Federal Paper Checks Face Stricter Limits Under Treasury Plan

The U.S. Department of the Treasury is proposing regulatory changes that would significantly restrict the circumstances under which federal agencies can issue paper checks, pushing the government closer to an all-electronic payment system.

The Bureau of the Fiscal Service published a proposed rule Tuesday (April 28) in the Federal Register, outlining amendments to 31 CFR Part 208, the regulation that governs federal payment disbursements. The rule stems from Executive Order 14247, signed by President Donald Trump in March 2025, which directed Treasury to eliminate paper checks for federal payments to the extent permitted by law.

The scale of the problem is not trivial. While 97% of the more than 1.3 billion payments Treasury disburses annually are already made electronically, the agency still printed 40.9 million checks in fiscal year 2025. The cost to print each check has climbed to $3.07—twenty times more expensive than an Automated Clearing House payment. Treasury also noted that paper checks are 16 times more likely to be reported lost, stolen, returned undeliverable or altered than electronic payments.

The proposed rule would restructure how hardship exemptions are granted. Under the current system, individuals who cannot receive electronic payments apply for waivers directly through Treasury. The new framework would shift that responsibility to the paying agencies themselves, with Treasury establishing guidelines that agencies must follow. Treasury’s rationale: agencies already have established relationships with their payees and are better positioned to assess individual circumstances.

The proposal also introduces a new waiver category for individuals and entities located on Native American land lacking the infrastructure to support electronic funds transfers—a provision added in direct response to feedback received during a 2025 Request for Information that drew 248 comments from consumer advocates, tribal governments, financial institutions and industry groups.

Several existing waiver categories would be eliminated or restructured. Notably, a legacy exemption for individuals born before May 1, 1921—which would now apply only to people over 104 years old—would be removed. Agencies seeking to issue checks for non-recurring payments to individuals or small businesses would now be required to obtain Treasury approval before doing so, a change from current rules that allow such payments without prior sign-off.

The comment period remains open through June 15.