Do Paper Checks Have a Future?

The U.S. government has had a long and storied history with checks. In fact, the federal government drove the movement to electronic payments, starting with direct deposit of Social Security payments in 1975. 

Following that development, community banks launched campaigns ramping up in the 1990s to encourage movement away from paper checks toward a system of fully electronic payments.

“We had just put together a flyer for community banks to encourage their customers to sign up for direct deposit, and I was driving home and had on NPR [National Public Radio],” recalls Kari Neckel, vice president of payments and technology policy for ICBA. “They were interviewing a woman whose home had been hit by a tornado, and she said, ‘I’m so glad I just shifted my Social Security over to direct deposit, because my home’s gone, but I know my money is in the bank.’” 

Fast forward 30 years or so, and while electronic payments have certainly gained traction, checks remain a popular payment choice. According to the Federal Reserve’s latest Payments Study, there were 11.2 billion checks in circulation in 2021. While the volume declined from the previous study, the average value of checks increased, accounting for 21% of non-cash payments.

Transitioning from Paper Checks to Electronic Payments

At the same time, the U.S. government is again looking to drive the country toward electronic payment solutions. 

On March 25, 2025, President Trump issued the “Modernizing Payments To and From America’s Bank Account” executive order, which stopped the issuance of paper checks for all disbursements from the federal government as of Sept. 30. Then, on Dec. 4, the Federal Reserve Board issued a request for information (RFI) on the impact of potential strategic changes to check services provided by the Fed. 

“There’s an acknowledgment underlying the check services RFI that the infrastructure is aging, and the Fed is thinking about where they take things in the future,” says Scott Anchin, senior vice president of strategic initiatives and policy for ICBA. “They’re really trying to get a sense for how much checks are relied upon and how much they need to continue to invest in the check infrastructure. The good news is the message has come through loud and clear that there are a lot of customers in the country that continue to rely on checks.”

Mitigating Check Fraud in Community Banks

While consumers and businesses continue to use checks, the rise in check fraud has been a key consideration. Community banks must strike the right balance of meeting customers’ needs and managing increasing risks. 

“Community banks have a unique mandate: protect the personal, relationship-driven experience their customers demand while still innovating and modernizing operations,” says John R. Ramage, executive vice president and chief administrative officer at $1.6 billion-asset Troy Bank & Trust in Troy, Alabama. “Checks sit right at the center of that tension. They’re still widely used—especially by small businesses and older customers in many parts of rural America—yet they also introduce fraud risk and operational drag. Navigating those dynamics requires a thoughtful, layered approach.”

Impact of Federal Reserve Check Services on Security

For its part, the Fed has been exploring ways to address the growing check fraud threat. The December RFI raised concerns, and a separate June 2025 joint agency RFI from the Fed, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) specifically sought industry input on improvement and collaboration that could help mitigate payments fraud. 

As ICBA pointed out in its response, community bank customers still rely on checks, especially to send payments, because of infrastructure limitations. Simultaneously, the Fed is the best-positioned entity to support enhanced fraud mitigation.

“With continued investment in the Fed’s check infrastructure, the Fed can continue to support an ecosystem that helps financial institutions identify suspicious items earlier, return fraudulent checks faster and stay ahead of emerging fraud schemes,” says Ramage. “In short, the Fed cannot eliminate check fraud—but it can make checks harder to exploit, especially as volumes decline and criminals become more concentrated. Now is not the time for the Fed to retreat given the amount of fraud in the system.”

Community Bank Advocacy for Check Infrastructure

As long as checks remain a payment mechanism of choice for American consumers and businesses, community banks will continue to process them and manage their risks accordingly. But as the federal government takes a harder look at check offerings and infrastructure, community banks must speak up and advocate for what their communities need. 

“We have to remember that Federal Reserve Financial Services is in the business of providing financial services to banks, and community banks are their largest customer group,” says Anchin. “If community bankers make it very clear to the Fed that they rely on those services, the Fed is likely to listen to those things.”