The White House has issued an executive order eliminating paper checks for government disbursements, effective September 30. While this initiative seems ambitious, the Trump administration has left itself some flexibility. The directive aims to significantly reduce the number of paper checks issued by the federal government, but it won’t eliminate them entirely anytime soon.
According to the order, the federal government will cease issuing paper checks for benefits, intragovernmental payments, vendor payments, and tax refunds. It also states that the government will stop accepting paper checks for payments “as soon as practicable.”
However, as is often the case, there are exceptions. Paper checks can still be issued in certain circumstances, such as for individuals without banking or electronic payment access.
While just 4.2% of U.S. households are unbanked, according to the FDIC, the demographics of these households have shifted. Unlike in the past, unbanked individuals are no longer disproportionately young. Instead, higher unbanked rates are now seen among lower-income households, working-age households with disabilities, and single-parent households—groups more likely to receive monetary assistance from the government.
Over the next six months, obtaining electronic funds transfer (EFT) information for the millions of individuals still receiving government checks will present a challenge.
Moving to Electronic Means
Overall, 23% of government benefit recipients still receive their assistance in the form of checks or vouchers. However, the vast majority of federal payments are now made electronically. The Treasury Department issued nearly 99% of its refunds via direct deposit during this tax filing season.
Earlier measures have also aimed to transition government disbursements to electronic payments. The Debt Collection Improvement Act mandates that all government payments, excluding tax refunds, be delivered electronically unless waived by the Treasury Secretary.
Benefits of Cutting Out Checks
Even a small reduction in paper checks could result in significant savings for the federal government. In 2023, the Treasury Department estimated that the average cost of issuing a paper check was 43 cents, while the average electronic funds transfer cost less than 2 cents.
EFTs are also less susceptible to fraud. Treasury checks are 16 times more likely to be reported lost or stolen, returned as undeliverable, or altered than an EFT, the administration said. It also noted that banks issue nearly 700,000 reports of check fraud each year.
