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A new executive order from President Trump is set to accelerate the global transition away from checks, as the declining payment method continues to be a significant source of fraud.
Under the terms of the order, all US federal agencies must cease issuing checks for disbursements, benefits, vendor payments and tax refunds from September 30, 2025.
Prior to this date, each agency must also implement new payment acceptance infrastructure to receive funds electronically, such as by bank transfer, debit or credit card, digital wallet or real-time transfer.
Following the executive order, all payments to the federal government, including fees, fines, loans and taxes, are expected to be processed electronically.
However, exceptions will be made for persons who do not have access to banking or electronic payments, certain emergency payments and certain law enforcement activities.
One of the main reasons that the Trump administration wants to eliminate checks is to end the country’s epidemic of check fraud.
As in other jurisdictions, the use of checks in the US has fallen dramatically, but unlike elsewhere, checks remain a significant payment method in the US, particularly for business-to-business (B2B) payments.
In 2012, according to the Federal Reserve Bank of Atlanta, checks accounted for 17.4 percent of non-cash payments in the US, but by 2021, this had dropped to 5 percent.
At the same time, however, check fraud has seen something of a renaissance, as criminals take advantage of the mandated clearing times and a lack of digital defenses.
According to the Department of the Treasury, check fraud has increased by 385 percent in the US since 2020.
In 2024, this triggered the Treasury’s Office of Payment Integrity (OPI) to implement AI-based check fraud detection controls — but the effect of these controls remains to be seen.
Although Trump’s executive order only applies to federal agencies’ handling of checks, it is likely to set in motion a move towards the phasing out of checks in the private sector as well.
Key considerations
In January 2025, the FBI and the US Postal Inspection Service (USPIS) issued a joint public service announcement on a specific form of check fraud known as “mail-related check fraud”.
Not all check fraud involves mail theft, but according to the FBI, mail theft accounts for a “significant volume” of check fraud.
Typically, fraudsters steal checks that are left in residential mailboxes overnight or for long periods of time, or they steal from United States Postal Service (USPS) collection boxes.
Less commonly, checks can be stolen when USPS facilities are burgled or when USPS employees are robbed or bribed.
Once the stolen checks are obtained, fraudsters use “washing” or “cooking” techniques to alter their details or to create counterfeits.
Check washing involves the use of chemicals to physically alter the check, typically by altering the payee name and transaction amount.
Check cooking involves the digital manipulation of an image of a stolen check. Using photo editing software and high-tech printers, fraudsters can manufacture multiple checks from a single image of a stolen check.
As noted by the FBI, fraudsters are effectively taking advantage of Regulation CC under the Expedited Funds Availability Act (EFAA), which requires financial institutions to clear most checks within two business days.
The window of opportunity for catching a fraudulent check is therefore “often too short” before the funds are cleared.
From 2021 to 2023, the number of suspicious activity reports (SARs) filed by US financial institutions related to check fraud almost doubled.
In 2023, the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an alert on mail-related check fraud, followed by a Financial Trend Analysis (FTA) on the same topic one year later.
The FTA found that, during a six-month period in 2023, FinCEN received more than 15,000 reports of mail theft-related check fraud, amounting to more than $688m in reported suspicious activity.
The bigger picture
These numbers, which cover only a subset of check fraud, highlight the scale of the problem in the US, but other jurisdictions are also seeing similar epidemics.
In Australia, both the value and volume of check fraud doubled year-on-year from 2022 to 2023, according to data from AusPayNet.
As in the US, rising check fraud is taking place against a backdrop of cratering check use: according to AusPayNet, check use has declined 70 percent since 2018, but check fraud has increased 61 percent.
Australia has committed to a complete wind-down of checks, with plans to end support for checks across the public and private sectors at the same time.
In 2023, Australia’s Labor government unveiled a two-step plan whereby check issuance will cease in 2028 and check acceptance will cease in 2029.
Also in 2023, Singapore set a deadline of end-2025 for the cessation of corporate checks, but in December last year, this deadline was extended to end-2026.
In Canada, the federal government committed to phasing out government checks by 2016, but as of today, it is still sending out checks under programs such as the Working Canadians Rebate.
Both the Singapore and Canada examples highlight the sticking power of checks, even when policymakers move to eliminate them.
Why should you care?
As the data from the US and Australia show, check fraud continues to grow despite the decline in check use.
The ongoing need to monitor transactions for check fraud therefore consumes valuable resources at financial institutions that could be better invested elsewhere.
And if a potentially fraudulent check is identified, even greater resources must be invested in filing a SAR (or its equivalent in a non-US jurisdiction).
On average, according to a 2024 Bank Policy Institute (BPI) survey, banks dedicate 21.4 hours of work to filing a single SAR.
Moreover, with fraudsters continually improving their alteration and forgery techniques, check fraud will become even more difficult to identify, unless firms are using sophisticated AI tools.
The continued decline of checks will also result in an increase in digital payments, particularly in the US context.
It is not yet clear which form these payments will take, but Automated Clearing House (ACH) transactions are likely to rise significantly, particularly for B2B payments — the main use case of checks at present.
As such, firms must ensure that they are prepared to meet the increased monitoring demands for fraud and Bank Secrecy Act (BSA) compliance that this will entail.
Firms should also study the Treasury Department's example and consider using AI-based tools to spot check fraud.
This is true not only in the US but also in other jurisdictions where checks continue to play a minor role in the payments landscape.
