Paper checks could be headed for the trash as the Trump administration moves at lightning speed to clamp down on alleged fraud, waste and abuse in government operations.

The White House issued an executive order March 25 banning the use of paper checks by federal government agencies after Sept. 30, arguing that they are costly and more prone to fraud. 

Paper checks are 16 times more likely to be reported lost, stolen or returned as undeliverable, according to the U.S. Department of Treasury; maintaining the check issuance infrastructure cost $657 million in 2024, the executive order stated. 

Efficiency, fraud at stake 

Efficiency is the main reason to move away from checks, with fraud a close second, Deepak Gupta, global senior vice president at payments company Volante and board member at U.S. Faster Payments Council, told Bank Automation News. 

The efficiency argument carries greater weight because, according to public sources, most government agencies on the radar of the directive — including the Internal Revenue Service, Social Security Administration, Medicare, Medicaid and Department of Veterans Affairs — already issue more than 99% of their payments electronically, Gupta said.  

“Maintaining a check-issuance and -tracking infrastructure for a small percentage of payments is costly on a per-payment basis,” he said. 

While the government does have a digital payments infrastructure, it is not highly scalable and doesn’t have much room to add volume, Gupta said. Increasing volume to the existing infrastructure would likely require money. 

“There will almost certainly be an opportunity — or need — to work with the private sector to ensure the volume and scalability issue is mitigated,” Gupta said. “I’d predict that the private sector will help facilitate education and outreach initiatives to help the government digitize its systems.” 

In the short term, the executive order will increase Automated Clearing House payments, however in the long term (longer than a year), “this will increase adoption of real-time payments, as the trend is for ACH payments to migrate to [The Clearing House] or FedNow.” 

The government can also provide incentives for real-time transfers by offering FedNow and The Clearing House’s Real Time Payment deposits for a small fee, similar to some businesses charging a convenience fee for credit card use. 

Scramble to comply 

Given that the order specifies Sept. 30, 2025, as the end-of-life date for checks, making the change  will be a scramble for agencies, Gupta said. 

“The administration is moving so fast because they really have 18 months to make big changes, because then we have the mid-term elections,” Tom Warsop, chief executive of payments provider ACI Worldwide, told BAN. “This could have been done earlier by the previous administration, but it never ranked high in the priority list earlier.” 

ACI works with the IRS to receive payments and has seen that “fewer people are sending checks to the government” as digital payment adoption increases, Warsop said. 

The government can easily aid the underbanked population through this transition by issuing cards and digital wallets to them, Warsop said.