Deluxe Corp. Chief Executive Barry McCarthy expects the company's payments business to generate more revenue next year than its check-printing business, which has been a mainstay since its founding in 1915.

"Our company is very focused, transforming from a legacy check-printing company, to a payments and data company," McCarthy said. “Sometime in 2023, we believe that our payments business will be the largest in the company's portfolio, and that'll be the first time that's happened in the company's 107-year history."

Deluxe's payments business currently ranks second to the company's check business in terms of revenue generation. For the first quarter, payments generated $166.2 million, which was more than double the same period a year ago, according to a presentation of results. Meanwhile first-quarter earnings before interest, taxes, depreciation and amortization nearly doubled to $36.4 million. 

Its payments business benefited from last year's $960 million acquisition of First American Payments. That payments technology business provides in-store, online, and mobile payments solutions, including processing receivables management and remittance and lockbox processing.

The Minneapolis-based company's other businesses are cloud solutions and promotional solutions, which provide web hosting and branded merchandise.

A spokesperson for the company declined to be more specific about Deluxe’s revenue figures, citing the need to keep information on earnings confidential before a second-quarter release. The spokesperson said Deluxe's second-quarter earnings report is scheduled for Aug. 4.

Earlier this year, Deluxe signed a deal with bill payment platform BillGO in May to provide digitized check delivery of payments, which is expected to increase payment processing annually by billions of dollars.

To be sure, Deluxe isn't getting out of the check business, a spokesperson said. For now, the business is still a money-maker for the company.

McCarthy's interest in changing the company's strategy is understandable given checks’ declining popularity, a trend documented by the Federal Reserve. The coronavirus pandemic exacerbated the movement as a surge in e-commerce spending led to increased digital payments. 

As Mercator Advisory Group noted in December, the “number of checks written annually fell from 22.5 billion in 2012 to 15.5 billion in 2018.” The consulting group also found a spike in peer-to-peer transactions during the same period, from 138 million to 711.7 million in 2018. 

Like others in the payments industry, Deluxe's share price has declined this year, falling by about 30%. Still, McCarthy sees better times ahead for the company, given the financial strength of Deluxe’s payments business.

"The market has taken its pound of flesh to date," he said. “But we have great cash flow, we're growing our revenue, and the company pays a healthy dividend. That's an unusual combination in the industry today, and we think that will continue for the foreseeable future."