Federal organization Nacha advises the government to steer clear of paper checks, calling for a switch to electronic payments.
In a significant move towards modernizing government operations, Executive Order 14247, signed on March 25, 2025, mandates a comprehensive transition by the federal government to electronic payments for nearly all financial transactions[1][2][3]. Known as *Modernizing Payments To and From America’s Bank Account*, the directive aims to eliminate paper checks by September 30, 2025, facilitating a move towards Electronic Funds Transfer (EFT) methods such as direct deposits, debit/credit cards, and digital wallets[1][2].
### Implications for Federal Disbursements
After September 30, 2025, most federal disbursements and payments will be conducted electronically, significantly reducing paper check use[1][2]. This affects tax refunds, Social Security payments, tribal payments (e.g., through agencies like the National Indian Gaming Commission), and all payments made to and from the federal government[3]. Heads of federal agencies were required to submit implementation plans by June 23, 2025, and the Treasury Secretary will report on progress by September 21, 2025, ensuring government-wide coordination and compliance with the order[1].
Agencies are adopting secure digital payment portals like Pay.gov, which is used by the National Indian Gaming Commission and other bureaus for convenient and secure payments[3].
### Benefits of Executive Order 14247
The federal government currently spends over $657 million annually on processing paper checks. Transitioning to electronic payments is expected to save hundreds of millions of dollars by cutting printing and mailing costs[1][2]. Electronic payments are much less vulnerable to fraud, theft, and loss compared to paper checks, enhancing protection of taxpayer money and personal information[2][3].
Electronic payments expedite transactions, allowing taxpayers and recipients to receive funds like tax refunds and benefits faster than traditional mail-based systems[2]. Electronic methods also eliminate issues related to postal delays or lost checks, providing a more consistent and dependable payment process[2].
### Specific Impact on Nacha, Zelle, and the US Treasury
While not explicitly named in the search results, Nacha (the organization managing the ACH network) and Zelle (a popular digital payment network) are likely integral to the EFT infrastructure promoted by the Treasury. Executive Order 14247’s emphasis on electronic funds transfer supports broader use of systems like ACH and real-time payments such as Zelle to facilitate faster and secure federal disbursements[1][2]. This transition encourages federal agencies to leverage existing private sector digital payment platforms compliant with Treasury standards.
The Treasury leads this modernization effort, setting deadlines and implementation guidelines, overseeing digital payment portal adoption (e.g., Pay.gov), and ensuring federal compliance. The Treasury benefits from reduced processing costs and enhanced payment oversight, and it enables a seamless interface between government payment systems and private payment networks like Nacha and Zelle[1][3].
In conclusion, Executive Order 14247 transforms federal payment systems by requiring nearly all transactions to move to electronic formats by late 2025. This modernization increases security, reduces costs, and improves speed and reliability for governments and recipients. It also accelerates the integration of private-sector digital payment platforms such as Nacha and Zelle into federal disbursement processes, with the Treasury playing a central coordinating role[1][2][3].
A consortium of banking associations has also submitted a comment in support of the executive order. Early Warning Services, parent company of Zelle, has emphasized that transitioning away from paper checks would strengthen the U.S. Treasury's capabilities to detect improper payments and prevent fraud. The federal government will cease issuing paper checks for benefits, intragovernmental transfers, vendor payments, and tax refunds, as well as stop accepting paper checks for payments.
No recommendation is made by Early Warning for the Treasury to shorten its ACH credit settlement times. Nacha recommended that the Treasury shorten its ACH credit settlement times to align with standard ACH timing in the private sector. The letter from the banking associations does not mention any specific technical readiness issues with the transition to electronic payments. The Bank Policy Institute, The Clearing House Association, and the Consumer Bankers Association have jointly filed a letter supporting the executive order, describing the effort as "a critical opportunity to modernize America's payment infrastructure, reduce fraud, and increase financial security for American taxpayers." Nacha, which runs the ACH payment network, has submitted a comment in support of the executive order.
- To achieve a more secure and efficient financial infrastructure, the government's emphasis on electronic payments via Executive Order 14247 could foster increased collaboration between federal entities and private-sector payment networks, such as Nacha, in the realm of Electronic Funds Transfer (EFT).
- As the federal government progresses with its transition from paper checks to digital wallets, direct deposits, and debit/credit cards, advancements in technology may enable more robust links between government-managed Electronic Funds Transfers (EFT) and modern payment networks, such as Zelle, potentially establishing a streamlined, unified financial landscape for both businesses and individuals.
