With the rise of digital banking and online payments, the use of checks has undergone a massive shift. In 2021, the Federal Reserve processed 14.5 million checks per day, a dramatic drop from the daily 26.7 million daily it processed 10 years earlier.

The average dollar amount of checks went up during the same period—from $1,187 in 2011 to $2,395 in 2021.

With mail theft on the rise and more ways that fraudsters are modifying existing checks to display their names, checks are more vulnerable than ever to fraud even as their use declines.

During a recent PaymentsJournal podcast, Steve Bartels, Senior Director of Solutions Consulting at Q2, and Brian Riley, Co-Head of Payments at Javelin Strategy & Research, discussed how financial institutions must let their business clients know they are doing everything possible to protect them from fraud and address their needs.

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What’s Driving Increased Check and ACH Fraud

Mail theft is on the rise, contributing to the surge in check fraud. Beyond the theft of checks directly from mailboxes, there have been instances of stolen mail trucks.

In some cases, the ease of modifying checks contributes to the rise in fraud. Many criminals are able to simply wash and modify the payee name on the check and alter it.

“In 2021, we saw a huge hockey stick growth in check fraud, and Q2’s Positive Pay system has about 600 banks across the country using Positive Pay,” Bartels said. “In 2021, we stopped and identified about $350 million in checking ACH fraud, and in 2022 it was more than double at $720 million. I looked at the first quarter numbers of this year, it was closer to $200 million in the first quarter. So we’re certainly still on that increasing track of fraud.”

Amid the increased check fraud—and with fewer checks being processed by the Federal Reserve—checks aren’t on their way out just yet.

“The death of the check is greatly exaggerated,” Riley said. “Checks will be around just like cash will be around for many years to come. And to show you how relevant it is, start looking at faster payments. Right now, clearances are starting to go in through so quickly on checks, whether they’re ACHs or physical checks. Certainly, that route comes into play, and that’s really one of the areas that attracts fraudsters.