Government Phasing Out Treasury Checks? Well, Not All…
- An executive order eliminates payments by check
- This could present difficulties for senior citizens
- In the end, checks will likely persist
On March 25, 2025, the administration signed an executive order entitled Modernizing Payments To and From America’s Bank Account. The Sec. 3. of the executive order details actions to take place, noting that:
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.
According to Federal Reserve data, 36 million government checks were processed by the FED in 2024. While not a small amount by any means, in the scope of the estimated 10B+ checks written in the US each year it is a tiny drop in the bucket.
While we are not here to debate the executive order itself, it's important to understand the challenges of this order -- and possible inability to fully execute it.
Who Receives Government Checks
While contractors and other government vendors previously received checks and will have an easier time adjusting, the largest portion of Treasury checks are delivered to taxpayers.
As reported by Fortune Magazine, one of the largest segments is older Americans -- where "3.4 million Social Security recipients still receive their payments by paper check, according to the Social Security Administration."
These seniors, many of whom are low-income and/or lack access to technology -- 10% of seniors over 65 lack internet access -- may struggle to adapt to the new electronic payment methods.
Downsides and Challenges
There are significant challenges and downsides to the executive order, as noted via the Fortune article's stark warning:
Over 485,000 seniors are at risk of losing their Social Security benefits due to a hidden impact of a new executive order, according to experts. The order, which aimed to reduce federal regulations, could inadvertently lead to cuts in Social Security payments for hundreds of thousands of retirees.
To address these concerns, Sec. 4 of the executive order notes several "exceptions":
(i) individuals who do not have access to banking services or electronic payment systems;
(ii) certain emergency payments where electronic disbursement would cause undue hardship, as contemplated in 31 C.F.R. Part 208;
(iii) national security- or law enforcement-related activities where non-EFT transactions are necessary or desirable; and
(iv) other circumstances as determined by the Secretary of the Treasury, as reflected in regulations or other guidance.
(b) Individuals or entities qualifying for an exception under this section or other applicable law shall be provided alternative payment options.
Expectations from Financial Institutions
Each financial institution will be in a unique position, as regionality will likely affect the number of treasury checks they will continue to see. However, banks will still be required to accept these checks and process them accordingly.
OrboGraph's Marketing Manager James Bi recently attended the ECCHO Operations Committee Meeting, where the subject was brought up to a group of payment experts from a wide range of financial institutions and vendors.
The consensus of the group: the executive order will have little affect, and the majority of FIs will still be ready to process Treasury checks.
During the ECCHO Operations Committee Meeting, many representatives of banks large and small noted that the executive order will not impact them in a meaningful way. The expectations is that there will be a lower volume of Treasury checks, but most were in agreement that they are still required -- and are ready to continue processing -- these checks. In reality, nothing is really changing for banks.
While payment modernization efforts across the US continue, the industry understands the notion that "checks are going away" has been around for over 40 years, yet the paper check still persists. That's why many banks continue to invest in technologies for payment automation -- including AI to streamline check processing -- rather than believing the hype.