The federal government is saying goodbye to paper checks. A new executive order requires agencies to only use electronic payments for tax refunds, Social Security, and other benefits by Sept. 30 this year.¹

The move is expected to affect about 479,000 monthly Social Security payments, less than 1% of the 69 million total monthly payments. About 1.9 million tax refunds issued last year were paper checks, about 3.5% of the 55.7 million total reimbursements.²

The order goes beyond the IRS or the Social Security Administration. All federal agencies must transition to electronic funds transfer (EFT) methods like direct deposit, debit/credit card payments, digital wallets, and real-time transfers by the end of September.³

Paper checks won’t be accepted for payments made to the government, on everything from income tax bills to passport applications.⁴

Read more: Do you need to make estimated tax payments?

Reducing costs and fraud 

The federal government handled at least 36 million paper checks in 2024, totaling about $175 billion for benefit payouts, tax refunds, vendor payments, and financial transactions between federal agencies, among other things.⁵

The complete shift to electronic payments is being promoted by the federal administration as a cost-savings measure. Potential savings include more than $650 million that the government spends annually on physical infrastructure and technology expenses for digitizing receipts and paper records.⁶

The move comes amid a steady decline in check usage for personal and business use. In the meantime, fraud has surged.⁷ The FBI recently warned about the rise in stolen checks from residential mailboxes and U.S. Postal Service collection boxes and facilities. The notice also said that bank reports of suspicious check activity have doubled in recent years.⁸

A 2024 federal study found about $688 million in mail-related check fraud during a six-month period between March 2023 and August 2023. About 44% of checks stolen from the mail were altered and then deposited, while 26% were used as templates to make counterfeit checks, according to the Financial Crimes Enforcement Network.⁹

Fraud has become more sophisticated in recent years with scammers exploiting bank requirements to make customer money available before fully verifying checks. Many share tips and even photos on social media message boards.¹⁰

Declining use 

The federal government is not alone in trying to cancel paper checks. Target announced last summer that it would no longer accept personal checks from customers, joining other stores such as Aldi, Whole Foods, Gap, and Old Navy.¹¹

Check writing has declined steadily since 1995, when about 50 billion checks were issued.¹² Check usage fell 75% from 2000 to 2021, while debit card usage increased tenfold during the same period.¹³

Exceptions to the executive order will be made for people who don’t have access to electronic payments, as well as in emergency situations and other circumstances. The government is also planning a public awareness campaign on the switch.¹⁴

Read more: How to be smart in a digital society

Sticking with checks 

Even with the rise of digital wallets and contactless payments, 73% of Americans keep paper checks around in case they might need them, according to a study from the Federal Reserve Bank of Atlanta.¹⁵

There were 11.2 billion checks issued in 2021.¹⁶  Checks remain a common form a payment for businesses such as contractors, lawyers, accountants, photographers, and landlords, not to mention gifts and charitable donations. More than two-thirds of Americans over the age of 65 regularly use checks, while less than 10% of those age 25 and under use them.¹⁷ 

Empower research shows that nearly half of Americans (49%) feel safer holding cash. There’s a similar sentiment behind the use of paper checks — at least for some.

A bad experience with a payment app or concerns about data breaches — with the potential to compromise sensitive personal data or bank-account information — has led some consumers to stick with paper checks.¹⁸

Others use paper checks to avoid the surcharges, typically up to 3%, that some local businesses and governments might charge customers for accepting credit card payments. It’s still often free to write a check — where they’re accepted.¹⁹