The Federal Reserve is considering phasing out paper checks, a move that could make checkbooks as outdated as pennies. The central bank has asked the public to weigh in over the next 90 days on whether to sharply scale back or even end check-processing services. The reason: Americans are writing far fewer checks these days, instead favoring credit cards and digital payments, and the Fed isn't sure it's worth investing in the aging infrastructure needed to keep checks circulating, per Quartz.
Federal Reserve banks charge commercial banks fees to process checks, but demand has dropped as fraud concerns rise and technology shifts how people pay. The government has already taken steps to reduce paper check usage: As of Sept. 30, the Social Security Administration stopped mailing paper checks for benefits, moving entirely to electronic payments—a change triggered by a Trump-era executive order designed to save money and cut fraud.
The cost difference is notable: Issuing a paper check runs about 50 cents, while an electronic payment costs just 15 cents. Still, the transition won't be seamless for everyone. While only 1% of Social Security recipients still use paper checks, about 20% of taxpayers get their refunds that way. Many in this group lack bank accounts due to homelessness, disability, or mistrust of sharing financial data with the government.
CNN notes that, per a June report from the Federal Reserve Bank of Atlanta, consumers consider checks to be the least secure form of payment, other than cash. Consumers also deem checks to be the second worst in terms of convenience and speed, behind only money orders. Just 7% of Americans still prefer to pay bills by check—a sharp drop from 19% in 2020, per Quartz.
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