The US Government has decided to phase out paper-based payments by 30 September 2025, under a new executive order signed by President Donald Trump.
The move is aimed at increasing efficiency, reducing costs, and improving security in federal transactions, while ensuring exceptions for individuals without access to digital banking.
Under the directive, the Department of the Treasury will cease issuing paper cheques for all federal disbursements, including benefits payments, vendor payments, tax refunds, and intragovernmental transactions. Federal agencies are required to transition to electronic funds transfer (EFT) methods such as direct deposit, prepaid card accounts, and digital wallets.
The decision follows concerns over rising mail theft complaints since the COVID-19 pandemic and inefficiencies associated with paper-based transactions. According to government data, Treasury-issued paper cheques are 16 times more likely to be lost, stolen, or altered than electronic payments. Additionally, maintaining the physical infrastructure for processing paper records cost taxpayers more than USD 657 million in the 2024 fiscal year.
While the executive order mandates electronic payments as the standard, certain exceptions will be made where digital transactions are not feasible. The Treasury Department is expected to review and revise procedures to accommodate individuals without banking access, emergency payments that would cause undue hardship, and cases involving national security or law enforcement operations.
Alternative payment options will be provided for those who qualify for exemptions under the directive. Treasury officials will also collaborate with financial institutions and consumer groups to ensure financial accessibility for unbanked and underbanked populations.
Federal agencies must submit plans outlining their strategy for eliminating paper transactions within 90 days of the order’s signing. The Treasury Department will provide support through its centralised payment systems and launch a public awareness campaign to help recipients transition to digital payment methods.
An implementation report detailing progress on the transition will be submitted to the White House. Additionally, government agencies are required to ensure the security of classified and personal information during the implementation process.
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