Federal Government to Phase Out Paper Checks by 2025 in Push for Payment Digitization

July 17, 2025
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Riley Harmon

On March 25, 2025, Donald J. Trump released an executive order in a major move towards modernizing financial operations directing the Federal Government to transition to fully electronic payments. The initiative aims to reduce costs, enhance security, and combat rising mail theft. The order is not connected to creating a Central Bank Digital Currency (CBDC).

Purpose of the Order

The continued use of paper-based payments, such as checks and money orders, is not only costly but also poses significant risks of fraud, theft, and inefficiencies. Treasury checks are reported to be 16 times more likely to be lost, stolen, or altered compared to electronic payments. In Fiscal Year 2024 alone, the physical infrastructure for processing these paper payments cost taxpayers over $657 million.

Key Mandates

Full Transition to Electronic Payments

  • Effective September 30, 2025, the U.S. Treasury will cease issuing paper checks for all federal payments, including:
    • Tax refunds
    • Benefit payments
    • Vendor disbursements
    • Intragovernmental transfers
  • Federal agencies are required to enroll all payment recipients in electronic payment systems such as:
    • Direct deposit
    • Prepaid debit cards
    • Digital wallets
    • Real-time payment systems
  • All payments to the federal government, such as taxes, fees, and fines, must also be processed electronically.

Exceptions and Accommodations

The Treasury is allowed to grant limited exceptions for:

  • Individuals without access to banking or electronic payment options.
  • Certain emergency payments.
  • National security or law enforcement activities that require paper transactions.
  • Other special cases as determined by the Treasury.

Alternative payment options will be provided for those qualifying for exceptions.

Implementation Plan

  • Public awareness campaigns will be launched to educate recipients on digital payment systems.
  • Agencies must submit a compliance plan within 90 days and work with the Treasury to ensure a smooth transition.
  • The Treasury will collaborate with financial institutions to support the unbanked and underbanked populations.
  • Strict protections will be enforced to safeguard personal and classified information.

Accountability and Reporting

  • Agencies must report their compliance strategies to the Office of Management and Budget.
  • The Treasury must report progress to the President within 180 days of the order.

Please reach out to your HHM advisor for more information.

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