The check's enduring role in the payments ecosystem

For years, the Federal Reserve has conducted comprehensive studies on payment patterns, analyzing data from a wide sample of financial institutions. The Federal Reserve Payments Study (FRPS) provides an authoritative view of payment trends — including check processing on the receiving side. A separate study conducted by the Federal Reserve Bank of Atlanta examined who writes checks and who receives them. Additionally, the Diary of Consumer Payment Choice tracks how consumers use different payment methods over a one-month time period.

While the Federal Reserve focuses on historical data, these studies can also inform future forecasts, particularly regarding check usage. This data sheds light on non-cash transactions, where checks still remain significant. For the average consumer, the results might be surprising. Despite a shift toward digital payments, checks still account for over 20 percent of total payment value in the U.S.

Check trends in payment value

Measuring cash transactions is challenging, but it's clear based on Fed data that cash use is declining. Meanwhile, ACH payments have seen significant growth. What surprises many is the value conveyed by checks. Despite the rise of debit, credit and prepaid cards, checks still carry three times more value than these combined due to the higher average transaction size. Although check usage is declining, smaller transactions like grocery and bill payments have moved to cards, leaving larger, business-related transactions to checks.

This highlights the ongoing relevance of checks, especially in certain use cases where consumers prefer them. It's important for frontline staff to understand these use cases and not let personal preferences overshadow customer needs.

Consumer payment behavior insights

Recent consumer payment data challenges common assumptions. While credit and debit cards remain popular, 46 percent of consumers have used a check in the past 30 days. If unbanked consumers are excluded, that number rises to over 50 percent.

Cash also remains widely used, with 83 percent of consumers still carrying it. Despite the narrative that "cash is dead," more than four out of five people use it, often for small transactions like giving money to those in need. Even younger demographics, who are assumed to be moving away from cash, still carry it regularly.

This mentality around cash also applies to checks. Although many frontline staff may think checks are outdated, their customers often use them, especially for consumer-to-business payments, like bill payments. Despite a decline in everyday uses like groceries, checks remain relevant. These transactions account for more than half the overall value of checks in circulation due to their larger average size.

Decline of check usage in retail

Despite digital options like Venmo and PayPal, consumer-to-consumer checks remain steady. These payment apps rarely replace checks but rather create new transactions that didn’t exist before. The exception may be very small businesses, such as landscapers or babysitters, who sometimes transition to digital payments.

For instance, sole proprietors often use personal checking accounts, even though they're technically running a business. In these cases, digital payments like Venmo or Zelle may be used, but again, these transactions are mostly new rather than replacing existing check payments.

Overall, while person-to-person app transactions are growing, checks continue to hold their place in the retail space. Without a major technological leap, checks are likely to decline slowly, but they are not disappearing yet.

Shift towards card reliance

According to the Fed's diary survey, consumers are now heavily reliant on cards, whether credit or debit, for transactions. On average, people make two check payments a month, with about half of all consumers writing checks regularly. While some may write many checks, others write few, resulting in this average.

Although electronic payments dominate, checking accounts remain central to financial activity, as debit and even credit card payments often pull from them. Despite the rise of e-commerce and electronic transactions, checks are still used for certain payments, especially bill payments.

Income and check usage

Interestingly, check usage varies by income level. Consumers earning less than $75,000 are more likely to use checks for bill payments, while those earning over $150,000 lean toward credit cards, likely to maximize rewards rather than float expenses. Even at higher income levels, check usage remains notable, reflecting diverse consumer habits.

These insights highlight the importance of not letting personal habits cloud judgment when serving customers. Frontline staff and other departments should be aware that while they may not use checks, many customers, especially small businesses, still do. This data can be a valuable resource to better understand and serve a wide range of customers.

Shifts in check usage patterns

Business checks now account for nearly 50 percent of all checks in the U.S., a significant shift from 10 to 20 years ago when consumer checks dominated. While consumer check use has declined, business check usage remains more resilient. A survey by Barlow Research shows that small to mid-market businesses, particularly those with revenues as low as $2-3 million, still rely on checks as a primary payment method, both for sending and receiving payments.

For small businesses, checks remain common, even when the accounts look like personal accounts. Direct deposit, which led to a major drop in payroll checks in the 1980s, has long replaced that use case. Similarly, small refunds, once issued by check, have been largely replaced by gift cards or other digital alternatives. However, most of the consumer check use cases that could be replaced have already been phased out.

The stickiness of B2B transactions

Business-to-business (B2B) transactions, especially in small businesses, have proven to be the most "sticky" when it comes to maintaining check usage. Despite ongoing efforts to simplify the process and reduce reliance on checks, the decline in B2B check transactions has been slow. Small businesses, which are a key focus for many banks, are particularly entrenched in their use of checks.

A major reason for this stickiness lies in the remittance information that accompanies payments. Small businesses need detailed information on what they're paying for and why certain amounts are deducted. For example, a supplier might send payment for one order but withhold payment for a second due to damage, or take a discount based on agreed terms. This remittance information is crucial for maintaining cash flow, which is essential for small business survival.

The challenge lies in how this information is delivered. While there are multiple ways to share remittance details, like email, matching those details with digital payments isn't always straightforward. In some cases, businesses opt to send both a check and the remittance information together in the same mailing, which keeps checks relevant in these transactions. This issue extends to industries like healthcare, where explanation of benefits often accompanies payments, further reinforcing check usage.

Ultimately, until there’s an easy, seamless way to match payments with detailed remittance information, checks will likely remain a key tool for many small businesses.

Segmentation in small business payments

Small business payment behaviors are influenced by both the psychographics of the entrepreneur and the specifics of their payment methods. For instance, a business receiving only three to four checks a month may find no need for invoice matching solutions.

However, as a business grows and becomes more complex — such as transitioning from QuickBooks or hiring an accountant — entrepreneurs begin to consider more advanced solutions. This transition often marks a pivotal point in their payment strategies, prompting a reevaluation of their financial management practices.

Predictions for check usage

By 2030, Deluxe predicts that check usage will decline to 7 billion transactions, but checks will still have their place. Understanding the specific use cases for checks is crucial, especially for small businesses that may not have the budget for invoice matching solutions.

For these businesses, checks remain a viable option. In contrast, mid-sized and larger businesses may opt for more expensive invoice matching solutions to eliminate the need for checks, though this often depends on the volume of transactions rather than revenue.

Ultimately, the segmentation of small businesses is more complex than consumer segmentation, and tailoring solutions to meet diverse needs will be key in the evolving landscape of payment methods.

Future of payment methods

The decline of consumer checks at retail point-of-sale has been one of the most significant factors in the reduction of check usage over the past 20-25 years. With much of that decline already realized, the remaining checks in use are still waiting for a more convenient alternative to drive further decline, which may not happen quickly. Emerging digital payment methods like Venmo, Cash App, and PayPal aren’t necessarily replacing checks, but instead seem to be creating new transactions that didn’t exist before.

Similarly, innovations like direct deposit and the Real-Time Payments (RTP) network, launched by the Clearing House, provide faster and more efficient payment solutions. However, these new technologies are unlikely to substantially reduce check volumes. In fact, the convenience of real-time payments may encourage more frequent transactions, such as paying multiple times throughout the month rather than just once.

Despite these advances, no major innovation currently appears poised to cause a significant drop in check usage. While new solutions like RTP and FedNow have the potential to impact payment behaviors, their effects on check volumes may be more incremental than transformative. The “quantum leap” that would drive a steep reduction in check usage hasn’t yet emerged, and even if such an innovation did appear, it would likely take years to fully realize its impact.

Note: This blog was informed by a breakout session held during Deluxe Exchange 2026 with contributions from Glen Sarvady of 154 Advisors.