The following is a guest post by Esra Eroğlu, a foreign law intern working with Foreign Law Specialist Jenny Gesley at the Global Legal Research Directorate of the Law Library of Congress.
For centuries, the paper bank check was an integral part of everyday financial life in many countries. In the United States, checks remain an ordinary—if slowly declining—method of payment for rent, utilities, and other bills. In Germany, however, checks have nearly vanished from daily use and are now on the path to formal retirement by the end of 2027.
This post takes a comparative look at the legal frameworks for and usage of checks in Germany and the United States, and explains how Germany is preparing to phase them out entirely.
Legal Foundation in the United States: The Uniform Commercial Code
A check is a written order from an account holder—the payor—to a bank where they have an account. The order instructs the bank to pay a third party—the payee—a certain sum of money from the payor’s account when the check is presented to the bank. Its legal definition can be found in article 3-104 of the Uniform Commercial Code (UCC). The UCC is a set of laws governing commercial transactions in the United States that have been adopted in full or in part by all states. The issuance, endorsement, collection, and payment of checks are regulated by article 3 (negotiable instruments) and article 4 (bank deposits and collections) of the UCC.
In addition, the Federal Reserve Board’s Regulation CC (12 CFR Part 229) implements the Check Clearing for the 21st Century Act (Check 21 Act) and the Expedited Funds Availability Act. The Check 21 Act is a federal law enacted in 2003 that, among other things, facilitates electronic check processing by allowing banks to substitute electronic images for the original paper checks while preserving their legal equivalence. The Expedited Funds Availability Act governs funds availability and disclosure obligations in the check collection process, in particular by establishing maximum hold periods for checks and other deposits.
Legal Foundation in Germany: The German Check Act
In Germany, checks are regulated by the German Check Act (Scheckgesetz, ScheckG). The act is based on the 1931 Geneva Convention Providing a Uniform Law for Cheques.
Article 1 of the German Check Act sets formal requirements for a valid check. This includes the use of the term “check” in the body of the document in the language in which the check is issued, meaning writing the check in German is not a requirement. Further details that must be included are the unconditional instruction to pay a specific sum of money, the name of the payee, the place of payment, the date and place of issuance, and the signature of the issuer. In the following sections, the law regulates other issues, such as how a check can be transferred to another person and how banks handle check payments.
As in the United States, under the Check 21 Act, the processing of checks in Germany may involve digital elements at the banking level. However, the check remains a paper-based instrument, and all rights arising from it continue to be tied to the physical document.
Use of Checks and Other Payment Methods
In the United States, paper checks increasingly coexist with a growing ecosystem of digital payment alternatives. Mobile payment apps are rapidly replacing traditional paper checks for many everyday transactions. Nevertheless, checks continue to maintain a notable foothold in U.S. payment culture. At the same time, the role of checks in the United States is being limited in the public sector. In March 2025, the federal government issued an executive order, directing federal agencies to phase out the issuance of paper checks for most government disbursements, including benefit payments, vendor payments, and tax refunds, by the end of September 2025. Limited exceptions remain for individuals without access to banking services or electronic payment systems. (Executive Order, § 4.) In December 2025, the Board of Governors of the Federal Reserve System initiated a public request for information on the future of its check services, explicitly questioning the long-term sustainability of maintaining a nationwide check-processing infrastructure amid declining volumes. Nonetheless, although check usage has declined over the past two decades, billions of checks are still issued annually in the United States. As an example, in 2021, the number of checks issued in the United States amounted to 11.1 billion.
In contrast, the use of checks in Germany has declined significantly. While the number of check transactions in 2007 was 75.5 million, it had fallen to 2 million in 2024. This corresponded to only 0.01% of all cashless payment transactions in Germany during that year. According to the German Bundesbank, the country’s central bank, the rapid decline in the use of checks can be attributed to the increasing use of alternative payment methods, in particular SEPA transfers and SEPA instant (real-time) transfers. SEPA is an abbreviation for “Single Euro Payments Area,” an EU initiative that standardizes electronic euro payments. In particular, SEPA real-time transfers are gaining in importance in Germany. According to Regulation (EU) 2024/886, it is mandatory for EU payment service providers to offer SEPA instant transfers. In 2024, about 334.8 million SEPA instant transfers were made in Germany. Others point out the check’s vulnerability to fraud. The use of checks declined to such an extent that many Germans today have never written or received a check, including me.
Germany’s Move to Phase Out Checks
In response to the continuing decline in check usage, German payment authorities have decided to phase out the check system. In October 2025, the German Bundesbank announced that the domestic check collection procedure would be discontinued at the end of 2027. As a reason, it emphasizes that checks now account for only a negligible share of cashless payments in Germany (0.01%) and are increasingly viewed as costly and inefficient due to their paper-based nature and limited potential for automated processing. With the termination of the domestic collection procedure, the technical framework that enables banks to clear and collect checks within Germany will cease to exist. As a result, remaining users of checks are to transition to alternative payment methods, such as SEPA transfers. While the German Check Act formally remains in force, the Bundesbank’s decision underscores that checks are expected to disappear almost entirely from payment practices in Germany.
Conclusion
While checks continue to play a role in the United States, recent developments—including the federal government’s move away from paper checks and the Federal Reserve’s reassessment of its check services—suggest a gradual narrowing of their practical relevance. In Germany, by contrast, checks have almost completely disappeared from everyday use. With the discontinuation of the domestic check collection system by the end of 2027, the German check will transition from a living payment instrument to a legal relic—on the books, but no longer in circulation.
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