Deluxe Corporation was founded in 1915 and was incorporated under the laws of the State of Minnesota in 1920. Our principal corporate offices are located at 3680 Victoria Street North, Shoreview, Minnesota 55126-2966. Our main telephone number is (651) 483-7111 and our web address is www.deluxe.com.

Our product and service offerings are comprised of the following:

Revenue by product and service category, as a percentage of consolidated revenue, for the years ended December 31 was as follows:

In support of our strategy, we are investing significant resources to build out our technology platforms, including sales technology that enables a single view of our customers, thereby providing for deeper cross-sell opportunities. We implemented a human capital management system in January 2020, and we are also investing in our financial tools, including an enterprise resource planning system and a financial planning and analysis system. Strategically, we believe these enhancements will allow

Initially, our focus will be to accelerate revenue growth organically, which we then plan to supplement with selective, strategic acquisitions and partnerships. While we will continue to advancesell to enterprise, small business, financial services and individual customers, our MOSbusiness is no longer organized by customer type. Instead, effective January 1, 2020, we began managing the company based on our product and service offerings, both via acquisitionsfocusing on the 4 primary areas mentioned earlier: Payments, Cloud Solutions, Promotional Solutions and internal development. In recent years,Checks. We expect to reinvest free cash flow into the 2 areas we have acquired a number of businesses that have expandedview as our MOS offerings, including dataprimary platforms for growth: Payments and analytics-driven marketing solutions and treasury management solutions. Sales of these higher growth services are expected to represent an increasing portion of our revenue. Additional information concerning our acquisitions appears under the caption “Note 5: Acquisitions”Cloud Solutions. We appointed general managers for each of the Notes4 new focus areas and we continue to Consolidated Financial Statements appearing in Item 8 ofrefine our new organization. Realignments such as this report. We expect that providing a growing selection of productstake time, considerable senior management effort, material "buy-in" from employees and services will offset the impacts of the decline in check usage and the continued pricing pressure we are experiencing in our check programs. As such, we focus on accelerating the pace at which we introduce new products and services, utilizing client feedback and market research to identify client needs and gaps. We have also invested in extending the Deluxe brand to increase brand awareness and loyaltysignificant investment. Beginning in the first quarter of 2020, the 4 focus areas become our reportable business segments, and we will begin reporting financial services market beyond check-related solutions.results under this new segment structure.

Financial Services continuesWe are also continuing our efforts to simplify processes, eliminate complexityduplicative processes and lower costs. As part of our cost reduction initiatives, we expect to continue enhancing our strategic supplier sourcing arrangements and assessing our real estate footprint. During 2017,2019, we closed administrative9 facilities, located in Omaha, Nebraska and Lincoln, Nebraska. During 2016, we closed a warehouse located in Nashville, Tennessee and during 2015, we closed a call center located in Plymouth, Michigan, as well as a warehouse located in Livonia, Michigan. Theintegrating these operations of these facilities were integrated into existing Financial Services operations.locations.

According to the Federal Reserve study released in December 2016, debit card, credit card and ACH payments all exceeded the number of checks written in 2015. Approximately 19.4 billion checks were written in 2015, accounting for approximately 13% of all non-cash payment transactions. This is a reduction from the Federal Reserve Study released in December 2013 when checks written accounted for approximately 17% of all non-cash payment transactions. Checks written includes check payments and checks converted to ACH payments, which uses the check as a source document to initiate the ACH payment. The Federal Reserve estimates that checks written declined at an annual rate of approximately 4.8% between 2012 and 2015, a slower decline than the 8.8% annual decline documented between 2009 and 2012. In December 2017, the Federal Reserve released a supplement to its 2016 study. This supplement did not update the data regarding checks written; however, it did indicate that the annual decline in check payments was 3.1% between 2012 and 2015, lower than the December 2016 estimate of 4.4%. In 2018, we anticipate check orders to decline approximately 7%, slightly higher than our 2017 decline rate. We expect that the number of checks written will continue to decline due to the increasing use of alternative payment methods, including credit cards, debit cards, direct deposit, wire and ACH transfers, and internet-based bill paying services, as well as automated teller machines.

In recent years, weEconomic conditions have a significant impact on our small business customers. We believe the economy negatively impacted our operating results and/or our growth opportunities in our Small Business Services segment. We believethat small businesses are more likely to be significantly affected by economic conditions than larger, more established companies. During a sluggish economy, it may be more difficult for small businesses to obtain credit and small businessesthey may choose to spend their limited funds on items other than our products and services. In addition,As such, the December 2017 repeal of net neutrality rules could negatively affect our small business customers. If small businesses are forced to pay higher fees to maintain adequate speeds for their websites, it could reduce their spending on our products and services. The National Federation of Independent Business (NFIB) publishes the results of quarterly surveys which provide an indicationlevel of small business owners' viewconfidence and the rate of economic conditions.small business formations and closures impact our business. The index of small business optimism published by the NFIBNational Federation of Independent Business (NFIB) was 102.7 in December 2017 was 104.9, down slightly from 105.8 in December 2016. For 2017,2019, consistent with the average index was 104.8, up significantlyfor 2019 of 103.0, but down from the 96.3 average index of 106.7 reported in 2016.2018. At the same time, the net percent of small business owners expecting general businesseconomic conditions to be better in 6 months, declined to 37%as published by the NFIB, held steady at 16% in December 2017,2019, the same as compared to 50% in December 2016. Although there continues2018. Additionally, consumer spending and employment levels remained strong throughout 2019. Overall, the small business economy appeared to be some optimism from small business owners, including some belief that they will benefit from federal tax reform under the Tax Cuts and Jobs Act of 2017,healthy in 2019. However, we cannot predict whether sustainable positiveeconomic trends will translate into economic growth. We also cannot predict whether economic trendsaffecting small businesses will improve, stay the same or worsen in the near future.

SalesA significant portion of our business checks and forms have been declining, and we expect this trend to continue. In addition torelies upon the decrease in the use of checks due to the availability of alternative payment methods, continual technological improvements have provided small business customers with alternative means to execute and record business transactions. For example, becausehealth of the lower price and higher performance capabilities of personal computers, printers and mobile devices, small businesses now have alternate means to print many business forms. Additionally, electronic transaction systems, off-the-shelf business software applications, web-based solutions and mobile applications have been designed to replace pre-printed business forms. Greater acceptance of electronic signatures also contributes to the overall decline in printed products. It is difficult to predict the pace at which these alternative products and services will achieve widespread acceptance and replace standardized business forms.

Over the past 2 years, we have provided check-related products and consolidations impact large portionsservices to over 4.0 million consumers directly, and to millions more through our financial institution clients. In addition to the prevalence of our customer base, this could havealternative payment methods, personal check orders are also affected by consumer confidence, unemployment levels, consumer spending and housing stock and starts. Consumer spending and employment levels remained strong throughout 2019. According to statistics released by the U.S. Census Bureau in January 2020, housing units completed in 2019 through November increased approximately 5.6% as

In addition to competition from the check printing portiondigitization of the payments, industry, we also face considerableintense competition from another large check printer in our traditional financial institution sales channel, from direct mail and internet-based sellers of personal and business checks, from check printing software vendors and from somecertain significant retailers. We expect competitionPricing continues to remain intensebe competitive in our financial institution sales channel, as financial institutions seek to maintain their previous levels of profitability, even as check usage continues to decline. Moreover, the check product must compete with alternative payment methods, including credit cards, debit cards, direct deposit, wire transfers, internet-based bill paying servicesdeclines. The market for business forms is also intensely competitive and digital wallet applications, as well as automated teller machines. The principal factors on which we compete are producthighly fragmented. Current and service breadth, price, qualitypotential competitors include traditional storefront printing companies, office superstores, wholesale printers and check merchandising program management. online printing companies.

The various markets for our service offerings are intensely competitive. Our Financial Services MOScompetitors range from large and established companies to emerging start-ups. These service offerings are also face intense competition, including competition fromrapidly evolving, creating opportunities for new competitors to enter the market. Current and potential competitors include, among others, financial institution core banking software providers, numerous financial technology service providers, advertising agencies, providers of data and analytics marketing solutions, companies offering website design and numeroushosting and domain name registration, email and social media marketing services companies, payroll service providers and ePayments service providers. In addition, many of our potential financial technology servicesinstitution clients have historically developed their key applications in-house and thus, we must also compete with their in-house capabilities.

The market for promotional products is also intensely competitive and highly fragmented. Current and potential competitors include traditional storefront printing companies, office superstores, wholesale printers, online printing companies and small business product resellers, as well as providers offering services such as customerof custom apparel and account acquisition, fraud and security risk management, receivables management and treasury support services, and rewards and loyalty solutions. We expect the intensity of competition to increase from established and emerging financial technology companies.gifts. The competitive factors affecting Financial Services MOSlandscape for online suppliers continues to be challenging as new internet businesses are introduced.

We believe we are well-positioned in this competitive landscape through our broad customer base, the breadth of our product and service offerings, include breadthmultiple distribution channels, established relationships with our financial institution and quality of services,enterprise clients and other partners, competitive pricing tiers, the ease of use price, solution completeness, responsivenessof our web and other services, our high quality and our dependable service.

We continue to focus on improving the customer experience by providing excellent service and quality, while increasing our productivity and reducing our costs. We accomplish this by embedding lean operating principles in our manufacturing processes, while emphasizing a culture of customer support,continuous improvement. We have a shared services approach, which allows our businesses to leverage shared manufacturing facilities to optimize capacity utilization and enhance operational excellence. We continue to reduce costs by utilizing our assets and printing technologies more efficiently and by enabling employees to better leverage their capabilities and talents.

The secure and uninterrupted operation of our networks and systems, as well as the abilityprocessing, maintenance and confidentiality of the sensitive information that resides on our systems, is critical to manage end-to-end financial institution processes.

We experience seasonal trends in saleshave a risk-based cybersecurity program dedicated to protecting our data and solutions. We employ a defensive in-depth strategy, utilizing the concept of somesecurity layers and the CIA (confidential, integrity and availability) triad model. Organizationally, we have an Enterprise Risk Management Steering Committee led by our Assurance and Risk Advisory Services group, our Chief Financial Officer and our Chief Administrative Officer, with participation from our Chief Information Officer, our Chief Strategy Officer, our Chief Compliance Officer and our Chief Information Security Officer. This committee assesses and monitors our top enterprise risks, including cybersecurity, and provides quarterly updates to our board of directors. Our Chief Information Security Officer also provides periodic updates to our products. For example, holiday cardboard of directors. In addition, we have an Enterprise Information Risk Management program and retail packaging salesCyber Incident Response teams designed to ensure compliance with our security policies and revenuesprotocols. These teams are composed of personnel from rewards and loyalty solutions,across the company, as well as searchoutside experts in some cases, who are tasked with ensuring that we are monitoring the effectiveness of our cybersecurity management programs.

In the event a cybersecurity incident is identified, we have established an Incident and email marketing,Crisis Response Program to ensure communication to our executive leadership team and to coordinate the response to any incident. Our Chief Executive Officer, Chief Financial Officer, General Counsel, Chief Information Security Officer and Chief Compliance Officer are typically stronger inresponsible for assessing such incidents for materiality, ensuring that any required notification or communication occurs and determining whether any prohibition on the fourth quartertrading of the year dueour common stock by insiders should be imposed prior to the holiday season. Salesdisclosure of tax forms are stronger in the first and fourth quarters of the year, and check sales for our Direct Checks segment have historically been stronger in the first quarter of the year. In addition, we may experience some fluctuations in revenue driven by our customers' marketing campaign cycles.information about a material cybersecurity event.

Materials, SuppliesFor more information on risks related to data security, see Item 1A, "Operational Risks – Security breaches, computer malware or other cyber attacks involving the confidential information of our customers, employees or business partners could substantially damage our reputation, subject us to litigation and Service Providersenforcement actions, and substantially harm our business and results of operations."

The principal materials used in producing our main products are paper, plastics, ink, cartonscorrugated packaging and printing plate material, which we purchase from various sources. We also purchase stock business forms and promotional apparel produced by third parties. We believe that we will be able to obtain an adequate supply of materials from current or alternative suppliers.

We have entered into agreements with third-party providers for delivery services and information technology services, including telecommunications, and network server and transaction processing services. We also rely upon third parties to provide a portion of the data used to maintain our proprietary and non-proprietary databases, including credit and non-credit data from the national credit bureaus and other data brokers. We believe we would be able to obtain an alternative source of supply if one or more of our service providers failed to perform.

We are subject to numerous international, federal, state and local laws and regulations that affect our business activities in several areas, including, but not limited to, labor, advertising, taxation, data privacy and security, digital content, consumer reports, consumer protection, online payment services, real estate, e-commerce, intellectual property, health care, environmental matters, and workplace health and safety. The cost of complying with these laws and regulations is significant and regulators may adopt new laws or regulations at any time. We believe that our business is operated in substantial compliance with all applicable laws and regulations. FurtherFor further information, regarding the impact of specific laws and regulations can be found insee Item 1A, of this report. At this time,"Legal and Compliance Risks – Governmental regulation is continuously evolving and could limit or harm our business." On January 1, 2020, the California Consumer Privacy Act (CCPA) became effective. Among other requirements, businesses subject to the CCPA are required to proactively explain privacy notices to consumers when personal information is collected and it provides California residents the right to demand that company-held personal data be shared with them or deleted. While several other states and the federal government are currently considering similar legislation, we are not aware of any additional changes in laws or regulations that will have a significant impact on our business during 2018, with the exception of the Tax Cuts and Jobs Act that was enacted in December 2017 (the 2017 Act). We expect that our annual effective income tax rate for 2018 will be approximately 25% and we expect that our total tax payments in 2018 will be approximately $25.0 million less than in 2017, driven primarily by the 2017 Act.2020.

We rely on a combination of trademark and copyright laws, trade secret and patent protection and confidentiality and license agreements to protect our trademarks, software and other intellectual property. These protective measures afford only limited protection. Despite our efforts to protect our intellectual property, third parties may infringe or misappropriate our intellectual property or otherwise independently develop substantially equivalent products or services that do not infringe on our intellectual property rights, either of which may adversely impact our results of operations. In addition, we may be the target of aggressive and opportunistic enforcement of patents by third parties, including non-practicing entities.

As of December 31, 2017,2019, we employed 5,1195,584 employees in the United States, 657U.S., 653 employees in Canada and 110115 employees in Australia and Europe. None of our employees are represented by labor unions, and we consider our employee relations to be good.

We make available through our investor relations website, Deluxe.com/www.deluxe.com/investor, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports filed or furnished pursuant to section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after these items are electronically filed with or furnished to the SEC. These reports can also be accessed via the SEC website, sec.gov, or via the SEC's Public Reference Room located at 100 F Street N.E., Washington, D.C. 20549. Information concerning the operation of the SEC's Public Reference Room can be obtained by calling 1-800-SEC-0330.sec.gov.

A printed copy of this report may be obtained without charge by calling 651-787-1068, by sending a written request to the attention of Investor Relations, Deluxe Corporation, P.O. Box 64235, St. Paul, Minnesota 55164-0235, or by sending an email request to investorrelations@deluxe.com.

Further information about Deluxe Corporation is also available at Deluxe.com,www.deluxe.com, facebook.com/deluxecorp and twitter.com/deluxecorp.

We have adopted a Code of Business Ethics that applies to all of our employees and our board of directors. The Code of Business Ethics is available on our investor relations website, Deluxe.com/www.deluxe.com/investor, and also can be obtained free of charge upon written request to the attention of Investor Relations, Deluxe Corporation, P.O. Box 64235, St. Paul, Minnesota 55164-0235. Any changes or waivers of the Code of Business Ethics will be disclosed on our website. In addition, our Corporate Governance Guidelines and the charters of the Audit, Compensation, Corporate Governance and Finance Committees of our board of directors are available on our website or upon written request.

Our executive officers are elected by the board of directors each year. The following summarizes our executive officers and their positions.

Our business, prospects,businesses routinely encounter and address risks, many of which could cause our future results of operations, financial condition and cash flows couldto be adversely affected by various risks and uncertainties.materially different than we currently anticipate. These risks include, but are not limited to, the principal factors listed below and the other matters set forth in this Annual Report on Form 10-K. We have disclosed all currently known material risks. We are also subject to general risks and uncertainties that affect many other companies, including overall economic, industry and market conditions. Additional risks not presently known to us, or that we currently believe are immaterial, may also adversely affect us. You should carefully consider all of these risks and uncertainties before investing in our common stock or other securities.stock.

The following important factors could causestrategic plan we announced during the second quarter of 2019 contemplates that our actualstrategic and tactical initiatives will result in, among other things, sustained organic revenue growth and strong segment adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margins. We plan to achieve these results through a variety of initiatives, including greater integration of operations and technology platforms, a more streamlined sales process, more targeted cross-selling to differ materially fromour existing customer base, growing that customer base and reducing our cost structure. In support of these initiatives, we anticipate that we will expend significant resources on infrastructure investments to scale the statements we make from time to time regarding our expected future results, including, but not limited to, forecasts regarding revenue, earnings per share, cash provided by operating activities and expected cost savings. Any forecast reflects various assumptions that are subject to significant uncertainties and, as a matter of course, may prove to be incorrect. Further, the achievement of any forecast depends on numerous factors that are beyond our control. Consequently, we caution investors that forward-looking statements are predictions based on our current expectations about future events and are not guarantees of future performance. The variation of actual results or events from such statements may be material and adverse. You are cautioned not to base your entire analysis of our business and prospects upon isolated statements,to advance our ability to accelerate revenue growth, including investments in enterprise resource planning, customer relationship management and are encouraged to use the entire mix of historical and forward-looking information made available by us, and other information affecting us and our products and services, including the following factors.

Our success depends on our ability to attract new and returning customers in a cost-effective manner. We use a variety of methods to promote our products and services, including a direct mail advertising,sales force, partner referrals, email marketing, purchased search results from online search engines, direct mail advertising, broadcast media, advertising banners, social media and other online links. The profitabilityCertain of our Direct Checks segment depends in large part on our ability to secure adequate advertising media placements at acceptable rates. We can provide no assurance regarding the future cost, effectiveness and/these methods may become less effective or availability of suitable advertising media. Additionally,more expensive. For example, our Direct Checks segment and portions of our Small Business Services segment have, at times, experienced declines in response rates related tofor direct mail promotional materials. While we believe that media response ratesadvertising have declined across a wide variety of productsbeen decreasing for some time, internet search engines could modify their algorithms or increase prices for purchased search results or certain partner referrals could decline. We continually evaluate and services, we believe that the declines we have experienced are also attributable to the decline in check usage, the gradual obsolescence of standardized forms products and the increasing use of e-commerce by both consumers and small businesses. In an attempt to offset these impacts, we continually modify our marketing and sales efforts and continue to shift a greater portionachieve the most effective mix of our advertising investment to the internet.promotional methods. Competitive pressure may inhibit our ability to reflect increased costs in the prices of our products and services and/or new marketing strategies may not be successful. We can provide no assurance that we will be ableEither of these occurrences would have an adverse impact on our ability to offset a decline in response rates, even with additional marketingcompete and sales efforts.

WeAdditionally, we believe we must maintain a relevant, multichannel experience for ourin order to attract and retain customers. Customers expect to be ablehave the ability to order products and services from us however they please,choose their method of ordering, whether that is via the mail, land-linecomputer, phone computer, tablet or

Although we are one of thea leading check printersprinter in the United States,U.S., we face considerable competition.competition in the check printing portion of the payments industry. In addition to competition from alternative payment methods,the digitization of payments, we also face intense competition from another large check printer in our traditional financial institution sales channel, from direct mail and internet-based sellers of personal and

We can provide no assurance that we will be able to increase pricescompete effectively against current and future competitors. Our competitors may develop better products or technologies and may be able to adapt more quickly to new or emerging technologies and changes in the future while remaining competitive.customer requirements. Continued competition could result in price reductions, reduced profit margins and/or loss of customers, and an increase in up-front cash payments to financial institutions upon contract execution or renewal, all of which would have an adverse effect on our results of operations and cash flows.

We have acquired over 25 companies incompleted several acquisitions during the lastpast 3 years, the details of which appear under the caption “Note 5:6: Acquisitions” of the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report. We have invested inThese acquisitions that offer marketing solutions and other services and that extend theextended our range of products and services, we offer to financial institutions and small businesses, including treasury management and data-driven marketing solutions.solutions and web services. In addition, over the past several years, we have purchased the operations of manyseveral small business distributors with the intention of growing revenue in our majorenterprise accounts and dealer channels. The integration of any acquisition involves numerous risks, including, among others:

One or more of these factors could impact our ability to successfully operate, integrate or leverage an acquisition and could negatively affect our results of operations.

We expecthave indicated that we plan to continue to invest in acquisitions.supplement organic revenue growth with strategically targeted acquisitions over time. The time and expense associated with finding suitable businesses, technologies or services to acquire can be disruptive to our ongoing business and may divert management’s attention. We

A component of our brand promotion strategy is establishing abuilding on our relationship of trust with our customers, which we believe can be achieved by providing a high-quality customer experience. We have invested, and will continue to invest, resources in website development, design and technology, and customer service and production operations. Our ability to provide a high-quality customer experience is also dependent on external factors, including the reliability and performance of our suppliers, telecommunications providers and third-party carriers. If we are unableOur brand value also depends on our ability to provideprotect and use our customers' data in a high-quality customer experience for any reason,manner that meets expectations. A security incident that results in unauthorized disclosure of our reputation may be harmed andcustomers' sensitive data could materially harm our efforts to develop brand loyalty could be adversely impacted.reputation. The failure of our brand promotion activities to meet our expectations or our failure to provide a high-quality customer experience for any reason could adversely affect our ability to attract new customers and maintain customer relationships, which would adversely harmingharm our business and results of operations.

Changes in the nature of technology solutions used by small businesses and their customers may occur rapidly. In addition, theThe markets for many of the products and services provided by our Financial Services segmentwe provide are characterized by constant technological changes.change and innovation. The introduction of competing products and services using new technologies, the evolution of industry standards or the introduction of more attractive products or services, including the digitization of payments, could make some or all of our products and services less desirable, or even obsolete. These potential changes are magnified by the intense competition we face. To be successful, our technology-based products and services must keep pace with technological developments and evolving industry standards, address the ever-changing and increasingly sophisticated needs of our customers, and achieve market acceptance. Additionally, we must differentiate our service offerings from those of our competitors and from the in-house capabilities of our customers. We could lose current and potential customers if we are unable to develop products and services that meet these changing demands in a timely manner. Additionally, we must continue to develop our skills, tools and capabilities to capitalize on existing and emerging technologies, and this requires us to incur substantial costs. Any of the foregoing risks could result in harm to our business and results of operations.

Intense competition, secular declines in the use of checks and business forms and the commoditization of web services compel us to continually improve our operating efficiency in order to maintain or improve profitability. Additionally, we intend to utilize structural cost savings to fund a large portion of the investments required to implement our One Deluxe strategy. Cost reduction initiatives have required, and will continue to require, up-front expenditures related to items such as redesigning and streamlining processes, consolidating information technology platforms, standardizing technology applications, further enhancing

The secure and uninterrupted operation of our networks and systems, as well as the processing, maintenance and confidentiality of the sensitive information that resides on our systems, is critical to our business operations and strategy. We have a risk-based cybersecurity program dedicated to protecting our data and solutions. We employ a defensive in-depth strategy, utilizing the concept of security layers and the CIA (confidential, integrity and availability) triad model. Computer networks and the internet are, by nature, vulnerable to unauthorized access. An accidental or willful security breach could result in unauthorized access and/or use of customer information, including consumers' personally identifiable information. Our security measures could be breached by third-party action, computer viruses, accidents, employee or contractor error, or malfeasance by rogue employees. In addition, we depend on a number of third parties, including vendors, developers and partners, that are critical to our business and to which we may grant access to our customer or employee data. While we conduct due diligence on these third parties with respect to their security and business controls, we rely on them to effectively monitor and oversee these control measures. Individuals or third parties may be able to circumvent these controls and/or exploit vulnerabilities that may exist, resulting in the disclosure or misuse of sensitive business and personal customer or employee information and data.

We have entered into agreements with third-party providers for information technology services, including telecommunications, network server, cloud computing and transaction processing services. In addition, we have agreements with companies to provide services such as online payment solutions. A service provider's ability to provide services could be disrupted for a variety of reasons, including, unauthorized access, computer viruses, accidentalamong others, human error, software errors or intentional actions,design faults, security breaches, power loss, telecommunications failures, equipment failures, electrical disruptions, orlabor issues, vandalism, fire, flood, extreme weather, terrorism and other conditions.events beyond their control. In the event that one or more of our service providers is unable to provide adequate or timely information technology services, our ability to deliver products and services to our customers could be adversely affected. Although we believe we have taken reasonable steps to protect our business through contractual arrangements with our service providers, we cannot completely eliminate the risk of disruption in service. Any significant disruption could harm our business, including damage to our brand and loss of customers. Additionally, although we believe that information technology services are available from numerous sources, a failure to perform by one or more of our service

For us to successfully grow and compete, we must recruit, retain and develop the key personnel necessary to execute our growth strategy. This is of particular importance as we realign our existing operations in economic conditions that negatively affectssupport of our actualgrowth strategy. The success of this realignment and forecasted operating results;

We are subject to risks associated with the cost and availability of paper, plastics, ink, retail packaging supplies, promotional materials and other raw materials. Paper costs represent a significant portion of our materials expense. Paper is a commodity and its price has been subject to volatility due to supply and demand in the marketplace, as favorablewell as thosevolatility in the raw material and other costs incurred by our paper suppliers. There are also relatively few paper suppliers and these suppliers are under financial pressure as paper use declines. As such, when our currentsuppliers increase paper prices, we may not be able to obtain better pricing from alternative suppliers. Historically, we have not been negatively impacted by paper shortages because of our relationships with paper suppliers. However, we can provide no assurance that we will be able to purchase sufficient quantities of paper if such a shortage were to occur.

We may be liable for fraudulent transactions conducted on our websites, such as the use of stolen credit facility, which wouldcard numbers. While we do have safeguards in place, we cannot prevent all fraudulent transactions. To date, we have not incurred significant losses from payment-related fraud. However, such transactions negatively affectimpact our results of operations and cash flow.could subject us to penalties from payment card associations for inadequate fraud protection.

We are subject to numerous international, federal, state and local laws and regulations that affect our business activities in several areas, including, but not limited to, labor, advertising, taxation, data privacy and security, digital content, consumer reports, consumer protection, online payment services, real estate, e-commerce, intellectual property, health care, environmental matters, and workplace health and safety. The cost of complying with these laws and regulations is significant. In addition, regulators may adopt new laws or regulations at any time, including triggeringwhich could trigger enforcement actions, or their interpretation of existing laws may change and/or differ from ours. TheseFor example, the California Consumer Privacy Act (CCPA) became effective on January 1, 2020. Among other requirements, businesses subject to the CCPA are required to proactively explain privacy notices to consumers when personal information is collected and it provides California residents the right to demand that company-held personal data be shared with them or deleted. Several other states and the federal government are currently considering similar legislation.

The various regulatory requirements to which we are subject could impose significant limitations on our business activities, require changes to our business, restrict our use or storage of personal information, or cause changes in our customers' purchasing behavior, which may make our business more costly and/or less efficient and may require us to modify our current or future products, services, systems or processes. We cannot quantify or predict with any certainty the likely impact of such changes on our business, prospects, financial condition or results of operations.

Portions of our business operate within highly regulated industries and our business results could be significantly affected by the laws and regulations to which we are subject. For example, international, federal state and internationalstate laws and regulations regarding the protection of certain consumer information require us to develop, implement and maintain policies and procedures to protect the security and confidentiality of consumers' nonpublic personal information. Portions of our business are subject to regulations affecting payment processing, including ACH, remote deposit capture, and lockbox services. These laws and regulations require us to develop, implement, and maintain certain policies and procedures related to payment processing. We are also subject to additional requirements in certain of our contracts with financial institution clients and communications service providers, which are often more restrictive than the regulations, as well as confidentiality clauses in certain of our contracts related to small businesses’ customer information. These regulations and agreements typically limit our ability to use or disclose nonpublic personal information for other than the purposes originally intended, which could limit business opportunities. Proposed privacy and cyber security regulations may also increase the cost of compliance for the protection of nonpublic personal information.collected data. The complexity of compliance with these various regulations may increase our cost of doing business and may affect our financial institution clients, reducing their discretionary spending and thus, reducing their capacity to purchase our products and services.

Due to our increasing use of the internet for sales and marketing, laws specifically governing digital commerce, the internet, mobile applications, search engine optimization, behavioral advertising, privacy and email marketing may have an impact on our business. Existing and future laws governing issues such as net neutrality, digital and social marketing, privacy, consumer protection or commercial email may limit our ability to market and provide our products and services. Changing data protection regulations may increase the cost of compliance in servicing domestic and international markets for our wholesale and retail business services channels. More restrictive legislation, such as new privacy laws, search engine marketing restrictions, “anti-spam” regulations or email privacy rules, could decrease marketing opportunities, decrease traffic to our websites and/or increase the cost of obtaining new customers.

Because of additional regulatory costs, financial institutions may continue to put significant pricing pressure on their suppliers, including their check and service providers. The increase in cost and profit pressure may also lead to further consolidation of financial institutions. Additionally, some financial institutions are warydo not permit offers of offering add-on services, such as bundled products, fraud/identity protection, expedited check delivery or rewards programs, to their customers. It would have an adverse impact on our results of operations if we were unable to market such services to consumers or small businesses through the majority of our financial institution clients. Additionally, as our product and service offerings become more technologically focused, and with expanded regulatory expectations for supervision of third-party service providers, additional portions of our business could become subject to direct federal regulation and/or examination. This would increase our cost of doing business and could slow our ability to introduce new products and services and otherwise adapt to a rapidly changing business environment.

We rely on a combination of trademark and copyright laws, trade secret and patent protection and confidentiality and license agreements to protect our trademarks, software and other intellectual property. These protective measures afford only limited protection. Despite our efforts to protect our intellectual property, third parties may infringe or misappropriate our intellectual property or otherwise independently develop substantially equivalent products or services that do not infringe on our intellectual property rights. Policing unauthorized use of our intellectual property is difficult. We may be required to spend significant resources to protect our trade secrets and to monitor and police our intellectual property rights. The loss of intellectual

A declinesignificant portion of our business relies on small business spending. Economic conditions have a significant impact on our small business customers. We believe that small businesses are more likely to be significantly affected by economic conditions than larger, more established companies. During a sluggish economy, it may be more difficult for small businesses to obtain credit and they may choose to spend their limited funds on items other than our products and services. As such, the level

A significant portion of our postretirement medical plan assets and/orbusiness also relies upon the health of the financial services industry, including merger and acquisition activity. As a significant increaseresult of global economic conditions in thepast years, a number of participantsfinancial institutions sought additional capital, merged with other financial institutions and, in some cases, failed. The failure of one or more of our postretirement medical planlarger financial institution clients, or large portions of our customer base, could adversely affect our operating results. In addition to the possibility of losing a significant client, the inability to recover prepaid product discount payments made to one or more of our larger financial institution clients, or the inability to collect accounts receivable or contractually required contract termination payments, could have a significant negative impact on our results of operations. There may also be an increase in financial institution mergers and cash flows.acquisitions during periods of economic uncertainty or as a result of other factors affecting the financial services industry. Such an increase could adversely affect our operating results. Often the newly combined entity seeks to reduce costs by leveraging economies of scale in purchasing, including its check supply and business services contracts. This results in providers competing intensely on price in order to retain not only their previous business with one of the financial institutions, but also to gain the business of the other party in the combined entity. Although we devote considerable effort toward the development of a competitively-priced, high-quality selection of products and services for the financial services industry, there can be no assurance that significant financial institution clients will be retained or that the impact of the loss of a significant client can be offset through the addition of new clients or by expanded sales to our remaining clients.

The fair valuemajority of the borrowings under our postretirement medical plan assets isrevolving credit facility are subject to various risks, including credit,variable rates of interest and overall market volatilityexpose us to interest rate risk. If the equity marketsinterest rates were to experience a significant decline in value, the fair value ofincrease, our plan assets would decrease. This would affect the funded status of our plan and result in higher postretirement benefitinterest expense in the future. Although our obligation is limited to funding benefits as they become payable, future declines in the fair value of our plan assets could also result in the need to contribute increased amounts of cash to fund benefits payable under the plan.

The decrease in our effective income tax rate for 2019, as compared to 2018, was driven primarily by the nondeductible portion of the goodwill impairment charges in each period, combined with the impact of the asset impairment charges on pretax (loss) income in each period. The larger non-deductible goodwill impairment charge in 2019 resulted in a decrease in our effective tax rate of 36.4 points, as compared to 2018. In addition, during the third quarter of 2016,2019, we retired all $200.0placed a full valuation allowance of $8.4 million on the intangible-related deferred tax asset generated by the impairment of intangible assets located in Australia, decreasing our 6.0% senior notes duetax rate 4.5 points. Partially offsetting these decreases in November 2020, realizingour effective income tax rate was an increase in our state income tax rate of 1.9 points, as compared to 2018, as well as a pre-tax lossbenefit of $7.9 million, consisting of a contractual call premium0.8 points in 2018 related to our accounting for the Tax Cuts and the write-off of related debt issuance costs. To fund the retirement, we amended the credit agreement governing our credit facility to include a new term loan facility.Jobs Act (the "2017 Tax Act"). Further information regarding the term loan facilityour effective tax rate for 2019, as compared to 2018, can be found under the caption "Note 13: Debt and lease obligations" of11: Income tax provision" in the Notes to Consolidated Financial Statements appearing in Part II, Item 8 of this report. We anticipate that our effective income tax rate for 2020 will be approximately 25%.

The decrease in interest expenseadjusted diluted EPS for 2017,2019, as compared to 2016,2018, was driven primarily driven by the continuing decline in checks, forms and accessories, investments in our transformation to One Deluxe, increased shipping and material rates, increased medical costs and interest expense, lower weighted-average interest rate in 2017 resulting from the fourth quarter 2016 retirement of long-term debt that carriedorganic Small Business Services marketing solutions and web services revenue, a higher interest rate.Small Business Services commission rate on customer referrals and continued check pricing pressure within Financial Services. These decreases in adjusted diluted EPS were partially offset by lower shares outstanding in 2019, benefits from our cost reduction initiatives, Small Business Services price increases and incremental earnings from businesses acquired.