No More Checks as Government Moves to Electronic Payments

Mandated by a recent Executive Order, the U.S. Treasury Department is eliminating paper checks and all payments to and from federal agencies must be made electronically. Paper refund checks and mailed-in tax payments will no longer be accepted beginning September 30, 2025. The goal is to transition to electronic payment methods like direct deposit, debit cards, and digital wallets, enhancing efficiency, security, and reducing costs. 

The executive order states that relying on paper-based payment methods, like checks and money orders, adds unnecessary expense, delays, and vulnerability to fraud, lost payments, and inefficiency within the financial system that supports the U.S. government.

According to the order, more than $657 million was spent in fiscal year 2024 to maintain the systems and infrastructure needed to handle paper-based records.

Under the new mandate, all government agencies will switch to electronic funds transfer (EFT) methods, such as direct deposit, digital payment platforms, and prepaid cards. Agencies are also expected to help recipients transition to EFT and ensure they are properly enrolled.

While the default will now be digital, the order does make room for exceptions. The Treasury secretary is authorized to allow continued use of paper checks in limited cases, such as:

• Individuals without access to banks or digital payment systems
• Emergency payments where electronic methods are impractical
• National security or law enforcement activities requiring alternative methods
• Any other cases as deemed appropriate by the Treasury, based on formal guidelines

To support the transition, the order calls for a comprehensive public education campaign. The Treasury is tasked with collaborating with financial institutions, advocacy groups, and other stakeholders to improve access to banking services for unbanked or underbanked individuals.

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Source: CPA Practice Advisor