The New Banking Trend That Could Make Paper Checks Harder to Use

Paper checks work without an internet connection, leave a paper trail, and feel familiar to millions of Americans who use them to pay rent, hire contractors, or settle estates. 

But if you still rely on checks to grow your wealth or manage everyday payments, a set of converging pressures is making that harder. Check fraud is rising, banks are adding security measures that can delay legitimate transactions, and the broader infrastructure supporting paper checks is steadily shrinking.

Here's what's driving the change and what you can do to stay ahead of it.

The fraud problem is severe

Check fraud has exploded since the pandemic. The U.S. Treasury Department has confirmed a 385% increase in check fraud since March 2020. 

FinCEN reported that financial institutions filed over 350,000 suspicious activity reports related to check fraud in 2021, then doubled to more than 680,000 in 2022. A September 2024 FinCEN trends analysis found that mail theft-related check fraud alone generated $688 million in reported suspicious activity in just a six-month window.

The methods are low-tech and effective. Check washing involves soaking a stolen check in chemicals to erase the ink, then rewriting the payee and amount. Counterfeit checks are printed using stolen account numbers. 

Paper checks offer fraudsters something digital payments don't: a physical object that can be intercepted, altered, and monetized without breaking through any digital security.

What positive pay is and why it affects you

Banks and businesses are responding with a fraud prevention service called positive pay. Positive pay is when a business issues checks, it submits a file to its bank listing every check by number, amount, date, and payee. When a check is presented for payment, the bank compares it against that file. If the details don't match exactly, the check gets flagged or rejected.

According to a 2025 NPG report cited by Checkrun, a majority of companies using positive pay report reduced fraud or losses, and banks are actively pushing more clients to enroll.

The problem is that this creates friction for entirely legitimate transactions. A check you write to your landlord can be rejected if the landlord's bank has enrolled in positive pay and the check details don't match a pre-submitted file. A check you receive from a contractor can be held while verification runs. The system works by requiring pre-approval of payments that previously moved without any extra steps.

The infrastructure around checks is shrinking

Positive pay is one layer of friction. Federal policy is adding another. 

In March 2025, President Trump signed Executive Order 14247, directing the federal government to stop issuing paper checks for virtually all federal payments by September 30, 2025. That covered Social Security benefits, tax refunds, veteran payments, and federal vendor contracts.

After public pushback, officials confirmed paper checks would remain available for Social Security recipients who have no other option and file a formal waiver. But as CNBC reported, the direction is clear: electronic is becoming the default, and paper the exception.

Treasury data shows paper checks cost roughly 50 cents each to process versus less than 15 cents for electronic transfers, and are 16 times more likely to be lost, stolen, or altered. 

For consumers, this means the pool of situations where a paper check is the expected or accepted form of payment is narrowing. Landlords are migrating to payment apps. Government agencies default to direct deposit.

The practical impact on common check uses

The consumers most likely to feel this are people who write checks for situations digital apps don't cover neatly. This includes rent to private landlords, contractor payments, charitable giving, and estate distributions. In these cases, positive pay and extended hold times can mean a check that used to clear in one day could take three to five, or gets rejected outright. 

Fraud flags can extend holds beyond the standard two-to-five business days, and a landlord could have grounds to charge late fees if cleared funds don't arrive by the due date.

What to set up now

The practical response is to have digital alternatives running before you need them in a pinch.

• ACH transfers are supported by nearly every bank, typically settle in one to three business days, and are free or very low cost. Most landlords and small businesses will accept them once asked. 
• Zelle settles instantly between participating banks at no charge and handles most personal payments well. 
• Online bill pay through your bank routes payments electronically or cuts a paper check on your behalf, shifting the positive pay burden to the bank rather than you. 
• FedNow, the Federal Reserve's instant payment network launched in 2023, enables real-time settlement and is increasingly available through credit unions and community banks.

Bottom line

Paper checks are not gone, but the conditions that made them simple and friction-free are eroding. Banks are adding verification layers, fraud holds, and enrollment requirements that make legitimate check use slower and less reliable.

The good news is that setting up digital alternatives costs nothing and takes less time than you might expect. ACH transfers, Zelle, and online bill pay can help you save money on bills by eliminating late fees caused by check holds, and they provide a reliable backup when a paper check gets flagged. Getting those systems in place now, before you need them urgently, is the kind of preparation that pays off quietly and consistently.

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