Paper checks in the U.S. are nearing obsolescence

On March 25, 2025, President Trump signed Executive Order 14247: “Modernizing Payments To and From America’s Bank Account,” a sweeping directive mandating the end of most federal paper check use by September 30, 2025.

Under the order, federal agencies must transition to electronic funds transfer (EFT) methods, including direct deposit, digital wallets, debit/credit card options, and real‑time payment rails for all disbursements and receipts where legally permissible. It also seeks to phase out physical lockbox services and move government payments online.

Treasury checks have historically been about 16 times more likely to be lost, stolen, altered, or returned undeliverable than electronic equivalents, and maintaining paper systems costs taxpayers hundreds of millions of dollars annually in infrastructure and processing. At the same time, digital payments are not immune to fraud globally. Payment fraud continues to rise, with the European Central Bank reporting losses of €4.2 billion in 2024.

Paper Fraud vs. Digital Fraud: Security Realities

One of the government’s core rationales for the transition is the risk of fraud. Paper checks remain unusually vulnerable to physical and procedural exploits, including mail theft, forgery, “washing” (erasing and altering payee information), and interception. For businesses, check‑related fraud accounted for about 30 % of all payment fraud losses in 2024, with attempts rising sharply even as check volume declined.

By contrast, digital payments rely on encryption, multi‑factor authentication, and real‑time monitoring that can detect and stop suspicious patterns before funds move. Although electronic fraud (including phishing and account takeover) continues to evolve and losses occur, digital systems provide a much higher baseline of security controls than paper systems, especially when combined with modern fraud detection tools.

Cost Dynamics: Paper vs. Digital

Paper checks impose hard and soft costs.

• Printing, mailing, handling, reconciliation, storage, and staff time add up. For businesses, the median cost to issue or receive a check has historically ranged from about $2–$4 per item, while ACH transactions cost as little as $0.26–$0.50 on average.

Federal overhead is even higher.

• Government estimates show that maintaining the check infrastructure costs over $650 million in FY2024, with check issuance costing about 50 cents per item, compared to less than 15 cents per item for EFT.

Digital systems entail infrastructure investments.

• Banks and platforms invest heavily in cybersecurity, compliance, and fraud‑monitoring tools. Merchant fees on consumer card payments can reach 1–3 % of the transaction value, a cost that doesn’t apply to paper checks.

Checks Persist Where Card Fees Bite

One key reason paper checks remain in use is to avoid credit or debit card surcharges. Many small businesses, landlords, and service providers add fees of 1–4% for card payments, which can add up for larger bills like rent, tuition, or contractor invoices. Writing a check eliminates these extra costs, making it a cost-conscious choice for both payers and payees.

While digital alternatives like ACH transfers, Zelle, or same-bank payments can reduce or eliminate fees, not all vendors support them. As a result, checks remain a practical option in contexts where avoiding card fees outweighs the convenience or speed of electronic payments.

Control vs. Power: Who Wins in the Digital Era

This power is centralized, not personal. Paper checks provide individuals with a tangible sense of control over their payments. When you write a check, you physically authorise the transaction, track it through your register, and can delay mailing if needed.

This hands-on process allows payers to monitor timing, amounts, and recipients directly, giving them autonomy and oversight that digital systems abstract away. In contrast, digital payments, whether ACH, Zelle, or real-time transfers, shift authority to the system itself, allowing banks, payment platforms, and regulatory frameworks to enforce security protocols, limits, and anti-fraud measures automatically.

Boomers, Digital Adoption, and the Human Side of Transition

Older Americans, particularly those over age 55, have been slower to adopt mobile banking and digital payment apps compared to younger generations. Surveys show that while nearly two‑thirds of younger consumers use mobile banking frequently, only about 39–43 % of Baby Boomers use mobile or online banking as their primary channel.

Challenges include comfort with technology, digital literacy gaps, distrust of online systems, and cybersecurity concerns, which can make the transition feel confusing and disorienting for older users.

The Future of Payments

The federal government’s shift is a milestone, formalizing a transition many private sectors have already been moving toward for years. Digital payments offer faster settlement, stronger security, lower fraud risk, and often lower long‑term costs. But they also bring different risks and costs: digital fraud, cybersecurity needs, and onboarding burdens, and they require inclusive strategies to ensure no one is left behind, especially those with limited digital access.

The era of the physical chequebook, like that of the penny, is fading. But the transition to digital payments is more of a cultural and educational shift than a flip of a switch, and its success will depend on how well institutions help people adapt.

From Pennies to Checks

Just as pennies have become largely obsolete due to production costs exceeding their value, paper checks are gradually fading from everyday use. Pennies now cost about 3.69 cents each to produce, up from 1.76 cents each in 2020, and retailers often round cash totals to the nearest five cents.

Similarly, checks are expensive and slow to process, with printing, mailing, and handling costs adding up, while digital transfers settle almost instantly and reduce fraud risk.

Private Sector Check Use

Many businesses still rely on checks for vendor payments, rent, and tuition, especially where digital alternatives impose fees or require complex onboarding. According to a survey by the Association for Financial Professionals, 73% of organizations are actively transitioning from checks to digital payments, but a significant minority continues using checks to avoid processing costs or maintain familiar workflows.

The private sector’s adoption will likely follow federal trends over time, particularly as businesses recognise the security, efficiency, and fraud-reduction benefits of digital methods. However, niche use cases and cost considerations mean checks are likely to persist in certain industries for several more years.

Checks Are Declining, But Not Dead Yet

Still, checks aren’t extinct: they still account for a meaningful share of business‑to‑business payments and tend to persist in contexts where digital alternatives are perceived as costly or complex. Many companies report continued reliance on checks for vendor payments, and most utilities still receive at least some paper payments.

Key Takeaway

• Federal checks are ending by law in 2025.
• Paper fraud is significantly higher than digital payment fraud for checks.
• Digital payments are not fraud‑proof but offer superior tools to mitigate risk.
• Costs shift rather than disappear, with operational savings balancing payment fees.
• Generational adaptation matters in how smoothly this plays out.

Disclosure line: This article was developed with the assistance of AI and was subsequently reviewed, revised, and approved by our editorial team.

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