Fed Requests Input, Looks To Change Check Services

On December 9, 2025, the Federal Reserve published a Request for Information seeking public input on the future of its paper check services. The RFI highlights the possibility of the Fed forgoing future investments in check infrastructure, streamlining current offerings, materially upgrading infrastructure, or even ending the services altogether. The RFI comes while the Fed with other agencies develop regulations to implement the GENIUS Act on payment stablecoins and the OCC clarifies the permissible scope of digital asset activities for national banks.

Banks, payments companies, those providing new payments alternatives, and businesses for which checks remain critical should consider commenting.

Why Now?

Echoing the March 2025 Executive Order directing Treasury to transition away from paper checks, the RFI cites rising fraud, high operational costs, and accelerating declines in check usage. It further notes the deterioration of the Fed's legacy check infrastructure and the substantial cost of needed upgrades. By law, those costs must be recovered through service fees charged to banks, raising questions about the long-term sustainability of the service.

What's Under Consideration?

The RFI outlines several potential strategic paths, including:

• Maintaining current services without further investment—an approach the Fed acknowledges would lead to ongoing degradation and reduced reliability.
• Simplifying offerings by discontinuing certain services, which the Fed also acknowledges could be potentially disruptive.
  • For example, it notes that eliminating check adjustment services would leave Reserve Banks responsible only for resolving settlement discrepancies they cause, while requiring financial institutions to resolve other errors among themselves.
  • Other simplification measures could result in reduced hours of operation, lower resiliency levels, or fewer deposit deadlines.
• Substantially winding down all check services.
• Making significant investments to modernize the infrastructure and preserve current service levels.

Bowman's Dissent

Emphasizing that the RFI "seems to favor the discontinuation of check services even while checks remain an important payment mechanism," Vice Chair for Supervision Michelle Bowman opposes it. She emphasizes the continued importance of checks for many consumers and businesses, even as she acknowledges fraud concerns—an issue the Fed began to address earlier this year through an interagency request for comment.

What's Requested?

The RFI poses broad questions, including which check services functions are critical, the operational or market impact of a reduction or cessation of check services, the willingness of institutions to absorb higher service fees, the feasibility of transitioning to alternative providers or alternative payment methods, and any planned efforts to reduce reliance on checks given that check usage has continued to decline. The RFI also requests general commentary on the risks, benefits, and continued relevance of check payments.

Curiously, other than suggesting that additional investments could be used to support private-sector initiatives to enhance check security, the RFI does not really grapple with ways checks could be improved, but rather points out their disadvantages.

Institutions for which Fed check services are business-critical—and for which switching providers or shifting customers to alternative payment methods would be costly or disruptive—may wish to (1) respond to the RFI directly or through trade associations; and (2) begin government relations planning If Vice Chair Bowman's statement is correct, as the RFI may signal a meaningful strategic shift away from Fed check operations—which many countries have already done.

Conversely, institutions or parties that do not rely on Fed check services (or do not plan to) may choose to highlight the opportunity cost of major reinvestment in check infrastructure, and advocate instead for continued modernization of electronic payment systems and updates to check and funds-availability regulations to reflect the dominance of electronic payments.

How Institutions Can Prepare

Banks and other direct users may consider:

• Preparing or reviewing comments in response to the RFI.
• Evaluating whether they can move potential transitions away from check reliance and the regulatory implications and costs associated with alternative payment methods, both in the short- and long-term.
• Assessing policies on check holds or other funds availability practices in light of heightened fraud concerns and the Expedited Funds Availability Act.

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