Modernizing Payments To and From America’s Bank Account
The Presidential order mandates a significant shift towards electronic payments for all federal disbursements and receipts by September 30, 2025.
This action aims to reduce costs, improve efficiency, enhance security, and combat fraud associated with paper-based systems, such as checks and money orders.
While recognizing the need for accommodations for those lacking electronic access, the order establishes a clear policy for modernizing government finances and sets specific timelines and responsibilities for its implementation.
Arguments For
Increased Efficiency and Reduced Costs: Transitioning to electronic payments will significantly reduce processing times, administrative overhead, and the costs associated with handling physical checks and maintaining the infrastructure for paper-based systems. The order cites over $657 million in costs for digitizing paper records in FY2024 alone.
Enhanced Security and Fraud Prevention: Electronic payments offer substantially improved security compared to paper checks, reducing the risk of fraud, loss, theft, and delays. The order highlights the significantly higher loss/theft rate associated with paper checks.
Modernization of Government Operations: The transition aligns the federal government with modern financial practices, improving overall efficiency and effectiveness. This initiative aims to reduce bureaucratic inefficiencies.
Improved Transparency and Accountability: Electronic transactions enhance transparency by providing auditable trails and reducing opportunities for errors or manipulation.
Environmental Benefits: Reducing paper usage will have positive environmental effects, minimizing waste and resource consumption.
Arguments Against
Digital Divide and Access Challenges: A significant portion of the population lacks reliable access to banking services or electronic payment systems. The order acknowledges this and mandates accommodations for these individuals, but implementation challenges remain.
Implementation Costs and Complexity: Transitioning all federal agencies and payment systems to electronic methods will require substantial investment, upfront costs, and coordination efforts. Technical difficulties and system compatibility issues might occur.
Potential for Unintended Consequences: System failures, cybersecurity breaches, or glitches in electronic payment systems could disrupt essential services and negatively impact beneficiaries.
Privacy Concerns: Collection and safeguarding of personal data associated with electronic transactions raise privacy concerns requiring effective security measures.
Exemptions and Exceptions: The number of exceptions provided could lessen the overall impact of the initiative potentially delaying comprehensive digital implementation.
By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered:
Section 1. Purpose. The continued use of paper-based payments by the Federal Government, including checks and money orders, flowing into and out of the United States General Fund, which might be thought of as America’s bank account, imposes unnecessary costs; delays; and risks of fraud, lost payments, theft, and inefficiencies. Mail theft complaints have increased substantially since the COVID-19 pandemic. Historically, Department of the Treasury checks are 16 times more likely to be reported lost or stolen, returned undeliverable, or altered than an electronic funds transfer (EFT). Maintaining the physical infrastructure and specialized technology for digitizing paper records cost the American taxpayer over $657 million in Fiscal Year 2024 alone.
This order promotes operational efficiency by mandating the transition to electronic payments for all Federal disbursements and receipts by digitizing payments to the extent permissible under applicable law (but not, for avoidance of doubt, to establish a Central Bank Digital Currency).
This section establishes the order's authority and states its purpose.
The continued use of paper payments is deemed inefficient due to costs, delays, and increased risks of mail theft and financial fraud.
The order aims to improve operational efficiency by mandating a transition to electronic payments, while expressly stating it does not authorize a Central Bank Digital Currency.
Sec. 2. Policy. It is the policy of the United States to defend against financial fraud and improper payments, increase efficiency, reduce costs, and enhance the security of Federal payments.
This section outlines the overarching policy goal: to improve the security and efficiency of federal payments by reducing fraud, costs, and increasing efficiency.
Sec. 3. Phase Out of Paper Check Disbursements and Receipts. (a) Effective September 30, 2025, and to the extent permitted by law, the Secretary of the Treasury shall cease issuing paper checks for all Federal disbursements inclusive of intragovernmental payments, benefits payments, vendor payments, and tax refunds, except as specified in section 4 of this order.
(b) All executive departments and agencies (agencies) shall comply with this directive by transitioning to EFT methods, including direct deposit, prepaid card accounts, and other digital payment options, and take all steps necessary to enroll recipients in EFT payments, except as specified in section 4 of this order.
(c) As soon as practicable, and to the extent permitted by law, all payments made to the Federal Government shall be processed electronically, except as specified in section 4 of this order.
(d) The Secretary of State, the Secretary of the Treasury, the Secretary of Health and Human Services, the Secretary of Education, the Secretary of Veterans Affairs, and the Secretary of Homeland Security shall take appropriate action to eliminate the need for the Department of the Treasury’s physical lockbox services and expedite requirements to receive the payment of Federal receipts, including fees, fines, loans, and taxes, through electronic means except as specified in section 4 of this order.
(e) The Secretary of the Treasury shall support agencies’ transition to digital payment methods, including by providing access through the Department of the Treasury’s centralized payment systems to:
(i) direct deposits;
(ii) debit and credit card payments;
(iii) digital wallets and real-time payment systems; and
(iv) other modern electronic payment options.
This section details the phase-out of paper checks for all federal disbursements and receipts by September 30, 2025.
It outlines the responsibilities of the Treasury Secretary and various agency heads in making this transition.
Specific electronic payment methods are encouraged, and support for the transition will be provided.
Exceptions to this phase-out are addressed in Section 4.
Sec. 4. Exceptions and Accommodations for the Phase Out of Paper Check Disbursements and Receipts. (a) The Secretary of the Treasury, shall review and, as appropriate, revise procedures for granting limited exceptions where electronic payment and collection methods are not feasible, including exceptions for:
(i) individuals who do not have access to banking services or electronic payment systems;
(ii) certain emergency payments where electronic disbursement would cause undue hardship, as contemplated in 31 C.F.R. Part 208;
(iii) national security- or law enforcement-related activities where non-EFT transactions are necessary or desirable; and
(iv) other circumstances as determined by the Secretary of the Treasury, as reflected in regulations or other guidance.
(b) Individuals or entities qualifying for an exception under this section or other applicable law shall be provided alternative payment options.
This section addresses exceptions to the electronic payment mandate.
The Treasury Secretary will review and grant exemptions for situations where electronic payment is impractical or causes undue hardship.
These exceptions include individuals lacking electronic access, emergency situations, and national security concerns.
Alternative payment options will be provided for those granted exemptions.
Sec. 5. Implementation and Compliance of Electronic Transactions. (a) The Secretary of the Treasury, in coordination with the heads of agencies, shall develop and implement a comprehensive public awareness campaign to inform Federal payment recipients of the transition to electronic payments, including guidance on accessing and setting up digital payment options.
(b) Agencies shall coordinate with the Department of the Treasury to facilitate a smooth transition to digital payments, ensuring that affected individuals and entities receive adequate support.
(c) The Secretary of the Treasury shall work with financial institutions, consumer groups, and other stakeholders to address financial access for unbanked and underbanked populations.
(d) The Secretary of the Treasury and the heads of agencies shall take all necessary steps to protect classified information and systems, as well as personally identifiable information and tax return information, through the implementation of this order.
This section outlines the implementation plan.
A public awareness campaign will educate recipients about the transition.
Agencies must cooperate with the Treasury Department to ensure a smooth process, including support for those needing help.
The Treasury Department will address banking access challenges and prioritize data security.
Sec. 6. Reporting Requirements. (a) The heads of agencies shall submit a compliance plan to the Director of the Office of Management and Budget within 90 days of the date of this order detailing their strategy for eliminating paper-based transactions.
(b) The Secretary of the Treasury shall submit an implementation report to the President through the Assistant to the President for Economic Policy within 180 days of the date of this order detailing progress on the matters set forth in this order.
This section details reporting requirements.
Agency heads will submit compliance plans within 90 days.
The Treasury Secretary will submit a progress report to the President within 180 days.
Sec. 7. General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect:
(i) the authority granted by law to an executive department or agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
DONALD J. TRUMP
THE WHITE HOUSE, March 25, 2025.
This section contains general provisions.
It clarifies that the order does not affect existing legal authorities or the OMB's functions.
Implementation depends on compliance with existing laws and the availability of funding.
The order does not create any legally enforceable rights.