President Donald Trump signed an executive order on Tuesday (March 25) to phase out the use of paper checks by the federal government, aiming to modernize payment systems and reduce costs and fraud. The order mandates the Treasury Department to stop issuing paper checks for benefits, tax refunds, vendor payments, and intra-governmental payments by September 30. Instead, the government will transition to electronic payment methods, including direct deposit, prepaid cards, and digital wallets.
According to the White House fact sheet, the shift to electronic payments is expected to cut unnecessary costs, delays, and security risks associated with paper-based systems. President Trump emphasized the need for the government to embrace modern technology, stating, "Government needs to catch up with the technology revolution."
The executive order also requires that payments made to the federal government, such as fees, fines, loans, and taxes, be processed electronically where possible. Exceptions will be made for individuals without access to banking services or in cases where electronic payments could cause undue hardship.
The transition is part of a broader effort by the Trump administration to digitize government operations. As reported by FedScoop, the Treasury Department will support federal agencies in adopting digital payment methods and lead a public awareness campaign to inform recipients about the changes.
The move to digital payments is also seen as a way to prevent fraud. A PYMNTS report highlighted that mail-theft related check fraud amounted to over $688 million between February and August 2023. By adopting electronic payments, the government aims to improve operational efficiency and future-proof its financial operations.