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.

Federal Government’s Move Away From Paper Checks:

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.

Financial Impact and Efficiency:

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

Current Check Usage:

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.

Business and Consumer Preferences:

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.

Federal Government Disbursement Volumes:

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).

Progress and Existing Electronic Payment Usage:

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.