The U.S. Treasury Department has announced that it will phase out the use of paper checks for all federal payments, including Social Security benefits and tax refunds, by September 30, 2025. This change is part of an executive order signed by President Donald Trump to modernize the government’s payment systems and reduce inefficiencies, costs, and security risks associated with paper-based payments. Under the new directive, all government disbursements will be made through electronic funds transfer (EFT) methods, such as direct deposit, debit or credit card payments, digital wallets, and real-time transfers.
Exceptions will be made for individuals who lack access to banking services or in emergency situations. The transition to electronic payments is expected to impact approximately 456,000 out of 68.2 million Social Security beneficiaries who currently receive their payments via paper checks. Many of these beneficiaries are older individuals who may not be as familiar with digital systems, raising concerns about the potential impact on this vulnerable population.
The White House emphasized that the move aims to combat waste, fraud, and abuse in government by modernizing outdated paper-based payment systems.
Treasury modernizes federal payment system
However, skeptics believe that the changes could affect the financial stability of beneficiaries who rely on Social Security payments as their primary source of income.
The Department of the Treasury, as the Federal Government’s primary financial manager, is tasked with protecting the United States General Fund against fraud and improper payments. The new directive seeks to enhance the safeguarding of federal payments by implementing measures such as Treasury verification of agency payment information, enforcement of pre-certification criteria for disbursement requests, and collaboration among agencies for preventing fraud. With tax season underway, taxpayers are encouraged to file their returns electronically and request direct deposit for their refunds to minimize the risk of mail fraud.
If a refund is delayed or suspected to be stolen, taxpayers can request a refund trace directly with the IRS or report their case to their State Comptroller’s Office for state refunds. While the transition to electronic payments promises more efficiency and security, it remains to be seen how effectively the government can support all beneficiaries through this significant change. The federal government has approximately six months to develop an implementation plan for these measures and address potential challenges faced by vulnerable populations.
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