Trump Signs Executive Order to Eliminate Paper Checks for Treasury Payments
The federal government will stop issuing paper checks for disbursements, effective Sept. 30, and will stop accepting them for payments “as soon as practicable.”
At that time, the federal government will switch to electronic payments, as mandated by an executive order signed Tuesday (March 25) by President Donald Trump.
“This order promotes operational efficiency by mandating the transition to electronic payments for all Federal disbursements and receipts by digitizing payments to the extent permissible under applicable law (but not, for avoidance of doubt, to establish a Central Bank Digital Currency),” the order said.
The disbursements for which the federal government will stop issuing paper checks include intragovernmental payments, benefits, vendor payments and tax refunds, according to a fact sheet issued by the White House.
Instead, executive departments and agencies will transition to direct deposit, debit/credit card payments, digital wallets, real-time transfers and other electronic funds transfer (EFT) methods, according to the fact sheet.
Payments made to the federal government must also be processed electronically, where permissible by law, the fact sheet said. These payments include fees, fines, loans and taxes.
Exceptions will be made for special cases, and a public awareness campaign will be launched to inform federal payment recipients about the change and how to set up digital payments, per the fact sheet.
The fact sheet said Trump ordered the change because paper-based payment systems have unnecessary costs, delays and security risks.
“President Trump has long championed the need for replacing outdated technology, saying ‘government needs to catch up with the technology revolution,’” the fact sheet said.
Transitioning to digital payments and instant rails is a way to prevent fraud and future-proof financial operations, according to the PYMNTS Intelligence and Ingo Payments collaboration, “Checks at Risk: How Paper Payments Weaken Fraud Prevention.”
The report found that businesses using instant payments experience improved cash flow, lower overhead and stronger vendor relationships.
The Financial Crimes Enforcement Network (FinCEN) said in September that mail-theft related check fraud amounted to more than $688 million between February 2023 and August 2023.
FinCEN found that after checks were stolen from the mail, 44% were altered and then deposited, 26% were used as templates to create counterfeit checks, and 20% were fraudulently signed and deposited.
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