Trump orders end of US government cheques in digital disbursements overhaul
US president Donald Trump has signed executive orders to “modernise how the government handles money” and centralise a “fragmented” federal disbursements bureaucracy to tackle fraud.
The first executive order mandates that, with effect from 30 September, the federal government “will cease issuing paper checks for all disbursements, including intragovernmental payments, benefits, vendor payments and tax refunds”.
Trump signed the order – titled Modernizing Payments To And From America’s Bank Account – to force a “switch from old-fashioned paper-based payments to fast, secure electronic payments” across the US federal public service.
“It’s basically modernisation of equipment and methods… it’s something that should have been done 25, 30 years ago,” Trump remarked as he signed the order on 25 March.
The second executive order – titled Protecting America’s Bank Account Against Fraud, Waste and Abuse and signed the same day – sets out numerous measures that aim to reduce fraud against the government. It includes an intention to reduce “as appropriate” Non-Treasury Disbursing Offices (NTDOs), with the Treasury Department asked to develop a plan to centralise and manage payments.
Comprehensive public awareness campaign to drive transition
The payments modernisation order demands that executive departments and agencies must transition to modern, electronic funds transfer (EFT) methods such as direct deposit, debit/credit card payments, digital wallets and real-time transfers.
Payments made to the federal government, such as fees, fines, loans and taxes must also be processed electronically “where permissible under existing law”.
The Treasury Department will phase out physical lockbox services and expedite electronic collection of federal receipts. Lockboxes are secure bank-run mailing locations.
A public awareness campaign will be launched to inform federal payment recipients of the shift to electronic options and offer guidance on setting up digital payments.
Exceptions will, however, be made for people without banking or electronic payment access, certain emergency payments, certain law enforcement activities and other special cases qualifying for an exception under the order or other existing law.
Read more: Trump and DOGE demand centralised tech systems to track spending
Digital payments’ advantages
“President Trump is cracking down on waste, fraud, and abuse in government by modernising outdated paper-based payment systems that impose unnecessary costs, delays, and security risks” a fact sheet published by the White House alongside the first executive order states. “Paper-based payments, such as checks and money orders, impose unnecessary costs, delays, and risks of fraud, lost payments, theft, and inefficiencies.”
It highlighted that, historically, Treasury cheques are 16 times more likely to be reported lost or stolen, returned undeliverable or altered than an electronic funds transfer; and mail theft complaints have increased “substantially” since 2020.
The executive order itself states that agencies shall coordinate with the Treasury to facilitate a smooth transition to digital payments, ensuring that affected individuals and entities receive adequate support. The Treasury secretary “shall work with financial institutions, consumer groups, and other stakeholders to address financial access for unbanked and underbanked populations”.
According to the Bureau of the Fiscal Service, 96.5% of payments made by the federal government were electronic during the fiscal year 2023.
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Centralisation push to fight fraud
The second executive order directs the Treasury Department to update guidance and “enhance systems across the federal government to ensure that all payments made on behalf of agencies undergo pre-certification verification to prevent fraud and improper payments”.
Agency heads will need to comply with Treasury disbursement requirements, which include ensuring that sufficient funds are available before obligations are incurred, verifying payee information, standardising information reporting formats, confirming funds are being disbursed from appropriate sources, as well as implementing other verification and certification measures.
Agencies must share “relevant” data with Treasury to enhance Treasury’s ability to detect and prevent fraud, subject to applicable law; and “consolidate core financial systems… to improve financial reporting and traceability”.
Treasury is to “develop a plan to centralise and manage payments previously handled by NTDOs”.
The federal government loses between US$233bn and US$521bn annually to fraud, according to Government Accountability Office estimates.
Looking to boost security and efficiency
“President Trump recognises that financial fraud threatens the integrity of federal programmes and undermines trust in government,” a further White House ‘fact sheet’ stated.
“Fragmented disbursing authority, with NTDOs handing 22% of federal payments, creates duplicative reporting and diminishes Treasury’s ability to provide centralised oversight,” the White House said. “Transitioning to centralised systems and ensuring basic pre-certification and verification measures before funds are disbursed will enhance security and improve efficiency in managing federal funds.”
Since returning to the White House on 20 January for his second presential term, Trump has signed more than 100 executive orders across a wide variety of topics. Last month (26 February) he signed an order directing US government agencies to build “centralised tech systems” to “record every payment” made via grants and contracts.
One of Trump’s most prominent first-day executive orders established the Department of Government Efficiency (DOGE). DOGE, led by billionaire Trump supporter Elon Musk, is tasked with “modernising federal technology and software to maximise governmental efficiency and productivity”.
This article was intitally published on Global Government Forum’s sister title Global Government Fintech
About Ian Hall
Ian is editor of Global Government Fintech a sister publication to Global Government Forum. Ian also writes for media including City AM and #DisruptionBanking. He is former UK director for the pan-European media network Euractiv (2011-2018), editor of Public Affairs News (2007-2011) and news editor of PR Week (2000-2007). He was shortlisted for ‘Editor of the Year’ at the British Society of Magazine Editors (BSME) Awards in 2010. He began his career in Bulgaria at English-language weekly the Sofia Echo. Ian has an MA in Urban and Regional Change in Europe and a BA in Economics, both from Durham University.
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