BPI and TCH Comment on Federal Reserve Check Services Request for Information

To Whom it May Concern:

The Clearing House Association^[1] and the Bank Policy Institute^[2] appreciate the opportunity to respond to the request for information and comment the Board of Governors of the Federal Reserve System ("Board") issued on the future of the Federal Reserve Banks' check services (the "RFI").^[3]

As check use continues to decline, we believe that consumers and businesses should be encouraged to use electronic payments rather than checks. The banking industry has made significant investments in modern, eficient, and secure electronic payment systems. The shift to electronic payments has become particularly important as check fraud increases, the cost to operate check services rises, and check-processing infrastructure ages.

We therefore encourage the Federal Reserve to develop-in close collaboration with the private sector and other stakeholders-a longer-term plan to transition the industry away from checks in favor of safer electronic payment alternatives. As part of this plan, the Federal Reserve should consider establishing a target date to end check services so all stakeholders can prepare for an orderly transition to safer electronic payments over time. While supporting this orderly transition, the Federal Reserve must preserve the reliability of key Reserve Bank check services in the near term. These services remain critical operational infrastructure for the time being, providing nationwide reach and standardized processing for forward collection, returns, and adjustments.

I. We encourage customers to use safer and more efficient electronic payments given the heightened risks and costs associated with checks, but barriers remain.

At present, depository institutions provide check services because certain customers, both commercial and consumer, continue to rely on them for certain payments. Even with the long-term decline in the use of checks, they continue to be processed on a very large scale.^[4] And checks continue to be frequently used for high-value payments, particularly in commercial contexts.^[5]

At the same time, even as check volumes decline, the nature and design of checks have made them a growing target for fraud because checks are physical instruments that often travel through unsecured environments and can expose sensitive account information. Checks are inherently more vulnerable to theft, alteration, and forgery compared to electronic payments. Checks lack security features inherent in electronic payments, such as encryption and real-time authentication; their security features designed to ensure transaction validity, such as holograms and watermarks, are becoming increasingly irrelevant as more checks are deposited as images rather than physical items. Checks are costly to originate, handle, transport, and reconcile, and exception processing is also costly.

For those reasons, many depository institutions actively encourage businesses and consumers to migrate from checks to electronic payments that can deliver greater speed, stronger security controls, and more eficient reconciliation. The industry now has a credible and well-established set of alternatives to checks, reflecting depository institutions' targeted investments in electronic payment infrastructure. Over the past decade, adoption of these alternatives has accelerated as capabilities such as same-day automated clearinghouse ("ACH"), instant payment, and peer-to-peer payment services have moved from niche oferings to mainstream payment options. Additionally, depository institutions provide customers with communications and educational materials outlining the risks associated with checks, including materials describing the proliferation of mail theft and check fraud observed since the COVID-19 pandemic. Some depository institutions have taken further steps to reduce check usage, such as issuing checkbooks only upon customer request.

Indeed, many depository institutions have invested heavily in modern payment capabilities and customer experiences. Examples include online and mobile banking, treasury portals, and connectivity tools that support straight-through processing and better data integration.6 These investments are complemented by layered security and risk controls such as customer authentication, fraud monitoring, payee and account validation approaches, secure onboarding processes, and encryption that are better aligned to today's threat environment than paper-based instruments. In addition, depository institutions continue to invest in the development and enhancement of digital payment tools and platforms, particularly for business payments, by expanding features that support invoicing, remittance information, and integration with receivables and reconciliation processes. These capabilities provide a realistic path to move many routine consumer and business payments away from checks while still meeting customer expectations for speed, certainty, and convenience.

To read the full comment letter, please click here, or click on the download button below.

[1] The Clearing House Association L.L.C., the country's oldest banking trade association, is a nonpartisan organization that provides informed advocacy and thought leadership on critical payments-related issues. Its sister company, The Clearing House Payments Company L.L.C., owns and operates core payments system infrastructure in the United States, clearing and settling more than $2 trillion every business day.

[2] The Bank Policy Institute is a nonpartisan public policy, research and advocacy group that represents universal banks, regional banks, and the major foreign banks doing business in the United States. BPI produces academic research and analysis on regulatory and monetary policy topics, analyzes and comments on proposed regulations, and represents the financial services industry with respect to cybersecurity, fraud, and other information security issues.

[3] Request for Information and Comment on the Future of the Federal Reserve Banks' Check Services, 90 Fed. Reg. 57062 (Dec. 9, 2025).

[4] Federal Reserve Board, Federal Reserve Payments Study (last accessed Mar. 2, 2026), https://www.federalreserve.gov/paymentsystems/fr-payments-study.htm.

[5] The 2024 Federal Reserve Business Payments Study found that 73 percent of small businesses continue to use checks as a primary payment method, more than any other payment rail. See FED. RSRV. FIN. SERVS., 2024 BUSINESS PAYMENTS STUDY 12 (2024), https://fedpaymentsimprovement.org/wp-content/uploads/2024-federal-reserve-payments-insights-business-study.pdf. Moreover, the number of consumer checks (5.2 billion) was less than the number of business checks (5.7 billion) for the first time in 2021. See Federal Reserve Payments Study, BD. GOVERNORS FED. RSRV. SYS. (Mar. 6, 2025), https://www.federalreserve.gov/paymentsystems/fr-payments-study.htm