Modernizing Payments To and From America’s Bank Account
TLDR
This executive order mandates a shift from paper-based to electronic payments for all federal disbursements and receipts by September 30, 2025. It aims to increase efficiency and reduce fraud, but may create barriers for vulnerable populations including the 7.1 million unbanked households, older adults, individuals with disabilities, and those in rural areas. Success depends on effective exceptions processes, public awareness campaigns, and addressing financial inclusion.
This executive order mandates a significant shift from paper-based to electronic payments for all federal disbursements and receipts by September 30, 2025. The key points and potential ramifications are:
- Paper checks will be phased out for federal disbursements, including tax refunds, benefits, and vendor payments.
- All payments to the federal government must be processed electronically.
- The Treasury Department will support the transition by providing access to various electronic payment methods.
- Limited exceptions will be granted where electronic payments are not feasible.
Approximately 7.1 million households were unbanked as of 2019. These individuals may face difficulties accessing their funds without traditional bank accounts.
While prepaid cards are proposed as a solution, they may not adequately address all barriers faced by unbanked households, particularly liquidity constraints.
Unbanked individuals may struggle to participate in online and mobile transactions, potentially excluding them from certain economic activities.
Older adults and individuals with disabilities may face challenges adapting to electronic payment systems. These groups may be more susceptible to financial exploitation or fraud in a fully digital system.
Individuals in rural or economically disadvantaged areas may have reduced access to banking services or reliable internet connections.
Unbanked individuals might incur fees for check-cashing services or prepaid cards, potentially reducing their effective income.
The shift to electronic payments raises concerns about the security of personal and financial information.
Some individuals may distrust electronic systems, preferring the familiarity of paper checks.
In cases of natural disasters or emergencies, electronic systems may be disrupted, potentially delaying critical payments.
Even for nonbank transaction accounts, some individuals may lack sufficient funds to maintain an account.
A significant effort may be required to educate the public about available electronic payment options and how to use them securely.
While the order aims to increase efficiency and reduce fraud, it may inadvertently create barriers for vulnerable populations. The success of this transition will largely depend on the effectiveness of the exceptions process, public awareness campaigns, and efforts to address financial inclusion for unbanked and underbanked populations.
By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered:
Section 1.
Purpose.
The continued use of paper-based payments by the Federal Government, including checks and money orders, flowing into and out of the United States General Fund, which might be thought of as America’s bank account, imposes unnecessary costs; delays; and risks of fraud, lost payments, theft, and inefficiencies. Mail theft complaints have increased substantially since the COVID-19 pandemic. Historically, Department of the Treasury checks are 16 times more likely to be reported lost or stolen, returned undeliverable, or altered than an electronic funds transfer (EFT). Maintaining the physical infrastructure and specialized technology for digitizing paper records cost the American taxpayer over $657 million in Fiscal Year 2024 alone.
This order promotes operational efficiency by mandating the transition to electronic payments for all Federal disbursements and receipts by digitizing payments to the extent permissible under applicable law (but not, for avoidance of doubt, to establish a Central Bank Digital Currency).
Sec. 2.
Policy.
It is the policy of the United States to defend against financial fraud and improper payments, increase efficiency, reduce costs, and enhance the security of Federal payments.
Sec. 3.
Phase Out of Paper Check Disbursements and Receipts.
(a) 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.
(b) All executive departments and agencies (agencies) shall comply with this directive by transitioning to EFT methods, including direct deposit, prepaid card accounts, and other digital payment options, and take all steps necessary to enroll recipients in EFT payments, except as specified in section 4 of this order.
© As soon as practicable, and to the extent permitted by law, all payments made to the Federal Government shall be processed electronically, except as specified in section 4 of this order.
(d) The Secretary of State, the Secretary of the Treasury, the Secretary of Health and Human Services, the Secretary of Education, the Secretary of Veterans Affairs, and the Secretary of Homeland Security shall take appropriate action to eliminate the need for the Department of the Treasury’s physical lockbox services and expedite requirements to receive the payment of Federal receipts, including fees, fines, loans, and taxes, through electronic means except as specified in section 4 of this order.
(e) The Secretary of the Treasury shall support agencies’ transition to digital payment methods, including by providing access through the Department of the Treasury’s centralized payment systems to:
(i) direct deposits;
(ii) debit and credit card payments;
(iii) digital wallets and real-time payment systems; and
(iv) other modern electronic payment options.
Sec. 4.
Exceptions and Accommodations for the Phase Out of Paper Check Disbursements and Receipts.
(a) The Secretary of the Treasury, shall review and, as appropriate, revise procedures for granting limited exceptions where electronic payment and collection methods are not feasible, including exceptions for:
(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.
Sec. 5.
Implementation and Compliance of Electronic Transactions.
(a) The Secretary of the Treasury, in coordination with the heads of agencies, shall develop and implement a comprehensive public awareness campaign to inform Federal payment recipients of the transition to electronic payments, including guidance on accessing and setting up digital payment options.
(b) Agencies shall coordinate with the Department of the Treasury to facilitate a smooth transition to digital payments, ensuring that affected individuals and entities receive adequate support.
© The Secretary of the Treasury shall work with financial institutions, consumer groups, and other stakeholders to address financial access for unbanked and underbanked populations.
(d) The Secretary of the Treasury and the heads of agencies shall take all necessary steps to protect classified information and systems, as well as personally identifiable information and tax return information, through the implementation of this order.
Sec. 6.
Reporting Requirements.
(a) The heads of agencies shall submit a compliance plan to the Director of the Office of Management and Budget within 90 days of the date of this order detailing their strategy for eliminating paper-based transactions.
(b) The Secretary of the Treasury shall submit an implementation report to the President through the Assistant to the President for Economic Policy within 180 days of the date of this order detailing progress on the matters set forth in this order.
Sec. 7.
General Provisions.
(a) Nothing in this order shall be construed to impair or otherwise affect:
(i) the authority granted by law to an executive department or agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
© This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
DONALD J. TRUMP
THE WHITE HOUSE,
March 25, 2025.