The Trump administration in the US has kicked off a drive to phase out the use of paper cheques in government payments as part of a concerted effort to modernise the nation's archaic payment systems. In a wide-ranging executive order last month, the White House directed all federal agencies to end the issuance or acceptance of cheques by the end of September, wherever legally allowed, the Financial Times reported.
The action is designed to cut costs, increase efficiency, and curb fraud. "It's 2025, we shouldn't be sending paper cheques, at a cost that's effectively 10 times more than an electronic payment," explained Joe Fielding, a partner with Bain & Co. The expense and inefficiency of cheques have made them an obvious target for reformers.
America is the global leader in cheque usage
Despite four decades of computerisation in finance, the United States is the globe's busiest cheque-writing nation. Americans produce ten times more cheques combined than citizens in the UK, Germany, France, Australia, and Italy, McKinsey said. The use is particularly noticeable in government dealings — almost one in every five payments to the US government in 2023 were made via cheque, based on the Atlanta Federal Reserve.
Cheques endure because there is a decentralized banking environment with more than 4,000 banks and an equal number of credit unions and system-wide modernisation is an operational nightmare. "We have a payments system in the US that needs to serve JPMorgan Chase, community banks, and the local credit union using filing cabinets in the basement of a church," stated John Pitts, policy director at fintech company Plaid.
Resistance from banks and small businesses
US banks, fearing they would lose profitable credit and debit card fees, have been reluctant to adopt account-to-account payment methods that might take the place of cheques. By contrast, nations such as Canada have been quick to adapt to e-payment systems like Interac due to a more consolidated banking industry.
Small businesses, too, have resisted change. Many contractors and tradespeople still rely heavily on cheques to avoid credit card fees that typically exceed 1 percent per swipe — much higher than the capped rates in Europe. According to Atlanta Fed data, 23 percent of payments to US contractors still come via cheque.
Retailers and seniors slow to change
Merchants are slowly eliminating cheques from customer-facing business. Target, for example, no longer accepts them, although Walmart still provides cheque cashing. But the holdout is strong among older Americans. Around 5.5 percent of payments made by people over age 65 are still by cheque, compared with only 1.5 percent for Americans younger than 35.
“There's still consumer demand to be able to have cheques as payment," said the Atlanta Fed's Kevin Foster, adding that while many older Americans are comfortable adapting to the latest technology, the familiarity of cheques remains widespread among them.
Inertia may put the paperless world on hold
While cheque usage is slowly on the decline, concerns are that cultural momentum and fear of dislocation will slow the transition. Merchants are afraid that changing payment procedures will add friction in checkout, and habitual users resist switching to new, unfamiliar digital substitutes.
"If they're used to doing something one way, then they likely want us to leave it that way," Foster said. "That's why they insist on being able to continue writing cheques."
Whereas the Trump administration's order can speed transformation within government, a cheque-less America is far from at hand. In the meantime, the paper cheque is a tenacious — albeit declining — reminder of how deeply financial custom is influenced by tradition.
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