Fed Requests Comment on Future of FRB Check Services

The Federal Reserve Board ("Fed") requested comment on the long term viability of its check collection and processing services.

The Fed asked for input on the importance of the Reserve Banks' check services, the impact of different potential strategies, the willingness to incur additional costs to support continued check use, the availability of alternative payment methods, and barriers to adopting electronic payments. The Fed stated that if its analysis supports a strategy that may have significant longer-run effects on the payments system, it would seek comment again on any specific proposal prior to adoption.

The Fed outlined four potential strategies for public consideration: (1) continuing services without infrastructure investment, resulting in degraded reliability over time; (2) simplifying services by reducing deposit deadlines, limiting hours, or eliminating adjustment services; (3) substantially winding down check services; or (4) upgrading infrastructure with substantial investment that would require higher fees to depository institutions.

The Fed said that Reserve Banks currently process nearly half of the nation's check volume, handling approximately 3.0 billion commercial checks in 2024, down from 5.7 billion a decade ago. The Fed noted that check usage has declined steadily, with only 11 billion checks written in 2021 compared with more than 40 billion in 2000. Despite this decline, checks represented $27.23 trillion in value in 2021, approximately 21 percent of noncash payments value. The Board stated that certain populations continue to rely on checks, including consumers aged 65 and older, rural populations, and low- and moderate-income households. The Fed also said that the share of returned checks that were potentially fraudulent increased from 10.2 percent to 15 percent between 2018 and 2021.

Comments are due on March 9, 2026.