The US’s $750 Million Bet: Ending Paper Checks to Drive Digital Finance

The federal government’s move to eliminate paper checks by Sept. 30 signals a massive shift toward digital transactions, potentially saving the Treasury $750 million. This transition, driven by an executive order, could accelerate the adoption of real-time payments across government and business. PYMNTS breaks it down.

• A presidential executive order has set a Sept. 30 deadline for the federal government to stop issuing paper checks for disbursements.
• The order also mandates the government to cease accepting checks for payments like fees, fines, loans and taxes, though without a set deadline.
• This aims to transition to electronic payment methods such as direct deposit, debit/credit cards, digital wallets and real-time transfers.

• The Department of Government Efficiency (DOGE) estimates the Treasury Department could save $750 million by eliminating paper checks and associated lockbox maintenance.

• Federal Reserve research indicates that businesses and the government are the primary users of paper checks.
• In 2015, these entities accounted for 60% of all paper checks by volume.
• The Fed also reports that the U.S. government processed 36 million paper checks in 2024, with an average value of $4,861.

• Businesses are increasingly seeking faster, more flexible payment methods.
• A significant majority (81%) of businesses believe instant payments are crucial for supplier relationships, according to PYMNTS Intelligence data.
• Over half (54%) of payees are willing to pay a fee for instant vendor transaction payments.
• Consumers are showing an increasing appetite for instant payments, with a growing percentage of disbursements being received instantly or via same-day ACH.

• Significant federal disbursements occur through various agencies, with substantial sums potentially moving to digital payment rails.
• Examples on USASpending.gov include Treasury refunding internal revenue collections ($333 billion), Social Security benefits ($1.31 trillion) and Health and Human Services Medicaid grants ($689 billion).

• Nacha reports that the Treasury originated 1.86 billion ACH payments in 2024, moving $8.5 trillion.
• Many federal agencies already heavily utilize electronic payments:
  • 99% of Social Security benefits are paid electronically.
  • 97% of tax refunds are issued electronically.
  • 97% of Veterans benefits are paid electronically.
  • 100% of the federal government employee payroll is electronic.

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