Tuesday marks the final day of September and along with the end of the month comes the end to paper check disbursements from the Social Security Administration (SSA), the Department of Veterans Affairs, as well as the broader federal government. The decision to concretely discontinue to the use of paper checks was made in March as per an executive order issued by the White House titled “Modernizing Payments To and From America’s Bank Account”.
As per this executive order, this shift to exclusively electronic methods of payments is due to go into full effect as of September 30th, which is Tuesday of this week. As such, any beneficiaries (both Social Security and VA) who receive their disbursements as paper checks have mere hours left to ensure their payment information is updated to an electronic method.
It is also worth noting that exceptions to this digital mandate will be granted under specific circumstances and if a beneficiary is unable to transition their payment method, they will likely need to submit an application for a waiver so as to prevent any disruptions with their benefit payments. Here is everything you need to know.
Modernizing America’s bank account
Issued on March 25th, the executive order stipulates that all paper based payments such as mailed checks or money orders be phased out of the broader federal government as of September 30th. According to the order, the usage of paper based payments “imposes unnecessary costs; delays; and risks of fraud, lost payments, theft, and inefficiencies.”
The order goes on to outline a substantial increase in mail theft over the past five years, adding 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).” Transitioning away from paper checks is also said to save the federal government millions of dollars each year. “Maintaining the physical infrastructure and specialized technology for digitizing paper records cost the American taxpayer over $657 million in Fiscal Year 2024 alone,” the order reads. 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.”
In addition to all disbursements from federal agencies being made electronically, all payments made to the federal government will also need to be made electronically as of September 30th. This means that if, for instance, you are owing federal taxes, you will need to make that payment electronically going forward. Last week, the IRS stated that it will “begin phasing out paper tax refund checks for individual taxpayers starting on Tuesday to comply with Trump’s order. However, taxpayers should “continue using existing forms and procedures until further notice.”
As such, all paper based payments will need to be transitioned to any of the following electronic options before September 30th, as per the executive order:
(i) direct deposits;
(ii) debit and credit card payments;
(iii) digital wallets and real-time payment systems; and
(iv) other modern electronic payment options.
Exceptions
If a beneficiary or any other individual is unable to transition their payment methods, the executive order does note that exceptions will be made in cases where electronic transactions are not deemed feasible. According to the Department of Treasury’s GoDirect website, in rare circumstances the Treasury will grant a waiver to individuals who are unable to change over their payment methods. A waiver will be granted under any of the following circumstances:
- The check recipient is an individual to whom electronic payments would impose a hardship due to a mental impairment.
- The check recipient lives in a remote geographic location lacking the infrastructure to support electronic financial transactions.
- The check recipient is age 90 or above.
Additionally, in its September 19th reminder, the SSA also noted the following: “temporary checks are no longer available for initial claims and anyone seeking an exemption must file a waiver with the U.S. Treasury by calling 1-877-874-6347. If you have no other way to receive payments, we will continue to issue paper checks. There are no plans to pause any payments starting October 1.”