Federal Government to Phase Out Paper Checks: What It Means for You

Earlier this year, the federal government announced an Executive Order aimed at modernizing how federal payments are handled. Under Executive Order 14247, signed in March 2025, all federal disbursements and receipts will transition to electronic formats by September 30, 2025. This change will impact individuals, businesses and organizations that receive or make payments to the federal government.

Why the Change?

The federal government processes trillions of dollars annually through what is often referred to as “America’s bank account” — the U.S. General Fund. Historically, a significant portion of these transactions have been paper-based, including checks and money orders. However, these methods are increasingly seen as outdated and vulnerable. According to the Executive Order:

• Paper checks are 16 times more likely to be lost, stolen or altered compared to electronic payments.
• Funds are delivered significantly faster via direct deposit than by paper check.
• Mail theft complaints have surged since the COVID-19 pandemic.
• In FY2024 alone, maintaining the infrastructure for paper-based payments cost taxpayers over $657 million.

What’s Changing?

Effective September 30, 2025, the U.S. Department of the Treasury will:

• Cease issuing paper checks for all federal disbursements, including Social Security, tax refunds, vendor payments and more.
• Require all federal agencies to transition to electronic funds transfer (EFT) methods such as direct deposit, prepaid cards, digital wallets and real-time payments. 

While formal guidance has not yet been issued regarding physical lockbox services, electronic payments are strongly encouraged to avoid delays and enable timely processing of payments to the government, including taxes, fees and fines. 

Are There Exceptions?

Yes. The Executive Order allows for limited exceptions in cases where electronic payments are not feasible, including:

• Individuals without access to banking or digital payment systems.
• Certain emergency or law enforcement-related payments.
• Other special circumstances as determined by the Treasury. 

What About Security and Fraud Prevention?

A companion Executive Order 14249, focuses on enhancing fraud prevention and financial transparency. It mandates:

• Pre-certification verification of all federal payments to ensure accuracy and legitimacy.
• Improved data sharing between agencies and the Treasury to detect and prevent improper payments.
• Stronger protections for personal and financial data. 

What This Means for Farm Credit East Customers

If you or your business receives federal payments — such as USDA program funds, tax refunds or vendor payments — it’s important to:

• Ensure your banking information is up to date with the relevant federal agencies.
• Prepare for digital payment methods if you currently rely on paper checks.

More specifically, Farm Credit East will be requesting all tax customers submit their bank account information by December 15, 2025. Please reach out to your tax preparer for more information.