In March 2025, the president signed Executive Order 14247, titled "Modernizing Payments To and From America's Bank Account". The order directs the federal government to phase out paper checks for payments and receipts by September 30, 2025, to the extent permitted by law.
So why is the government making this change? The reasons are pretty straightforward when you look at the numbers.
First, there's the fraud issue. The Treasury has found that paper checks are 16 times more likely to be lost, stolen, returned undeliverable, or altered compared to electronic funds transfers. That's a pretty staggering difference when you think about it.
Then there's the cost factor. Issuing a paper check costs the government about 50 cents per payment, while electronic payments come in at under 15 cents. When you're talking about millions of payments, those savings add up fast.
Electronic payments also clear faster and are much easier to track. They reduce the government's reliance on physical mail, processing centers, and lock‐box services that have been around for decades.
This federal shift really just mirrors what's already happening in the broader payments industry, where we're seeing more ACH transactions, digital wallets, and real‐time payments replacing manual paper-based processes.
What Exactly Is Changing
Starting September 30, 2025, the federal government will stop issuing paper checks for most disbursements. This includes benefit payments from the Social Security Administration, tax refunds from the IRS, and payments to vendors and contractors from federal agencies.
Federal receipts, meaning payments made to the government, are also required to move to electronic formats "as soon as practicable" under the executive order.
There are some exceptions
While the broad rule is that disbursements and receipts by check will be discontinued, the order allows for limited exceptions if electronic payment or collection isn't feasible. For example, individuals without bank access or electronic payment means might still receive checks, and emergency payments or national security activities where checks may still be needed.
The timeline
The Executive Order was issued March 25, 2025. Agencies must submit compliance plans and the Treasury must report implementation progress. For the IRS specifically, beginning with 2025 tax year filings, paper refund checks for individual taxpayers will be phased out.
Who's Impacted
For individuals
If you're still receiving Social Security, Veterans benefits, or other federal payments via paper check, you'll need to enroll in an electronic payment method like direct deposit or a prepaid debit card to avoid disruptions.
The same goes for tax refunds. If you currently expect a paper check refund, after the deadline you'll need to provide banking details or another electronic method to receive your refund.
For those who pay the government, whether it's taxes or fees, the rule means more of these payments will need to be made electronically rather than by check.
The transition will be toughest for vulnerable populations like the "unbanked," underbanked individuals, seniors in remote areas, and those with limited digital access. Critics are already saying the transition must be handled carefully to avoid payment delays or exclusion.
For businesses and vendors
Federal contractors and vendors who currently get paid by paper check will need to make sure their systems can accept electronic payments like ACH, direct deposit, or virtual cards.
Agencies that issue checks will need to update their payee enrollment systems, revise contracts, and ensure they have vendor bank details captured properly.
Businesses should review their receivables from government and make sure they're set up to receive EFT payments to avoid payment delays.
For government agencies
Agencies will need to update policies, systems, mail processes, lock‐box services, and launch public outreach campaigns.
The Treasury expects significant cost savings and reduction in fraud-related losses. Some estimates suggest the move could save hundreds of millions of dollars annually.
Agencies must ensure financial access for those currently dependent on paper checks and monitor implementation to avoid service disruptions.
What You Should Do to Prepare
The good news is there's still time to get ready, but you shouldn't wait until the last minute. Here's what different groups need to focus on:
If you're an individual
First, check how you currently receive federal payments. If you're getting a paper check, head to your agency's website (like GoDirect.gov for benefits) and enroll in direct deposit or another electronic method.
Make sure your bank and account information is up to date. Mistakes in routing or account numbers can cause delays or misdirected payments, which is the last thing you want when you're expecting money.
If you don't have a bank account, consider opening a low-or-no-fee account at a bank or credit union, or look into the prepaid benefit debit card options that the Treasury supports.
Keep an eye out for communications from federal agencies about the phase‐out and deadlines. They'll be sending out notices as we get closer to September 30.
For taxes specifically, when you're filing for your refund next season, make sure to choose direct deposit or provide valid electronic account info. Don't rely on getting a check in the mail anymore.
If you're a business or vendor
Review your vendor enrollment status with any federal agencies you do business with. Make sure you've provided bank account details for EFT rather than relying on mailed checks.
You'll want to update your contracts to reflect that electronic payments will be standard and paper checks will be rare or require special justification.
Test your systems to make sure they can receive payments in different electronic forms like ACH, virtual cards, or digital wallets. You don't want any disruption after September 30.
Reach out to your government contacts and ask how they're implementing the change. Confirm that your payment method is compatible with their new systems.
For agencies and payment processors
Develop or update compliance plans as required by the executive order. Launch public awareness campaigns so recipients know about the change, how to switch, and what to do if they don't have bank access.
Identify and support exceptions or hardship cases like the unbanked, people in remote areas, or emergency/disaster payments as allowed by law.
Revise internal processes to eliminate paper check issuance where feasible, move collection to electronic methods, and phase out physical lockbox services.
Monitor key metrics like the percentage of payments still by check, cost savings, fraud incidence, and uptake of electronic methods. Use this data to adjust your outreach efforts accordingly.
The Challenges Ahead
This transition won't be without its hurdles. The biggest concern is access and equity. Some individuals simply don't have bank accounts, distrust electronic systems, lack digital literacy, or have disabilities that make digital payments difficult. If not managed properly, the transition could lead to payment delays or even exclusion for some people.
Agencies also need to make sure their infrastructure and vendor payment networks can handle the shift smoothly. There's nothing worse than promising faster electronic payments only to have system crashes or delays.
Security and privacy are another major consideration. Electronic payments carry cyber risks, so the transition must include strong safeguards for personally identifiable information and sensitive financial data. The executive order actually emphasizes this point.
There are also legal and legislative limitations to consider. Some payments might still require paper checks due to statutory or regulatory constraints, which is why the executive order includes that "to the extent permitted by law" caveat.
Finally, there's the human element. Recipients who are accustomed to checks may resist the change or simply be unaware of it. That's why outreach and support are crucial to making this work.
Why This Matters to You
If you're a taxpayer expecting a refund, contractor payment, or federal benefit and you haven't updated your payment information, you risk a delay or missed payment after September 30. That's not something you want to deal with.
For businesses, failure to switch to accepting electronic payments from government could lead to payment disruption, contract delays, or administrative headaches you don't need.
For the government, this modernization promises to cut costs, reduce fraud, improve speed and transparency, but only if it's implemented smoothly and inclusively.
The Bottom Line
The phase‐out of paper checks by the U.S. Treasury marks a significant milestone in federal payment modernization. While the target date of September 30, 2025 sets a firm timeline, the real challenge lies in execution, ensuring access, avoiding disruption and building robust electronic payment systems.
Whether you're an individual recipient of government benefits, a contractor selling goods or services to the federal government, or part of an agency issuing payments, now is the time to review your payment method, update your accounts, and prepare for a fully digital payment environment.
If you receive federal payments or pay the government by check, don't wait until the last minute. Act now to switch your payment method and avoid getting caught off guard.