The centuries-old payment method could be halted in U.S. banks weeks after Social Security payments make the same change.
A notice from the Federal Reserve Board this week indicated that banking checking services may soon be “scaled back.”
Paper checks have been phased out in favor of electronic payments for the majority of Social Security beneficiaries under President Donald Trump.
And now, future Checks in traditional bank branches can be at risk.
In a statement about the possibility Federal Reserve He said electronic payments are being used more widely.
“Over time, the use of checks has steadily declined, the availability and use of digital payment methods has increased, and check fraud has risen,” she said.
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“Also, the Reserve Banks will need to make significant investments in their check infrastructure to continue to provide the same level of check services in the future.”
What could this mean?
If this happens, it could create a problem for those who don’t have access to online banking tools and rely on paper slips to receive some of their money.
Some older consumers may not feel comfortable using smartphones to connect to the Internet Banking.
According to Federal ReserveAbout 6% of adults were “unbanked” in 2024.
This meant that they did not have an online checking, savings, or money market account.
The number rose to 22% for those with incomes of less than $25,000.
June report from Federal Reserve Bank of Atlanta found that more than 90% of those asked last year preferred to use something other than checks to pay bills.
The report claimed that only 6% pay by cheque, down from 18% in 2017.
The importance of paper verification
The growth of electronic payment apps like Venmo, PayPal, and Zelle has reduced the need for paper checks.
Americans also said that paper checks were inconvenient and too slow for them Banking needs.
How to contact your bank
With bank fraud on the rise, it’s important to know how to contact your bank without risking fraud.
There is of course a foolproof way to go to your bank in person, but you will likely be directed to a customer service phone line.
To ensure you are calling the bank, be sure to use the phone number provided to you by the representative or outside of the bank’s website.
Some banks also have online helplines that can securely connect you with a representative.
Conversely, if you believe the bank is contacting you about an account issue – be sure to verify those concerns by contacting a bank contact you know to be legitimate.
Fraudsters usually disguise themselves as bank representatives to steal information from frightened customers.
But some spoke out against Federal ReserveSuggest and highlight the continued necessity of paper checks.
Michelle Bowman, the Fed’s vice chair for supervision, undermined the proposal and argued in favor of paper.
“Checks remain important payment mechanisms for consumers and businesses,” she said.
“Stop Federal Reserve Check services are not an effective solution to the growing payment fraud problem, especially in light of the continuing role of checks in the payments system.
It claims that paper checks make up approximately 5% of transactions and represent 21% of the value of those payments.
Doug Cantor, general counsel for the National Association of Convenience Stores, offers cash check services to customers, and he also disagrees with the proposal at this time.
“Checks are obviously not used as much as they used to be, but they are still an important part of the financial system, especially for low-income people,” Cantor said.
“I think they are not ready to end it yet, and I hope they are not ready to end it yet because there are large numbers of people – a minority, no doubt – but still large numbers who depend on the system.”
No more pennies
In November, the U.S. Mint minted the final batch of one-cent coins, ending the practice for the first time in 238 years.
Billions of pennies are still in circulation, but no new coins will be produced.
The pennies would cost 3.69 cents to produce, and Trump made the change to cut costs in government.
In February, he called the production of pennies “wasteful,” and in 2024, the US Treasury announced a loss of $85.3 million from the creation of more than three billion new pennies.
