What Is Lockbox Payment Processing? Why Banks and Businesses Still Rely on It

Checks might seem outdated until you look at the numbers. According to the 2024 AFP Payments Fraud report, about 75% of U.S. businesses still accepted checks, and nearly 70% said they weren’t planning to stop anytime soon. That includes everything from regional hospitals to nationwide B2B firms.

Meanwhile, check fraud has surged: 63% of organizations experienced attempted or actual fraud involving checks in 2022. And that’s just what got reported.
So, if checks are still here and riskier than ever, how do you process them safely, and without bogging your finance team down?

Lockbox payment processing is a modern, secure way to handle payments that haven’t gone digital yet. Let’s break down what a lockbox is, how it works, and why businesses still rely on it in 2025.

What Is a Lockbox?

A lockbox is a safe, outsourced mailbox for payments.

Instead of having customers mail checks to your office, you direct them to a secure P.O. box managed by a lockbox service provider. That provider opens the mail, scans the check, makes the deposit, and sends you the remittance data. It’s hands-off for your team, but with better tracking, faster processing, and fewer security risks.

There are two variations of lockbox services:

Retail lockbox: Designed for small-dollar payments that often include coupons, such as utilities, clinics, and school districts.
Wholesale lockbox: Better for B2B payments. Fewer checks, higher amounts, and usually no coupon attached.

How Lockbox Services Actually Work

So, what does this process really look like, day to day?

You update your payment instructions. From now on, checks go to a secure P.O. box managed by your provider.
The provider collects the mail, often more than once a day.
Each envelope is opened, scanned, and logged. Checks are verified and prepped for deposit.
Lockbox deposits are made, usually the same day.
You receive digital check images, remittance files, and a daily report you can plug right into your ERP or accounting tool.

For teams used to piles of mail on a receptionist’s desk, or worse, checks getting lost in internal routing, this process is a relief. No one must key in amounts by hand. No one needs to guess where the check came from.

Where Electronic Lockbox Fits In

Customers aren’t only mailing checks. A lot of payments come through online portals, walk-in centers, or bank bill-pay systems. These payments might arrive electronically, but they still require processing.

That’s the role of an electronic lockbox. Also called eLockbox, it gathers digital payment data from multiple sources and formats it just like traditional check remittances. That way, your accounting system doesn’t care whether the payment came from an envelope or a web form.

For finance teams juggling both paper and digital inflows, electronic lockbox services make life easier. Instead of managing two workflows, they consolidate them all into one stream, clean, searchable, and ready to post.

Why Lockbox Payment Processing Still Makes Sense in 2025

Some leaders assume this kind of setup is obsolete. But if you’re still accepting checks, and most organizations are, it’s probably more relevant now than ever.

Here’s why:

Checks are a growing fraud risk: Just in 2023, FinCEN tracked more than $688 million in suspicious activity tied to mail-theft-based check fraud. That’s not small.
Fraud targeting is shifting: Organized crime rings now target business checks in transit. The longer those checks sit unprocessed in your building, the more vulnerable you are.
Same-day deposits matter: Faster lockbox deposits mean quicker access to funds and stronger cash flow. That’s a finance and operations benefit.
Regulatory expectations are rising: Especially in healthcare, government, and finance, documenting your payment-handling process isn’t optional.
Audit trails are automatic: Scanned images, timestamps, and processing logs come standard with most lockbox services.

What Finance Teams Actually Get Out of It

CFOs and controllers are using lockbox payment processing to clean up AR and improve reporting.

When it’s working well, here’s what that looks like:

Staff spend less time sorting envelopes or correcting misapplied payments.
Remittance files come pre-formatted for your system, not someone else’s.
OCR (optical character recognition) or ICR (intelligent character recognition) cuts down on manual entry errors.
Cash application becomes a daily task, not a month-end panic.
Finance can track payments against outstanding receivables in near-real time.

Is In-House Still a Viable Option?

Sometimes, yes.

Remote deposit capture (RDC) can work for businesses with low volume or very simple payment structures. You scan checks internally and deposit them electronically. Easy enough.

But for companies handling multiple payments per day, documents that require verification (like rebate forms or EOBs), or invoices that don’t always match check amounts, RDC starts to fall apart.

A lockbox for checks gives you scale, built-in redundancy, and better data. You don’t have to rely on a single staffer to get it all done, especially during busy periods or year-end chaos.

How Third-Party Lockbox Providers Stand Apart

Banks offer lockbox services, but they’re not always the most flexible partners.

At CheckIssuing, we’ve designed our lockbox service to fit around your needs, not force you into rigid templates.

We handle:

Traditional checks, but also forms, rebates, surveys, and title documents.
Custom remittance file formats to match your accounting software.
High-volume and low-volume clients with equal precision.
Secure, same-day lockbox deposits with full image capture and archival.

If you need to test the system first, we support parallel onboarding, so your team can verify everything works before flipping the switch.

If you work with multiple banks, our systems can split deposits and remittance data wherever you need.

This Might Be the Right Time to Rethink Your Process

Payment processing isn’t glamorous. But when it goes wrong, it eats up time, money, and trust.

If you’re still handling checks in-house or piecing together digital payments from multiple inboxes, there’s probably a better way.

We built our lockbox services for finance teams that need flexibility, speed, and confidence. Whether you’re reconciling paper checks, capturing rebate forms, or pulling together payments from five different portals, we can help you sort it out.

At CheckIssuing, our job is to help you move money safely and efficiently without pulling your team off high-value work.

Want to see how it works? Reach out today to schedule a demo or talk through what a solution might look like for your team.

Key Takeaways

Lockbox payment processing outsources check handling to a secure provider, reducing fraud and manual work.
Two types exist: retail lockbox (small-dollar, coupon-based payments) and wholesale lockbox (high-dollar B2B payments).
Electronic lockbox (eLockbox) consolidates both digital and paper payments into one workflow.
Lockbox services improve security by preventing in-house delays and providing audit trails with images, timestamps, and deposits.
In 2022, 63% of organizations experienced check fraud, and in 2023 FinCEN tracked $688M in suspicious activity tied to mail-theft-based check fraud — making secure lockbox solutions more critical than ever.