Deluxe Isn’t Just Paper Checks Any Longer

Deluxe Isn’t Just Paper Checks Any Longer

Although the death of paper checks has long been predicted, and has largely occurred in Europe, paper is still strong in the United States. So it’s no surprise that Deluxe Corporation continues to prosper — it ships 150,000 packages of checks a day, said CEO Barry McCarthy.

But those paper checks account for less than 38% of revenue at the 105-year old company, he added. Over the last decade Deluxe has diversified to payments, cloud services and promotional products — businesses each producing hundreds of millions in revenue. Rather than discuss the printed check business, McCarthy prefers to talk about how Deluxe supports small businesses, from their very beginnings — getting registered and obtaining any necessary licenses, to payments from payroll to treasury management and lockbox operations.

Before McCarthy moved from First Data to Deluxe, the company acquired Wausau Financial, which most lockboxes use, he said. In the fourth quarter of 2019 Deluxe took over the lockbox operations of Fiserv.

“We have massive scale that no one else has and we do it in a very efficient way so companies don’t have to do it themselves,” he added.

“Today the company supports about 4.5 million small businesses, 4,000 financial institutions (FIs) and processes $2.8 trillion in payments annually on behalf of billers. We have massive scale in payments and going forward have huge opportunity to provide additional solutions, especially in health care and disbursements.”

Through cloud services Deluxe offers everything from logo design to web hosting (4.5 million small business web sites) and logistics services. More recently it has grown its promotional business. Need coffee mugs with your logo for a trade show? Deluxe can do it.

“We can print logos on anything,” McCarthy said. That includes Mazda branded merchandise for dealerships. And when Mazda Racing goes to the track, Deluxe is there with uniforms for drivers and branded products for spectators to buy.

“In our go to market strategy we think about the lifecycle of a business rather than individual products, which is why all these pieces make sense to have in one company.”

Deluxe has acquired more than 50 companies over the last seven years but only recently focused on integrating them, McCarthy said.

Instead of running 50 different sales teams across the company, it can go to customer and ask about their problems and what they need.

“If they need data-driven marketing, promotional materials or payroll help, we can bring in experts.” In addition to providing paper checks, Deluxe has developed e-checks. “All you need to know is the amount and the recipients email address,” McCarthy explained. Then it lets the payer, such as a health insurance or property insurance company, send an email to the person it wants to pay. The recipient can print the check and deposit it like a normal check, put it on a Visa debit card, deposit it to a PayPal account or transfer the money directly to her bank account using an ACH transfer.

“I think we are moving to a time when the consumer has a choice in how they get paid,” said McCarthy. “We’re into our second year of the e-check product and have been relatively quiet about it, but when you think of the billions of non-recurring checks written each year by financial institutions, health care and insurance, it is a huge problem solver. We take out all the handling cost and can get the customer paid much more quickly.”

Deluxe has also become a video producer with The Small Business Revolution airing on Amazon Prime and Hulu, an eight-part series that is in its fifth season. The show goes to a small town, selected through a national competition, and invests $500,000 and a lot of expertise in revitalizing its businesses through improving web presence, financials and shop design. The show breaks out some of the advice in short videos on the Deluxe web site.