It's past time for paper checks to follow the penny into extinction

• Key insight: Checks are an expensive, insecure legacy that is a drag on the U.S. economy. it is time for the U.S. to phase them out in a logical, orderly fashion.
• Supporting data: In 2024, checks accounted for 65% of all payment fraud losses.
• Forward look: Businesses and legislators should work together to invest in broadband and fintech platforms in underserved areas and educate the public about the risks of using checks, as well as how to use online banking platforms.

The phrase, "The check's in the mail" probably sounds strange to younger people because the era of paper checks is rapidly drawing to a close. Put bluntly, checks are an expensive, insecure legacy that is a drag on the U.S. economy. Rather than wait for them to vanish slowly, the pragmatic choice is to strategically accelerate the transition to paperless payments.

Over the past 25 years, commercial check volume collected through the U.S. Federal Reserve has dropped by roughly 83%. And yet, the Fed processed $175 billion in paper checks in 2024, incurring nearly $700 million in system support costs. For the same reasons that the U.S. Mint ceased penny production in 2025, it is time for the U.S. to eliminate paper checks by phasing them out in a logical, orderly fashion.

To design a phase‐out strategy, we must first understand why checks remain entrenched. A few key reasons stand out, but they are not all supported by factual data.

For some consumers, it could be familiarity with checks and sticking to what they know. For others, checks can help prevent overspending compared to digital payment options. Headlines about data breaches can also create the illusion that paper checks are safer than other payment types. And in some cases, checks are the required payment, such as for small property management companies that collect rental income.

Some businesses continue to use checks for a number of reasons: inertia or lack of incentives to switch, avoidance of transaction fees, use of float time as a liquidity management tool, or the perception of reduced fraud risk. As with consumer fears of fraud, industry data shows that checks are a far greater fraud risk than encrypted digital payments.

From efficiency, security and cost-effectiveness perspectives, there is a compelling case to move beyond checks entirely while addressing the needs of both consumers and businesses. Numerous studies document the costs and labor inherent in processing a check. Similarly, an Association for Financial Professionals, or AFP, survey reports that the median fee for issuing a paper check is 7.5 to 8 times that of ACH. The billions we spend annually on check usage could instead fund investment or lower prices.

Checks also openly display personal information that criminals can easily steal or alter. Fraudsters can take advantage of second-day fund availability on checks to withdraw fraudulent check funds before the check is flagged as fraudulent. In 2024, checks accounted for 65% of all payment fraud losses. In comparison, modern electronic payments use security features that greatly reduce fraud losses.

Checks also inherently delay payments by days or weeks, while digital rails offer near-instant or same-day settlement. Real-time payments improve cash forecasting and free up credit; they also leave clear electronic records and audit trails that make cash application less of a headache. In a fast-moving economy where supply chains depend on prompt payments, checks are archaic.

Federal Reserve

Fed seeks comment on future of check services

The agency is weighing costly infrastructure needs, fraud risks and long-term decline in check use as it solicits public input on the possibility of winding down checks following an executive order phasing out paper in federal payments.

By Ebrima Santos Sanneh

December 5

Eliminating checks will require coordinated effort by the Fed, banks and industry, and policymakers to convince consumers and businesses to voluntarily abandon checking. For consumers, the goal is to make digital payments as easy as or easier than writing checks by expanding access and education, incentivizing digital adoption, and building trust.

Businesses and legislators should work together to invest in broadband and fintech platforms in underserved areas and educate the public about the risks of using checks, as well as how to use online banking platforms. As demand for alternatives to checks grows, businesses should also create parallel, easy-pay options, such as instant-issue prepaid cards or cash payroll machines to lift the tech-averse into the mainstream. Introducing small incentives can also encourage consumers to go digital, such as using prepaid debit cards to pay underbanked workers.

Businesses should be encouraged to switch to digital and required to provide alternatives to checks for disbursements. A critical first step involves encouraging broader acceptance of digital payments. Large corporations and government contractors should be required to accept electronic payments for all invoices. For small businesses that lack the resources or infrastructure, tax incentives or small grants could bridge the gap. Levying a nominal surcharge on paper invoice payments, while simultaneously waiving fees for electronic payments, would reward digital use.

It is also important to modernize corporate payroll. Businesses should be encouraged or required to implement direct deposits for employee pay in place of paychecks and pensions, with support for any remaining, underserved recipients who may face barriers.

To be successful, federal and state governments must lead infrastructure and policy changes to retire checks. A clear road map should come from the Fed and the Treasury, giving banks and businesses time to adapt, while continuing to invest in faster payment rails, so that even rural credit unions can access instant payments without difficulty. Federal and state governments must also focus on mitigating operational risks during any transition, ensuring that regulated entities have cyber insurance and robust risk features. It is best practice to maintain an emergency fallback, such as a secure bill-pay portal, during any rollout phase.

As with any transition, regulatory harmony will also be critical. NACHA rules and tax/payment laws must be aligned around the elimination goal, and coordination must happen with state treasury departments so that checks in state programs also vanish.

Phasing out checks will encounter obstacles, but each has viable solutions. By planning for these issues, the transition can be made as smoothly as possible. Importantly, a phased approach ("soft landing" with increasing disincentives for checks) will give laggards time to adjust without sudden disruption.