03-28-2025

Modernizing Payments To and From America's Bank Account

Executive OrderView the Original .pdf
View the Original .pdf

The 1-Minute Brief

What: Executive Order 14247, issued on March 25, 2025, mandates that the federal government phase out paper-based payments, such as checks, and transition to electronic payment methods for both sending and receiving money by September 30, 2025.

Money: The order aims to eliminate significant costs to the taxpayer, citing that the physical infrastructure for paper payments cost over $657 million in Fiscal Year 2024 alone.

Your Impact: If you receive federal benefits, a tax refund, or other government payments, you will likely need to receive them via direct deposit, a prepaid card, or another electronic method instead of a paper check.

Status: This is an Executive Order, signed by the President on March 25, 2025, and is in the implementation phase. Agencies are required to submit compliance plans within 90 days of the order.

What's Actually in the Bill

Executive Order 14247 directs the U.S. Department of the Treasury to stop issuing paper checks for all federal payments and to process incoming payments electronically to the greatest extent possible. The goal is to enhance efficiency, reduce costs, and improve the security of federal financial transactions.

Core Provisions:

  • Phase-Out of Paper Checks: Effective September 30, 2025, the Treasury is ordered to cease issuing paper checks for federal disbursements, including benefit payments, vendor payments, and tax refunds.
  • Mandatory Electronic Payments: All executive departments and agencies must transition to Electronic Funds Transfer (EFT) methods, such as direct deposit and prepaid cards.
  • Electronic Collections: All payments made to the federal government, such as fees, fines, and taxes, are to be processed electronically.
  • Exceptions: The Secretary of the Treasury can grant limited exceptions for individuals without access to banking services, for certain emergency payments, for national security activities, or in other circumstances where electronic methods are not feasible.

Stated Purpose (from the Sponsors):

The order states its purpose is to defend against financial fraud, increase efficiency, reduce costs, and enhance the security of federal payments. It highlights that Treasury checks are 16 times more likely to be lost, stolen, or altered than electronic transfers and that mail theft complaints have risen significantly since the COVID-19 pandemic.

Key Facts:

Affected Sectors: Government Operations, Banking, and any individual or entity receiving payments from or making payments to the federal government.
Timeline: The main transition is to be effective by September 30, 2025. Agency compliance plans are due within 90 days of the order's issuance.
Scope: This is a nationwide directive affecting all federal disbursements and receipts.

The Backstory: How We Got Here

Timeline of Events:

The Long Road to Digital Government Payments (1970s-2010s):

The push to modernize federal payments is not new. The Federal Reserve began operating an electronic payment system, the Automated Clearing House (ACH), in the 1970s as an alternative to paper checks. The effort gained significant momentum with the Debt Collection Improvement Act of 1996, which included a provision known as "EFT '99". This law mandated that all federal payments, except tax refunds, be made electronically by 1999.

To achieve this, the Treasury Department launched public awareness campaigns, most notably the "Go Direct" program starting in 2005, which urged recipients of Social Security and other federal benefits to switch to direct deposit. By 2011, new Social Security beneficiaries were required to select an electronic payment option. These efforts were largely successful, with nearly 99% of Treasury-disbursed benefit payments being electronic by late 2023.

Why Now? The Political Calculus:

  • Rising Fraud and Mail Theft: A primary driver for this executive order is the dramatic increase in mail theft and check fraud. Since the COVID-19 pandemic, complaints of mail theft have surged. Criminals increasingly target mailed checks, using techniques like "check washing" to alter payee information and amounts, leading to significant financial losses. In a six-month period in 2023, financial institutions filed over 15,000 reports of mail theft-related check fraud, totaling $688 million in suspicious activity.
  • Cost Savings and Efficiency: The executive order explicitly points to the high cost of maintaining paper-based systems. The argument is that eliminating paper checks will save hundreds of millions of taxpayer dollars annually and streamline government operations. Both Republican and Democratic administrations have previously advocated for modernizing the federal payment framework.
  • Technological Advancement: The proliferation of digital payment options, including digital wallets and real-time payment systems, makes a full transition more feasible than in the past. The order directs the Treasury to support a variety of modern electronic payment methods.

Your Real-World Impact

The Direct Answer: This directly affects anyone who still receives paper checks from the federal government, such as for Social Security, veterans benefits, or tax refunds, and those who pay the government via check.

What Could Change for You:

Potential Benefits:

  • Faster Access to Funds: Electronic payments are generally faster than waiting for a check to arrive in the mail and then waiting for it to clear.
  • Increased Security: Direct deposits and other electronic transfers eliminate the risk of your check being lost, stolen from your mailbox, or altered by criminals.
  • Convenience: Your money is automatically deposited into your account, saving you a trip to the bank or a check-cashing store.

Possible Disruptions or Costs:

Short-term (Now through late 2025):

  • Need to Sign Up: If you currently receive paper checks, you will need to enroll in an electronic payment option, either through direct deposit to a bank account or by signing up for a Direct Express® Debit MasterCard®.
  • Banking Access: Individuals without a bank account will need to open one or use the prepaid card option provided by the Treasury.

Long-term:

  • End of Paper Checks: The option to receive a federal payment via a paper check will effectively be eliminated for most people.
  • Privacy Concerns: Increased digitization of financial transactions raises concerns for some about government surveillance and financial privacy.

Who's Most Affected:

Primary Groups:

  • Senior citizens and other recipients of federal benefits who have not yet switched to direct deposit.
  • The "unbanked" and "underbanked" populations who may not have easy access to traditional banking services.
  • Individuals and businesses that still pay taxes or federal fees by mail.

Secondary Groups:

  • The U.S. Postal Service, which will see a reduction in mail volume.
  • Financial institutions, which will have to facilitate the transition for their customers.

Regional Impact: The impact will be nationwide, but it may be more pronounced in rural areas or among populations with less access to high-speed internet and banking services.

Bottom Line: For most Americans who already use direct deposit, this order will have little impact, but for those still reliant on paper checks, it will require a shift to electronic payments in the coming year.

Where the Parties Stand

Republican Position: "Fiscal Responsibility and Modernization"

Core Stance: Generally supportive of measures that increase government efficiency, reduce wasteful spending, and cut bureaucracy.

Their Arguments:

  • ✓ Republicans would likely support the cost-saving aspects of the order, aligning with their goals of reducing government spending and tackling the national debt.
  • ✓ The emphasis on modernizing government systems and improving security aligns with general Republican platforms.
  • ⚠️ Some Republicans may express concern over government mandates and the potential impact on individual choice, particularly for seniors and those in rural communities.
  • ✗ There is strong Republican opposition to the creation of a Central Bank Digital Currency (CBDC), which this order explicitly states it is not intended to establish.

Legislative Strategy: The party would likely support the implementation of this executive order as it aligns with their stated goals of fiscal conservatism and government efficiency. They would, however, remain vigilant against any move towards a CBDC.

Democratic Position: "Inclusion and Protecting Beneficiaries"

Core Stance: Generally supportive of modernizing government services, while ensuring that vulnerable populations are protected and have access to necessary resources.

Their Arguments:

  • ✓ Democrats would likely support the move to more secure and efficient payment systems that ensure beneficiaries receive their payments on time.
  • ✓ The order's provisions for exceptions and accommodations for the unbanked align with Democratic priorities of ensuring financial inclusion and protecting low-income families.
  • ⚠️ Democrats may raise concerns about ensuring the transition is smooth and does not create barriers for seniors, people with disabilities, or those with limited access to technology. They have previously expressed concerns about taxpayer privacy in relation to the modernization of financial systems.
  • ✗ They would likely oppose any implementation that disproportionately burdens low-income individuals or makes it harder for them to access their benefits.

Legislative Strategy: Democrats would likely focus on overseeing the implementation of the order to ensure that the exceptions are fairly applied and that robust support is provided to all affected individuals.

Constitutional Check

The Verdict: ✓ Constitutional

Basis of Authority:

The President is issuing this order based on the authority vested by the Constitution and the laws of the United States, specifically the powers of the executive branch to manage its own operations. The Treasury Department has long-standing statutory authority to manage the government's finances and payment systems.

Relevant Portion of the Constitution: The executive power is vested in the President of the United States of America, who is tasked with ensuring that the laws are faithfully executed. This includes managing the executive branch and its agencies in an efficient manner.

Constitutional Implications:

Executive Authority: This order is a directive to executive branch agencies on how to conduct their financial operations. It is generally seen as within the President's authority to manage the executive branch.
Precedent: There is a long history of legislation and executive action aimed at moving the federal government toward electronic payments, such as the Debt Collection Improvement Act of 1996. Courts have not found these efforts to be unconstitutional.
Federalism: This order deals with federal payments and does not overstep into powers reserved for the states.

Potential Legal Challenges:

Legal challenges are unlikely to succeed. The order contains clear exceptions for those for whom electronic payments would be a hardship, addressing potential arguments that it would unfairly harm certain populations. Advocacy groups for civil liberties might monitor the implementation for potential privacy infringements, but a direct challenge to the order itself is improbable.

Your Action Options

TO SUPPORT THIS BILL

5-Minute Actions:

  • Share Information: Inform friends and family who receive federal benefits by check about the upcoming changes and the options available to them. Direct them to the Treasury's "Go Direct" website or the Direct Express® card program.

30-Minute Deep Dive:

  • Assist a Relative or Neighbor: Help someone who is less tech-savvy to sign up for direct deposit at their bank or enroll in the Direct Express® card program.
  • Engage with Advocacy Groups: Support organizations that work to improve financial literacy and access for all communities.

TO OPPOSE THIS BILL

5-Minute Actions:

  • Call Your Rep/Senators: Capitol Switchboard: (202) 224-3121. "I'm a constituent from [Your City/Town]. While I understand the need for efficiency, I am concerned about the impact of Executive Order 14247 on [e.g., seniors, the unbanked]. I urge [Rep./Sen. Name] to ensure robust protections and accessible alternatives are in place."

30-Minute Deep Dive:

  • Write to the Treasury Department: Express your concerns about the implementation timeline, the accessibility of exceptions, or privacy issues.
  • Join an Organization: Support civil liberties and privacy advocacy groups that monitor the government's collection and use of financial data, such as the ACLU. Or, get involved with groups that provide services to unbanked and underbanked individuals.