New data on fraud, cost and settlement delays is prompting finance leaders to rethink the default.
Paper checks have survived multiple waves of payment innovation. Even as companies adopted cloud-based accounting systems, automated invoicing and digital banking, checks remained embedded in many accounts payable workflows.
For years, that persistence could be explained by familiarity. Checks were widely accepted, already connected to existing approval processes and seemingly straightforward to control. Moving away from them could feel like a larger operational project than continuing to print, sign and mail them.
In 2026, however, that calculation looks different. The federal government has moved away from most paper check disbursements, check fraud continues to outpace fraud involving other payment methods and digital payment options have become easier to implement. At the same time, the cost of maintaining manual processes is becoming harder to overlook.
None of these developments emerged overnight. Together, however, they give finance leaders a clearer and more measurable reason to reconsider whether checks should remain the default.
One of the clearest signals came from the U.S. federal government.
Executive Order 14247, “Modernizing Payments To and From America’s Bank Account,” directed the U.S. Department of the Treasury to stop issuing paper checks for most federal disbursements beginning Sept. 30, 2025. The order included benefit payments, tax refunds and vendor payments, subject to limited exceptions.
The executive order described paper-based payments as a source of unnecessary costs, delays, fraud, lost payments, theft and inefficiency. It also reported that Treasury checks have historically been 16 times more likely than electronic funds transfers to be reported lost or stolen, returned as undeliverable or altered. Maintaining the federal infrastructure required to process paper records cost taxpayers more than $657 million in fiscal year 2024.
Private companies are not required to follow the same timeline, but the federal transition establishes an important precedent. One of the largest and most complex payment operations in the country determined that the risks and costs of paper checks no longer justified their continued use as a standard disbursement method.
That decision has practical implications for businesses that receive federal payments. Contractors, vendors, grantees and other organizations receiving federal payments may also increasingly need to ensure they can accept electronic disbursements.
For finance teams still treating checks as the stable default, the Treasury’s transition offers a useful point of comparison and a reason to reassess whether continued reliance on paper remains justified.
Checks can feel secure because they are physical. A payment must be printed, approved, signed and mailed. Those tangible steps can create a feeling of control.
However, recent fraud findings challenge this story.
According to the 2026 Association for Financial Professionals Payments Fraud and Control Survey, 58% of organizations experienced check fraud in 2025. Checks remained the payment method most affected by fraud even as 87% of organizations continued to use them.
Counterfeit checks are only one part of the risk.
The FBI and the U.S. Postal Inspection Service have warned that mail theft-related check fraud is rising. Fraudsters may steal checks from residential mailboxes, postal collection boxes, delivery routes or postal facilities. They can then alter the original payment through check washing, use an image of the check to create counterfeits or deposit it using a forged endorsement.
The FBI reported that suspicious activity reports related to check fraud nearly doubled between 2021 and 2023.
FinCEN documented the scale of the problem from another angle. During a six-month review period in 2023, financial institutions submitted 15,417 reports related to mail theft-related check fraud, representing more than $688 million in reported suspicious activity. The agency found that stolen checks were commonly altered, used as templates to create counterfeits or deposited with fraudulent signatures.
A check also exposes information that can be reused. Account numbers, routing numbers, signatures and business details may all be visible on the document. Once compromised, those details can support additional fraud attempts that extend beyond the original payment.
No payment method eliminates fraud risk. Electronic payment workflows can also be targeted through business email compromise, account takeover and fraudulent requests to change vendor banking details. The distinction is that digital business payment systems can apply verification requirements, approval rules and transaction monitoring before funds are released.
A paper check moving through the mail offers fewer opportunities to detect interference after it leaves the finance team.
The visible cost of a check is easy to underestimate.
Paper, envelopes and postage are only part of the total expense. Finance teams must also account for employee time spent printing checks, securing signatures, preparing mail, updating records, answering vendor questions and reconciling cleared payments.
Exceptions add another layer. A check may be lost, delayed, deposited incorrectly or sent to an outdated address. Resolving the issue can require a stop-payment request, check reissuance, vendor communication and additional reconciliation.
Industry benchmarking from the Association for Financial Professionals has consistently found that checks cost more to issue than ACH payments once processing and operational expenses are included. The exact cost varies by organization, but the direction of the comparison is clear: A manual payment carrying printing, postage, labor and exception-handling costs is difficult to match against an automated electronic transaction.
The difference becomes more meaningful at scale. A small cost gap across a handful of checks may not attract attention. Applied across hundreds or thousands of monthly vendor payments, it becomes a recurring operating expense. The process also consumes staff capacity that could otherwise support cash management, exception analysis, supplier relationships or other higher-value finance work.
For organizations working with leaner teams, the opportunity cost matters as much as the transaction cost.
Checks also create uncertainty between the date a payment is issued and the date it clears.
During that period, the payment may appear complete within the AP workflow while the funds remain in the company’s account. That delay can complicate cash forecasting, make outstanding balances harder to interpret and add another layer of reconciliation during the month-end close.
Finance teams may need to identify uncashed checks, investigate older outstanding payments and determine whether a vendor received the original document. Vendors, meanwhile, may contact AP for payment status updates because they cannot see where the check is in the delivery or deposit process.
Electronic payments can provide clearer processing information and more predictable settlement. ACH, virtual card and realtime payment options each serve different needs, but all can reduce the physical uncertainty created by a check traveling through the mail.
Realtime payments are also moving beyond early adoption. Research published by PYMNTS Intelligence in 2026 found that 53% of surveyed businesses planned to adopt The Clearing House’s RTP network within two years. Respondents cited cash flow management, supplier relationships and reconciliation among the anticipated benefits.
The payment landscape is not simply moving toward one universal rail but toward greater choice, visibility and control.
The strongest argument for maintaining checks is often not that they are better but that changing the process appears disruptive.
Finance teams may worry about vendor resistance, limited IT capacity, implementation demands or the prospect of replacing systems that already support their accounting operations.
A measured transition can address those concerns.
Organizations can begin by reviewing where checks create the greatest cost, risk or operational burden. That may include high-volume vendor groups, payments with frequent exceptions or checks mailed to suppliers that already accept electronic options.
From there, businesses can move appropriate payments to ACH, virtual card or realtime rails while retaining limited check capabilities where necessary. Vendor validation, approval controls and payment data can be incorporated into the workflow to support security and reconciliation.
REPAY helps businesses modernize vendor and supplier payments without requiring them to replace their existing enterprise resource planning or accounting systems. Digital payment options, secure controls and system integrations allow finance teams to reduce check volume at a pace that works for their operations.
A modern payment strategy should provide greater flexibility, allowing finance teams to select, issue and track payments while reducing the manual work associated with paper.
For decades, “we have always used checks” could end the discussion. The process was familiar, widely accepted and already built into the finance department’s routine.
That explanation is becoming less persuasive.
The federal government has shifted most disbursements to electronic payments. Check fraud continues to affect a significant share of organizations. Manual processing carries recurring costs and delayed settlement creates unnecessary reconciliation work.
Finance teams do not need to wait for a major fraud incident or operational failure before reconsidering their payment strategy. The cumulative business case already exists.
By evaluating paper checks against today’s cost, risk and payment capabilities, organizations can make a deliberate transition rather than a reactive one. REPAY provides the technology and operational support to help businesses reduce paper-dependent workflows, integrate electronic payment options and modernize vendor payments without rebuilding their financial infrastructure.
In 2026, the question is not whether paper checks still function but whether they still make financial and operational sense.
Businesses are reducing paper check use because checks carry higher processing costs, greater fraud exposure and slower reconciliation than many electronic payment options. Federal payment modernization and wider adoption of digital payment rails are also accelerating the shift.
Checks remain one of the payment methods most frequently targeted by fraud. Mail theft, check washing, counterfeiting and exposed account information can all create risk. Electronic payments still require strong controls, but they can support verification, approval rules and transaction monitoring before funds are released.
Common paper check alternatives include ACH, virtual cards and realtime payments. The right option depends on vendor preferences, transaction type, cost, security needs and settlement speed.
ACH payments generally cost less to process than paper checks because they reduce printing, postage, manual handling and exception-related work. The exact savings depend on payment volume, current processes and the level of automation used.
Yes. Modern vendor payment automation platforms developed by REPAY can integrate with existing enterprise resource planning and accounting systems. Businesses can transition gradually by moving selected vendors or high-volume payments to electronic methods while retaining checks where necessary.