Paper checks issued for tax refunds, Social Security payments and other government benefits have been dwindling and will soon be eliminated, potentially affecting hundreds of thousands of Americans.
President Trump signed an executive order on March 25 directing the federal government to stop issuing paper checks as of Sept. 30. Instead, government agencies must make payments electronically, by direct deposit to a bank account, debit card or digital wallet.
“This executive order will defend against financial fraud and improper payments, increase efficiency, reduce costs and enhance the security of federal payments,” a White House spokeswoman, Liz Huston, said in an emailed statement.
Most monthly Social Security payments and annual tax refunds are already paid by direct deposit, agency statistics show. Yet the administration said it was further “phasing out” paper to modernize how the government handled money. A fact sheet about the order said the government aimed to switch “from old-fashioned paper-based payments to fast, secure electronic payments.”
The order gives the Treasury Department just six months to carry out the mandate — “a very aggressive time frame,” Steve Kenneally, senior vice president of payments with the American Bankers Association, said on an ABA Banking Journal podcast. The order is nevertheless “welcome,” the association said, because electronic payments are “a much faster, cheaper and safer choice” for consumers and the government.
The Treasury Department did not respond to a request for comment.
Jennifer Tescher, chief executive of the Financial Health Network, said that doing away with paper checks was the right thing to do but that “consumer awareness and help making the shift” would be critical to making the change go smoothly.
“It’s all in the execution,” she said.
The White House fact sheet said the government planned a public awareness campaign to inform federal payment recipients of the change and to offer guidance.
Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities, said she agreed that direct deposit was a “best practice” for secure payments. But, she said, newly announced verification requirements for creating online Social Security accounts could mean more people may need government help to set up the payments.
That could be challenging, given that federal agencies like the Social Security Administration and the Internal Revenue Service are facing significant staff cuts under the Trump administration.
How many paper checks are issued by the government?
The government’s use of paper checks has long been in decline as a result of various federal efforts and the evolution of payment technology. The government tried to make most federal payments, other than tax refunds, electronic in the 1990s, in an initiative known as EFT ’99. But the effort faced resistance, Mr. Kenneally said in the podcast, often from members of Congress who received complaints from constituents who preferred paper checks.
Over time, though, reliance on paper checks has fallen. More than 99 percent of the roughly 69 million monthly Social Security payments are made by direct deposit, according to the latest statistics from the Social Security Administration. Beneficiaries are already required to receive electronic payments except in “rare” circumstances, such as receiving a hardship waiver because of a mental impairment or geographic location, according to the agency’s website.
“The government is largely out of the check business,” Ms. Tescher said.
Still, about 486,000 paper Social Security checks go out monthly. Another 238,000 paper checks are mailed each month to recipients of Supplemental Security Income, available to people with low incomes who are blind or disabled.
Leland Dudek, the acting commissioner of Social Security, said in an emailed statement, “We support this executive order and will comply.”
How many people get tax refunds by paper check?
The majority of federal income tax refunds are sent by direct deposit. As of March 21, the I.R.S. had issued about 55.7 million refunds for 2024 tax returns, of which about 1.9 million, or about 3.5 percent, were paper checks. (The president’s order isn’t expected to affect refunds for this spring’s tax season, which is nearing its April 15 deadline for most filers, an I.R.S. spokesman said.)
The Treasury Department has recently taken other steps to reduce paper, including eliminating the option to use tax refunds to buy the paper version of I bonds, federal savings bonds that protect against inflation.
Are paper checks less secure?
While some people still prefer paper, checks can go astray in the mail and are increasingly subject to fraud. They can be stolen from mailboxes and cashed by someone forging a signature. In one scheme, stolen paper checks are “washed” with chemicals, to remove the recipient’s name and the amount of the check. The thief then inserts his or her own name and a larger dollar amount. Last summer, two former Postal Service employees were indicted on charges that they stole $4 million in Treasury checks from a mail facility at Kennedy Airport in New York, then sold them to others.
What if I don’t have a bank account?
The president’s order specified that “limited exceptions” would be made, such as “for people without banking or electronic payment access.”
“We’ll have to see how the exceptions play out,” said Lauren Saunders, associate director of the National Consumer Law Center.
The number of Americans who are “unbanked,” or lack access to a traditional checking or savings account, has fallen in recent years. Just over 4 percent of households were unbanked in 2023, down from about 8 percent in 2011, according to the Federal Deposit Insurance Corporation.
One reason for the drop is that people can now find low-fee bank accounts through the Bank On program, run by the nonprofit Cities for Financial Empowerment Fund, Ms. Tescher said. The program works with banks nationally to certify thousands of safe, low-cost accounts. You can search online to find one that meets Bank On’s standards.
And Ms. Saunders noted that people without formal bank accounts could already get federal payments via the Direct Express program, through which the government puts payments on a prepaid debit card, allowing recipients of Social Security, disability or veterans benefits to withdraw cash or pay bills.
Direct Express serves about 3.4 million people, most of whom don’t have bank accounts. Its longtime administrator has recently come under scrutiny for poor customer service, and a new bank, the Bank of New York Mellon Corporation, will start running the program this year.
Does the order affect payments made to the government?
The executive order also requires that payments to the government — such as for income taxes and passport applications — must also be made electronically rather than by physical check.
