The problems with paper checks are well-documented. According to the Federal Reserve, “Checks are vulnerable to fraud because checks can be stolen, altered, or forged.” Also, “the physical nature of checks makes them susceptible to theft while in transit or when left in unsecured locations. Checks also contain visible sensitive information—the payor's name, account number, routing number, address, and signature—that can be used by criminals to conduct other forms of payments fraud.”

And, according to the Association for Financial Professionals, “Checks continue to be the payment method most often subjected to fraud, with 63% of respondents reporting that their organizations faced check fraud in 2024.”

Advances in speed, safety and reliability have driven a steady decline in paper check usage as individuals and businesses transition to faster and more secure electronic payments, such as ACH.

According to Federal Reserve studies, annual check volume has declined from 42.5 billion in 2000 to just 11.1 billion in 2021. It likely continued to significantly decline through 2025. Meanwhile, many forms of electronic and card payments have increased significantly in use over the same period. According to Nacha’s own data, the annual volume of ACH payments has increased from 5.2 billion in 2000 to 35.2 billion in 2025. These increases include consumers paying their bills electronically, employers switching from paper checks to Direct Deposit to pay employees, and businesses moving more of their vendor payments away from checks to ACH.

Although the number of checks being written is declining, the costs to process those checks have not. As check volumes fall on largely fixed-cost infrastructure, a vicious cycle can emerge: lower volumes drive higher per-transaction costs. If cost increases are passed along to customers in the form of price increases, then transaction volume is likely to further decline.

In this context, policymakers are confronting decisions about how to address the aging check processing infrastructure. The Board of Governors of the Federal Reserve System recently issued a “Request for Information and Comment on the Future of the Federal Reserve Banks' Check Services.” 

The Federal Reserve offered four options for how it would process checks in a time of declining check use: 

• Continue check services as they exist now without investments to address aging infrastructure.
• Significantly simplify check services, including discontinuation of certain offerings, with the intent of minimizing investing in check infrastructure.
• Substantially wind down check services.
• Provide substantial investments to upgrade check-processing infrastructure.

Nacha was pleased to provide our point of view that of these options, the second one makes the most sense and is in line with past Federal Reserve practices. The shortcomings of paper checks do not warrant increasing the investment in their services. As there are fewer and fewer checks being written, Nacha believes it is prudent that the Federal Reserve simplify its existing check service without making significant new investments.

Our full comments are available here.

We appreciate the Federal Reserve’s request for public input on this important discussion.

Nacha looks forward to our ongoing collaboration for the continued safety and reliability of the U.S. payments system.