A recent White House Executive Order (EO) mandates the transition to electronic payments for all federal disbursements and receipts by digitizing payments. It says:

“Sec. 3.  Phase Out of Paper Check Disbursements and Receipts.  (a)  Effective September 30, 2025, and to the extent permitted by law, the Secretary of the Treasury shall cease issuing paper checks for all Federal disbursements inclusive of intragovernmental payments, benefits payments, vendor payments, and tax refunds, except as specified in section 4 of this order.”

The order lays out the problems with the continued use of paper check payments by the federal government, pointing out that:

  • Check use imposes unnecessary costs; delays; and risks of fraud, lost payments, theft, and inefficiencies.
  • Mail theft complaints have increased substantially since the COVID-19 pandemic.
  • Paper checks are 16 times more likely to be reported lost or stolen, returned undeliverable, or altered than an electronic funds transfer (EFT).
  • Maintaining the physical infrastructure and specialized technology for digitizing paper records cost the American taxpayer over $657 million in fiscal year 2024 alone.

This is the latest in a series of moves by the federal government to expand digital payments, starting with the Debt Collection Improvement Act of 1996, which requires that all federal non-tax payments be made electronically. The EO notes that prepaid card programs are one option for agencies to comply with its disbursing requirements as the federal government fully transitions to Electronic Funds Transfer (EFT).

Since its introduction in 2008, Direct Express® has been providing unbanked federal benefit recipients with a way to receive payments electronically. It became a useful and cost-effective option for both federal benefit agencies and their unbanked recipients to comply with Treasury’s updated EFT regulation in 2010 that effectively eliminated paper check as a payment option for Federal beneficiaries. Direct Express® will continue to provide a means for the federal government to make electronic payments to unbanked beneficiaries in fulfillment of this order and as part of the wider government transition to modernize the delivery of benefits payments.

The full EO can be read at the link below:

Modernizing Payments to and from Americas Bank Account (March 25, 2025)

SOURCE: White House