Federal Reserve weighs exiting check processing as Trump halts federal checks

Check usage per American falls to 27 a year, down from 150 in 2000

The Federal Reserve is deciding whether to continue operating its check processing unit, which costs about $100 million annually and turned a $6.6 million profit in 2024. The agency’s machines need replacement, and the Fed accepted public comments in early 2026 on whether to wind down, improve, or leave unchanged the service.

The deliberation comes as check writing by the federal government halted under an executive order from President Donald Trump, who previously ended the production of pennies. The U.S. government stopped minting pennies in 2025, and MSI previously reported that states are now setting rules for rounding cash purchases to the nearest nickel.

Germany plans to eliminate paper checks by the end of 2027, and Australia aims to follow by 2030, leaving the U.S. as one of the few countries where check payments remain common, according to data from the Bank for International Settlements.

The Federal Reserve Payments Study shows that check usage has declined sharply. In 2000, Americans wrote roughly 150 checks per person annually. By 2024, the average had fallen to 27 checks, or slightly more than two per month. At the same time, the typical check amount rose from under $1,000 to $2,600, pushing the total face value of checks written in 2024 above $24 trillion — nearly equal to the U.S. gross domestic product of $29 trillion that year.

The decline in usage is concentrated among younger consumers. A Federal Reserve Bank of Atlanta survey found that roughly 60 percent of people 65 and older had written a check in the previous 30 days, compared with under 6 percent of those aged 18 to 24. Many online bill payments still result in a paper check when electronic transfer is not possible, meaning some consumers who believe they never write checks are, in fact, generating them indirectly.

Small businesses are a major reason checks persist. More than 80 percent of businesses with annual sales between $1 million and $10 million use checks, often because they require two signatures for payment, giving owners control over outgoing funds. Accepting checks also avoids credit card processing fees that can add 3 percent or more to a transaction.

The system has frictions. The Federal Reserve returned about 22 million checks with a total face value of roughly $80 billion in 2024 because the accounts lacked sufficient funds, though over 99 percent of checks clear without issue. Check fraud, often involving mail theft, accounts for about 500,000 annual cases in the U.S., a fraction of total check volume.

Jay L. Zagorsky, an associate professor at Boston University, wrote in The Conversation that checks remain important for small businesses and older Americans and that eliminating them would be premature. He argued that while checks are less central than in the past, the numbers show that “the American people and businesses still use and need checks.”