Decline of Paper Checks: The Future of Banking Transactions

The Federal Reserve has indicated a potential decline in the use of paper checks in the United States, comparing it to the fate of the penny. According to a statement from the Fed, check usage has steadily declined as digital payment methods have gained popularity, with a rise in check fraud.

A report from the Federal Reserve Bank of Atlanta in June revealed that over 90% of surveyed consumers prefer using alternatives to checks for bill payments, with only 6% reporting they pay by check, down from 18% in 2017.

Consumers ranked checks as the second least convenient payment method, only ahead of money orders, and as the least secure payment option other than cash. Despite these trends, checks still account for approximately 5% of all transactions and represent 21% of the total payment value, according to Michelle Bowman, the Fed's vice chair for supervision, who dissented from the Fed's recent statement.

The central bank is considering whether to invest in check processing services or to maintain current costs, which could lead to a decrease in service reliability in the future.