For most people, payment habits evolve over time, then change abruptly. The next thing you know, the coins start piling up at home, while checks stop appearing in daily transactions. In late 2025, the United States Mint stopped producing 1-cent coins after years of rising production costs. The decision signaled a broader shift toward lower-cost, electronic payment rails. At the same time, central banks and regulators have been weighing how long paper-based systems should keep operating at scale, especially as fraud risks grow and consumer expectations move toward instant transfers. The push toward digital payments now blends convenience, cost, security, and access, and the trade-offs show up differently for households, businesses, and governments.
The Penny Exit
The end of penny production in the United States did not happen because people stopped using money. It happened because producing that coin stopped making financial sense. The U.S. Mint’s own public guidance notes that the estimated cost of producing each penny rose sharply over the last decade. In its Penny FAQs, the Mint points to how the unit cost increased from 1.42 cents to 3.69 cents over roughly 10 years, which turns every new penny into a loss at the moment it leaves the Mint. The same page also explains the institutional barrier that kept the penny alive for so long, since “no Secretary of the Treasury had determined that the production of one-cent coins was no longer necessary.” That one sentence captures the real friction. The penny survived through inertia and logistics, not because it powered modern commerce.
Once penny production stops, the practical question becomes rounding for cash transactions. Other countries provide a template. Canada’s 2012 budget documents explained that the cent would remain the unit for pricing, yet cash totals would need rounding as pennies were withdrawn from circulation. Canada also kept pennies as legal tender, which helped the shift land without forcing an immediate purge of coins from homes and tills. In the United States, researchers have also modeled symmetric rounding rules, and a Federal Reserve Bank of Atlanta analysis argued that the inflation effect from rounding can be minimal under common rules. The point is not that rounding has zero impact for every shopper. The point is that small-value coin systems can become expensive to maintain, even when the wider economy still runs smoothly.
Infrastructure Under Pressure
Checks occupy an odd place in the payment system. Many people rarely write them, yet checks still move large sums for rent, contractors, business-to-business payments, and government flows. That mismatch creates a policy problem. When volumes fall, the fixed costs of running a nationwide check-clearing network become harder to justify. In early December 2025, the Federal Reserve published a request for information on the future of the Federal Reserve Banks’ check services. The central question was straightforward: should the Fed keep investing in check infrastructure, streamline it, or plan for a phase-down? Even before any decision, the request itself signaled that the status quo no longer looked stable.
The debate inside the Fed has already surfaced in public statements. In a written statement, Vice Chair for Supervision Michelle Bowman objected to the direction of the request, writing, “I cannot support the check-services notice as drafted. She warned that it “seems to favor the discontinuation of check services,” even while checks still play a meaningful role. Her statement also cited the scale of remaining use, noting that in 2021, people wrote about 11 billion checks, and checks represented a small share of noncash transactions but a much larger share of total value. Those numbers explain why the discussion is tense. A low-volume system can still be high-stakes, and the people who depend on checks often have few quick substitutes.
The New Benchmark for Speed
Digital payments are not one thing. They run on different rails, settle at different speeds, and carry different risk controls. What has changed recently is the baseline expectation. People now expect money to move quickly, including outside banking hours. In the United States, the Federal Reserve launched the FedNow Service in July 2023 to support instant payments between participating institutions, operating every day. The Fed describes FedNow as a platform that can support a wide variety of instant-payment use cases, with banks and credit unions offering services on top of it.
The Fed’s launch messaging made the intended benefits concrete. In the official announcement, Chair Jerome Powell said, “The Federal Reserve built the FedNow Service to help make everyday payments over the coming years faster and more convenient.” He then tied that speed to everyday cash-flow problems, such as receiving wages immediately or a business accessing funds when an invoice gets paid. Instant settlement changes how people manage overdraft risk, late fees, and emergency expenses. Yet speed also concentrates risk when scams succeed, because victims have less time to stop a transfer. That tension sits at the center of the digital payments push. Faster payments can deliver real value, but they also demand stronger controls, clearer dispute processes, and better fraud prevention at the point of authorization.
This Does not Mean they Disappear
A common mistake in digital-payment debates is treating change as a straight line. Usage can fall while importance stays high for specific situations. Research in multiple regions shows that people keep cash for certain purchases and for backup. In the euro area, the European Central Bank’s 2024 consumer attitudes study summarized this tension clearly. Its press release stated, “Despite the trend towards digital payments, the number of cash payments remains significant in 2024.” That line matters because it comes from a central bank watching payment behavior in detail, not from a marketing campaign. Cash persists because it works without power, without internet, and without a card network.
The same ECB study also found broad support for keeping cash available, even among people who prefer cards in shops. In the detailed results, the ECB reported that 62% of consumers considered it important or very important to have cash as a payment option. That preference shows up during outages, transport disruptions, and local emergencies. It also shows up in daily life for privacy-minded consumers, informal workers, and small merchants who want immediate finality. Even in business settings, ECB research has reported meaningful cash handling by companies, including withdrawals over counters and ATMs. Digital rails can reduce handling costs and speed reconciliation, but cash still performs as a resilient public option.
The Politics of Payment Change
A payment system can look modern and still leave people behind. That risk is why financial inclusion has become a recurring theme in digital-payment policy. In the United States, the FDIC’s household survey remains a key reference point for account ownership and access barriers. The FDIC describes the survey as nationally representative and designed to measure how households meet transaction needs. In its 2023 findings, the FDIC reported an unbanked rate of 4.2%, with higher rates in lower-income and less-educated households, among other demographic patterns. A smaller unbanked share still represents millions of households, and those households often rely on cash, money orders, and check-cashing services.
Globally, the story unfolds differently, especially where mobile money leapfrogs traditional bank branches. The World Bank’s Global Findex 2021 highlights how mobile money drives account growth, and it reports that in Sub-Saharan Africa, 33% of adults have a mobile money account. That statistic shows why digital payments can expand access when the product fits local reality. However, inclusion depends on coverage, fees, consumer protections, and the availability of effective dispute resolution. Digital payments can also create new exclusion, if merchants stop accepting cash, if identity requirements block onboarding, or if fraud risks make people afraid to use apps. For a transition away from checks and coins to succeed, it must protect the people who use legacy methods for reasons tied to access, not preference.
The Real Trade-Off
Digital payments rely on electricity, connectivity, software, and coordinated infrastructure across many firms. When everything works, they win on convenience. When something breaks, the failure can spread fast. That is why central banks and supervisors keep talking about resilience, redundancy, and operational risk. Cash plays a role here that payment apps cannot fully replace. It provides settlement finality in person, without depending on a bank’s uptime or a card network’s authorization systems. It also provides a widely understood fallback during cyber incidents, natural disasters, and technical outages.
At the same time, resilience is not only about cash. It also includes secure authentication, layered defenses, and safer user behavior. NIST’s small business cybersecurity guidance puts the authentication issue in plain language, stating, “MFA is an important security enhancement that requires a user to verify their identity” with more than a password. That guidance applies directly to payment apps, online banking portals, and merchant dashboards. As checks and coins fade, more people will touch digital systems more often, which increases exposure to phishing, account takeover, and social engineering. A resilient system, therefore, needs secure design, plus public education that matches how scams work today.
Raising the Stakes of Fraud
The move to digital payments brings a predictable side effect: criminals follow the money. Fraud now blends technical tactics with psychological manipulation, and instant settlement can reduce the time available to interrupt a scam. The Federal Trade Commission reported that consumers lost more than $12.5 billion to fraud in 2024, describing it as a sharp year-over-year increase. That headline number matters because it reflects reports across scam types, including impersonation and payment redirection schemes that exploit everyday transfer tools. People often blame technology alone, yet many scams succeed because criminals pressure victims into sending money themselves.
Law enforcement data also shows the scale of online-enabled crime. The FBI’s Internet Crime Complaint Center said its 2024 report combined 859,532 complaints with reported losses exceeding $16 billion, and the annual report PDF lists losses at $16.6 billion. Those losses span phishing, investment fraud, business email compromise, and other categories tied to digital channels. When a person wires funds, pushes a real-time transfer, or sends crypto, recovery can become difficult. That reality strengthens the case for stronger authentication, better confirmation prompts, and friction at key moments. The challenge is designing that friction so it stops criminals without blocking legitimate users who depend on speed for bills and wages.
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What Comes Next
The payments shift will continue, yet the endpoint is not fixed. Governments and central banks can influence acceptance rules, fees, consumer rights, and public options. For example, when the penny disappears from production, policymakers still decide how rounding works, how businesses display prices, and how cash remains usable. Canada’s official policy language captured that balance, saying, “price rounding on cash transactions will be required” as pennies are withdrawn, while pricing can still use cents. That approach reduced disruption while letting the coin fade out in practice. Similar design choices will shape any future drawdown of check services, including transition periods and support for people who still rely on paper.
In the United States, the Federal Reserve’s check-services review and its move into instant payments show the same theme: keep the public infrastructure aligned with how people pay now. The FedNow program describes an always-on service that can support broad use cases, and the check-services request asks what level of investment still makes sense for paper clearing. Those questions will land differently across regions and income groups. A smart transition keeps payment choice real, protects vulnerable users, and treats fraud prevention as core infrastructure. If pennies can exist without breaking commerce, checks can evolve, too. The success metric will be trust, measured by whether people can pay, get paid, and fix errors without entering a maze.
Conclusion
The move away from pennies and the debate over checks point to a bigger change in how money circulates. Digital payments reduce handling costs, speed up settlement, and match modern expectations. However, efficiency alone cannot guide policy. Payments are public infrastructure, not just consumer products. When systems change, access, reliability, and error resolution matter as much as speed. The Federal Reserve framed this balance clearly when launching instant payments. Jerome Powell said, “The Federal Reserve built the FedNow Service to help make everyday payments over the coming years faster and more convenient.” Speed helps households manage cash flow, yet it also increases the cost of mistakes and fraud when safeguards fail.
What comes next depends on deliberate choices. Checks may decline, yet some uses remain hard to replace quickly. Cash may shrink, yet it still provides offline reliability and universal acceptance. Digital systems must therefore earn trust through strong consumer protections, clear dispute paths, and security that matches modern scam tactics. Inclusion also remains central. Millions still rely on paper or cash because of access limits, not habit. A successful transition keeps alternatives available while digital options improve. Pennies showed that change can happen without breaking commerce. Checks will test whether institutions can modernize carefully, protect vulnerable users, and keep payment choice real during the shift.
Disclaimer: This article was created with AI assistance and edited by a human for accuracy and clarity.
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