical checks for decades, so it might seem like a valid option even today.

But… times have changed. Technology has gotten more advanced.

And sending paper checks, like using phone books, is starting to feel a little outdated. Here are a few reasons why.

Using checks creates delays

Between the time a check gets put in the mail and the time it gets deposited, a lot of time can pass. 

Weeks, in some cases. 

And in an age where people can order an Uber from their phone in a few clicks, there’s a growing expectation that technology will advance in all areas of daily life… And digital disbursements are no exception.

There’s no easy way to track where physical checks are

When you send a check through the mail, it’s next to impossible to tell where it is exactly… unless you’ve specifically requested tracking information. 

In other words?

You can’t tell customers waiting for their payout when they can expect their check with any certainty. 

And that’s frustrating for everyone concerned. With digital payouts, people get their money quickly – without needing to wait for the mail to arrive at some undefined time in the future.

It’s inconvenient to have to go to an ATM to deposit a check

These days, people want – and expect – convenience more than ever before. 

And having to wait days or weeks for the mail to arrive, sign a check, go to the bank, wait in line, and deposit it is anything but convenient. 

That’s a lot of steps for something that should be simple.

Also, if people move away and don’t update their physical address, their check can be sent to the wrong place, which adds to the inconvenience.

What consumers want

As Gen Zs and Millennials are starting to make up a larger and larger percentage of consumers, it’s essential to look at what these consumers (especially Gen Zs, the first generation to grow up with the internet) want. 

And, unsurprisingly, paper isn’t it.


Well, for one thing, using paper raises sustainability questions.

It’s clear that younger generations care more about causes like sustainability than previous generations, and dealing with physical checks takes a toll on the environment: It means more trees need to be cut down and more paper checks and envelopes need to be recycled after being used just one time. 

With digital disbursements, paper doesn’t have to be involved at all, and that’s a huge plus for today’s consumers.

For example, Millennials tend to use digital payment options like Apple Pay 16x more than Baby Boomers, which shows there’s been a shift in how people think about payments in general.

But what do insurance and benefits companies themselves have to gain by going digital? That’s what we’ll look at next.

Going digital means huge cost savings for insurance and benefits companies

Here’s the deal: Checks aren’t just slow and inconvenient. 

They’re also really expensive.


Because you have to factor in all kinds of costs, like the cost of buying enough paper, envelopes, postage, ink, etc. to mail thousands of checks. 

And that’s not even taking into account the time it takes employees to get the right check to the right consumer.

So, yes, writing checks can be a major expense. 

How major?

According to Bank of America, B2B payments made by check can cost up to $20 or more – per payment. On the flip side, digital disbursements cost 60% less

The future of digital disbursements

So, what does all this mean?  

More and more, people are moving away from physical checks – for all kinds of reasons. Whether it’s because of convenience, sustainability concerns (or a mix of both), one thing is clear: 

It’s time for companies to adjust so they can stay relevant, meet customer demand, and ultimately, save money. Follow our blog using the form below to stay in the know on all things insurtech.