We’ve been following the story of the demise of the paper cheque/check for some years. Let’s take another look and see what's changed since our last article on the subject.
Setting the scene
For most of the 20th century, paper cheques were one of the world’s dominant payment methods. Businesses paid suppliers with them, governments mailed benefits and tax refunds by cheque, and households used them for everything from rent to utility bills.
Over the last three decades, most developed economies have steadily shifted toward electronic payments such as EFT (Electronic Funds Transfer), direct deposit, internet banking, debit cards, instant payments, and mobile payment apps.
Driving the change
When it comes to the why, this should surprise nobody. The main reasons for the transition are practical, economic, and technological.
- First, electronic payments are way faster. A cheque can take days to clear because it must be physically deposited, verified, and processed through banking systems. EFT and real-time payment systems can move money almost instantly.
- Second, electronic payments are cheaper. Processing paper cheques requires printing, transport, fraud detection, manual handling, storage, and specialised clearing infrastructure.
Central banks and payment authorities increasingly argue that maintaining cheque systems for a shrinking number of users is inefficient and expensive. (Australia’s Reserve Bank would be far from alone in noting that cheque transaction volumes have collapsed, while the cost per remaining cheque continues to rise.)
- Third, digital systems are more convenient. Online banking, smartphone apps, tap-to-pay cards, and real-time transfer systems allow consumers and businesses to send money without visiting a bank or mailing documents.
- Finally, security: Governments and banks increasingly see electronic payments as more secure and traceable. Paper cheques are vulnerable to loss, theft, forgery, alteration, and mail fraud.
Leading the Charge for Change
Many countries have either eliminated cheques entirely or reduced them to near-obsolescence. Here are just some examples:
- The Netherlands effectively phased out cheque usage years ago after banks stopped supporting them widely. The country moved heavily toward direct debit and electronic transfers.
- Denmark and Sweden also largely abandoned cheque use decades ago, becoming leaders in digital payments and cashless transactions.
Elsewhere in Europe, the rise of unified banking standards such as SEPA (Single Euro Payments Area) has accelerated the move away from cheques by making cross-border transfers cheap and easy. Looking further south:
- In New Zealand, banks progressively stopped accepting and issuing cheques between 2018 and 2021. Major banks such as ANZ, BNZ, ASB, and Westpac all shut down cheque processing services, pushing customers toward online banking and electronic transfers.
- Australia is also on the path towards a formal wind-down. The Australian Government plans to phase out government cheque use by 2028 and close the cheque system entirely by 2030. (Cheques now account for less than 0.1% of Australian payments.)
American Exceptionalism?
The notable exception among advanced economies is the United States. Although cheque usage in the US has declined substantially, Americans still write billions of cheques annually. Businesses, landlords, government agencies, older consumers, and certain industries continue to rely on them.
So, why has the US lagged behind other developed nations? Here are some contributing factors:
- A fragmented banking system: Unlike countries dominated by a handful of large banks, the US has thousands of banks and credit unions. Coordinating nationwide payment modernisation is therefore slower and more difficult.
(In Canada, by contrast, the support of large banks has been instrumental to the successful introduction and evolution of Interac, its national electronic transaction processing system.)
- Historical infrastructure: The US developed a massive cheque-processing ecosystem long before modern electronic banking existed. Many established accounting and payment systems are built around cheque workflows. For a business to decouple from this can be costly and disruptive.
- Cultural habit also plays a role. Older Americans in particular are comfortable with cheques and may distrust digital payments. Some businesses prefer cheques because they avoid merchant card fees or provide a paper trail.
(A search of social media uncovers a lot of passionate commentary about the perceived downside of doing away with paper cheques - much of it unfit for publication here!)
The US also relied heavily on ACH (Automated Clearing House) transfers, which historically were slower and less user-friendly than the instant bank-transfer systems adopted elsewhere. Until recently, the US lacked a widely adopted real-time national payment system comparable, for example, to Australia’s PayID or the UK’s Faster Payments.
Is change coming in the US? Perhaps!
- The US Federal Reserve launched the FedNow instant payment system in 2023, allowing participating banks to transfer money in real time.
Meanwhile, the federal government has started accelerating its own move away from paper payments.
- In 2025, the White House ordered federal agencies to phase out most paper cheques by September 2025, affecting tax refunds, benefits, and other government payments.
There is also growing discussion within the Fed and banking industry about eventually winding down cheque-clearing infrastructure altogether, although no final nationwide shutdown date has been announced.
So, in summary…
- Speed, efficiency, lower costs, and digital convenience are driving the world’s move away from cheques.
- Most advanced economies now treat cheques as a legacy system.
- The US is following the same path, but more slowly due to its fragmented banking structure, entrenched business practices, and the sheer scale of its legacy cheque infrastructure.
What are you waiting for?
The humble cheque may be destined for a slow death in your country, but here is no need to be the last one off the sinking ship.
You can join the thousands of businesses that have been taking matters into their own hands for years with Orchid’s EFT Processing.
Say goodbye to paper-based payments and enjoy the benefits today of increased efficiency, greater accuracy, and improved security.
