Around half a million Social Security beneficiaries will soon have to say goodbye to paper checks when receiving their benefits as the executive order issued by the office of the president is set to come into effect before year end. A March 25th executive order titled “Modernizing Payments To and From America’s Bank Account” has stipulated that all federal payments and disbursements are to be made digitally meaning that the use of paper based payment methods will be discontinued as of September 30th, 2025.
As such, it is not just Social Security beneficiaries that are going to have to make the transition, all federal transactions will be impacted and that includes payments made from citizens as well. Here is what you need to know.
What is this digital mandate all about?
In pursuit of increasing operational efficiency, President Donald Trump issued an executive order earlier this year stating that paper based payments will be phased out of the federal government and subsequently, as of September 30th, 2025, all payments will be made digitally by means of direct deposit, debit card payments, or other electronic payment methods. According to the executive order, paper based payments such as mailed checks “imposes unnecessary costs; delays; and risks of fraud, lost payments, theft, and inefficiencies.”
The mandate also cites increased mail theft as a driving force behind the decision to transition to exclusively digital payment methods to and from what “might be thought of as America’s bank account.” The order further states that, “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).” Furthermore, in the Fiscal Year 2024, the American taxpayer was costed over $657 million for infrastructure used in digitizing paper records. Additionally, according to the U.S. Department of the Treasury, “issuing a paper check costs about 50 cents, whereas an EFT costs less than 15 cents.”
Impact on Social Security
There are currently around 72 million recipients of Social Security benefits, and of this 72 million, a little over 99% were already receiving their monthly benefits digitally via direct deposit. The remaining beneficiaries, which are around 0.8% or 512,690 individuals do still receive their benefits in the form of a paper check, however. As such, these beneficiaries will soon have to contact the Social Security Administration (SSA) or login to their my Social Security account online and change their payment option over to either a Direct Deposit or a Direct Express Card.
In order to aid beneficiaries with this transition, the SSA has also stated in its recent update that the agency is “proactively sending notices to people who currently receive paper checks, to explain the upcoming change and highlight the benefits of switching to electronic payments. In addition, all benefit checks will include an insert explaining the steps a beneficiary can take to transition to electronic payments, and our technicians are ready to assist.”
There is, however, one issue with the implementation of this executive order, and that is the matter of unbanked individuals who will not be able to utilize or access digital payment systems. “A household is considered unbanked if no one in the household has a checking or savings account at a bank or credit union,” the Federal Deposit Insurance Corporation (FDIC) explains. “In 2023, 4.2% of U.S. households—about 5.6 million households— were unbanked.”
For unbanked individuals, the executive order does stipulate that exceptions can be made and as such, they may continue to receive their benefits in the form of paper checks. This, however, may not necessarily be a permanent exception as the order goes on to state that, “The Secretary of the Treasury shall work with financial institutions, consumer groups, and other stakeholders to address financial access for unbanked and underbanked populations.” This could likely mean that eventually the unbanked will also be granted access to digital financial options and as such, paper checks will be fully phased out at some point.