The Clearing House, Bank Policy Institute and Consumer Banking Association are urging the U.S. Treasury to add additional instant payments rails to its infrastructure once paper checks are phased out later this year.
The Treasury will stop issuing paper checks starting Sept. 30 for all intragovernmental payments, tax refunds, benefits payments and vendor payments, according to a March 25 Trump administration executive order. The shift from paper checks is in an effort to reduce costs and the growing threat of check fraud.
Treasury issued $461.2 billion in tax refunds in fiscal 2024, 91% through direct deposit, according to Internal Revenue Service data.
“As of now, the plan is for the Treasury to use FedNow and FedACH to move payments electronically,” Nora Rigby, associate director of regulatory and legislative affairs at TCH, told Bank Automation News.
However, in a letter sent this week to the Treasury, The Clearing House, Bank Policy Institute and Consumer Banking Association requested the use of modern payments services beyond the Federal Reserve’s rails.
For example, the organizations want Treasury to allow payments to be made via Early Warning Service’s disbursements with Zelle, The Clearing House’s ACH service and its instant payments rail the Real Time Payments network.
“One of our recommendations is that the government should consider using alternate payment rails (like TCH) for redundancy and resiliency purposes,” Rigby said, noting the importance of having active rails in case of outages.
Rigby also noted TCH’s reach as a positive for the Treasury. In fact, RTP taps into 61% of all U.S. bank accounts, compared to 31% for FedNow, and nearly 98% of all real-time payments in the United States occur on TCH’s RTP network, he said.
Spreading wealth
The Treasury issued 36 million checks worth more than $170 billion in 2024, according to Federal Reserve data.
FedNow processed $49 billion in payments in 2024, according to the Federal Reserve. TCH’s 2024 total payment value was $246 billion.
Many financial institutions, including First International Bank and Trust, JPMorgan, BNY and Citi use FedNow, RTP and Zelle to give customers choices when making payments.
Register here for “Seamless integration: The new frontier in embedded payments,” a free Bank Automation News webinar set for Tuesday, July 22, at 11 a.m. ET.
