On March 25th, an executive order was issued directing the broader federal government to transition all payments to and from “America’s bank account” from paper based to electronic. This executive order was scheduled to go into full effect as of September 30th, which means that today, October 1st, is day one of no paper checks in the federal government. While September 30th was the official deadline to phase out the use of paper based payment methods, exceptions will still be made for those who are unable to transition to an electronic method of transacting.
On July 14th, the Social Security Administration (SSA) also shared an update on its blog stating that the agency will no longer be issuing paper checks once September ends. The SSA Commissioner did later backtrack on the agency’s initial announcement, clarifying that paper checks will be issued to those who require it even after September 30th. Here is everything you need to know.
Digital mandate comes into effect today
Now that October has begun, all payments made from and to the federal government must be done electronically as per the March 25th executive order. This includes disbursements of benefits for Social Security or VA beneficiaries, as well as when paying your federal taxes. Shifting toward digital transactions in this manner comes as no major surprise in this day and age. According to the executive order, the use of paper based payments such as mailed paper checks or money orders “imposes unnecessary costs; delays; and risks of fraud, lost payments, theft, and inefficiencies.”
Furthermore, the issue of mail theft which is said to have drastically increased since the COVID-19 pandemic will reduced greatly. “Paper checks are 16 times more likely to be lost or stolen compared to electronic payments, increasing the risk of fraud. Electronic payments provide a safer, more secure way to receive benefits,” as per the SSA.
Transitioning to electronic payments will also save the federal government millions annually. 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. This shift could save the federal government millions of dollars annually.”
Impact on Social Security
According to SSA data, over 99% of beneficiaries already receive their benefits electronically, and as such, should not be impacted by this executive order. For the remaining less than one percent of beneficiaries who receive paper checks, the agency had been “proactively contacting those beneficiaries to alert them about the change and the process to enroll in direct deposit or receive Direct Express cards,” as per an SSA spokesperson.
Speaking at the Financial Literacy and Education Commission public meeting on September 24th, Matthew Bilenki, director of finance and management at the SSA, shared that, “many people have already responded and converted to direct deposit.”
On September 19th, the SSA issued a reminder of the approaching deadline on its blog, noting that before the month ends, beneficiaries should enroll in either a Direct Deposit, or if they have no bank account, a Direct Express Account. If a beneficiary was unable to do so, their benefits will not be paused or delayed, however.
According to the SSA, “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.”
The Department of Treasury will grant a waiver to beneficiaries under 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.
A waiver application can be requested by contacting the U.S. Treasury Electronic Payment Solution Center – Waiver Line at 1-855-290-1545.