As per an executive order that had been issued earlier in the year, all federal payments and disbursements will be digitized going forward, and as of September 30th, 2025, the use of paper based payments will be phased out entirely. Whilst this decision made was in pursuit of lowering costs and increasing efficiency, there still remains a cohort of vulnerable individuals who could be negatively impacted by this change.
Social Security currently has around close to 74 million beneficiaries, and for the most part, these beneficiaries already receive their benefits electronically by means of direct deposit. According to the Social Security Administration (SSA), the number of beneficiaries who still receive their benefits in the form of a mailed paper check amounts to less than one percent of the total beneficiaries.
This may seem like a small figure but even less than one percent of some 74 million amounts to at least half a million individuals. Beneficiaries of the Social Security program are a vulnerable group and as such, delays of any kind could result in severe ramifications for these households. This now raises the question: what should those who cannot access the internet do when this executive order comes into effect? Here is what the agency has shared.
What is this change about?
On July 14th, the SSA uploaded a post to its blog affirming that it would also be phasing out the use of paper checks in accordance with the March 25th executive order titled “Modernizing Payments To and From America’s Bank Account”. This is set to go into effect as of September 30th and the agency states that this is being done in order to “improve efficiency, security, and ensure beneficiaries receive their monthly benefits promptly.”
Shifting closer and closer to complete digitization is essentially the way of the world in today’s landscape and as such, this change does not come as much of a surprise. In its post, the SSA also notes that aside from enhanced security and increased speed and efficiency, this change will also cut costs.
“Issuing a paper check costs about 50 cents, whereas an EFT costs less than 15 cents. This shift could save the federal government millions of dollars annually,” the agency wrote citing the U.S. Department of the Treasury.
In the context of Social Security beneficiaries, however, the issue being raised is the matter of vulnerable individuals who might not be able to access electronic banking systems with ease. The concern being raised is that these individuals will possibly face delays with their benefits if they do not switch over to electronic payment methods due to being unbanked, or living in a rural area with no access to the internet.
Will the Social Security phase out paper checks entirely?
“About 4.2% of of U.S. households lacked a bank or credit union account in 2023,” as per the Federal Deposit Insurance Corporation. Additionally, according to Bankrate, some people are considered as “underbanked because they believe they don’t earn enough to open an account. Those who are underbanked also cited concerns about fees, privacy or general distrust of banks.”
As such, whilst the SSA hopes to have as many beneficiaries as possible transitioned over to an electronic payment method, it has been confirmed that the agency will continue to disburse paper checks to those who are unable to utilize electronic payment systems, according to a spokesperson for the SSA who recently spoke with FOXBusiness.
Senator Elizabeth Warren also spoke with SSA Commissioner Frank Bisignano last month regarding various matters at the agency. At this time, the SSA Commissioner also confirmed that the agency will continue to issue paper checks for those who need it.
“In the meeting with Senator Warren, Commissioner Bisignano backtracked, confirming that paper checks will remain an option for beneficiaries who need them,” according to a press release.