Federal Paper Checks Have Ended: What Government Vendors Must Do

The federal government is ending paper checks for vendors. See what EO 14247 requires, who qualifies for exceptions, and how to set up electronic payments.

Adrian ReyesSenior Payments & Fintech Editor

October 31, 2026 · 7 min read

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On this page 6 sections

What Happened: Executive Order 14247 and Its Timeline
Federal Government Ending Paper Checks: Which Vendors and Payers Are Affected
The Exceptions Are Narrow, and Few Fit a Business
Setting up Electronic Payments With Federal Agencies
Analysis: Will State and Commercial Payers Follow?
Reducing Check Fraud in Your Own Receivables

Key takeaways

Since September 30, 2025, federal vendor, grant and refund payments go electronically. If your bank details on file are wrong, expect a rejected payment, not a mailed check.
The legal requirement to pay by EFT comes from 31 U.S.C. 3332 and 31 CFR Part 208. Treasury's April 2026 proposal to rewrite Part 208 is the document to watch.
The exceptions are written mainly for unbanked people, emergencies and security work, so a business with a checking account should plan on no waiver.
The order doesn't stop you from accepting checks. Moving customers to electronic payments brings a new main fraud risk: fake requests to change bank details.

The federal government is ending paper checks for vendors, grantees and almost everyone else it pays. Executive Order 14247, signed March 25, 2025, told the Treasury to stop issuing paper checks for federal payments as of September 30, 2025, and it names vendor payments specifically. If you sell to an agency or draw federal funds, the government needs current bank details to pay you, because mailed checks are now limited to a few narrow exceptions.

The other half of the order covers money going into the government: taxes, fees, fines and loan payments. That side is moving more slowly. As of October 2026 it is still a gradual change, with no firm cutoff date for businesses.

What Happened: Executive Order 14247 and Its Timeline

The order, titled "Modernizing Payments To and From America's Bank Account," was published in the Federal Register on March 28, 2025 (90 FR 14001). Section 3 sets the September 30, 2025 date and lists the payments it covers: payments between agencies, benefits, vendor payments and tax refunds. It tells agencies to move payees to electronic funds transfer (EFT), meaning direct deposit, prepaid card accounts and other digital options.

The order gives fraud and cost as its reasons. It says Treasury checks are 16 times more likely than an EFT to be reported lost or stolen, returned undeliverable or altered. It also says keeping up the systems for handling paper cost more than $657 million in fiscal year 2024.

Date	What happened	Source
March 25, 2025	EO 14247 signed	Federal Register, 90 FR 14001
May 30, 2025	Treasury asks for public input; comments due June 30	Federal Register notice, 90 FR 23108
August 14, 2025	Treasury confirms the September 30 phase-out	Treasury press release
September 30, 2025	Paper check payments stop, with exceptions	EO 14247, Sec. 3
October 2025	Treasury moves check printing to an outside provider and limits it to qualifying exceptions	Bureau of the Fiscal Service
January 2, 2026	CBP interim final rule requires electronic refunds to importers	Federal Register
April 29, 2026	Fiscal Service proposes rewriting 31 CFR Part 208	Federal Register

The source of the rule matters for compliance. An executive order gives instructions to federal agencies. It doesn't regulate your business. The legal requirement that federal payments go by EFT is older: it sits in 31 U.S.C. 3332 and in Treasury's regulation at 31 CFR Part 208, first issued in 1998. The April 2026 proposal would tighten that regulation, so it's the document to watch.

For scale, the proposed rule says 97% of the more than 1.3 billion payments Treasury makes each year for agencies were already electronic. Even so, Treasury printed 40.9 million checks in fiscal year 2025.

Federal Government Ending Paper Checks: Which Vendors and Payers Are Affected

The federal FAQ on MyMoney.gov answers the scope question directly: the order covers payments both to and from the federal government. Four groups of businesses feel it.

If you are...	What changed	What to do
A contractor or vendor paid by an agency	No paper check as a fallback for invoices	Confirm the bank account each paying agency has on file
A nonprofit or grantee	Grant payments and reimbursements go electronically	Check the payment system named in your award
An importer due a customs refund	CBP refunds go electronically under its January 2026 rule	Make sure CBP has your bank details; waivers follow 31 CFR 208.4
A business paying taxes, fees or fines	Paper payments being reduced over time	Set up electronic payment channels now

Contractors and professional services firms were mostly paid electronically already. For them, the change removes the fallback. A wrong or outdated bank account used to mean a delayed check. Now it's more likely to mean a rejected payment.

For nonprofits and churches that run on grants, a reimbursement sent back because of a closed account can delay payroll for a program.

For payments into the government, the order tells agencies to collect fees, fines, loans and taxes electronically "as soon as practicable." Its list of accepted methods includes debit and credit card payments. The IRS has said it will rely less on mailed paper payments and expand ACH debit, online payment portals, electronic business payment channels and same-day wire. When the IRS announced on September 23, 2025 that it would phase out paper refund checks, it told taxpayers to keep using their current payment methods until further notice.

The Exceptions Are Narrow, and Few Fit a Business

Section 4 of the order told Treasury to review how it grants limited exceptions where electronic payment isn't workable. It names four categories:

People without access to banking services or electronic payment systems
Certain emergency payments where paying electronically would cause undue hardship, as provided for in 31 CFR Part 208
National security or law enforcement work that requires non-electronic payments
Other cases the Treasury Secretary sets out in regulations or guidance

Most of that list doesn't fit an operating business with a checking account. CBP's refund rule shows how the exceptions work in practice: an importer can still get a check only if it meets one of the waiver conditions in 31 CFR 208.4.

The April 2026 proposal would also change who grants waivers. Today, people apply to Treasury. Under the proposal, agencies would decide, because Treasury reasons they already know the people they pay. The proposed text has agencies collect payment details for one of three account types: an account at the payee's bank or credit union, a qualifying prepaid account, or a Treasury-sponsored account. If you receive federal money, plan on electronic payment and don't count on a waiver.

Setting up Electronic Payments With Federal Agencies

List every federal payer. Include contracts, grants, tax refunds and customs refunds, and note how each one pays you today.
Update your bank details where the agency looks them up. For most contractors, that's the business registration in SAM.gov. Grantees should check the payment system named in their award. If you're unsure, ask your contracting officer or grants officer.
Match names exactly. The legal business name and taxpayer ID on file should match the account holder name at your bank.
Control who can change the account. Require two people to approve any change to payment details, both internally and in agency systems.
Ask your bank for payment details. An ACH deposit can arrive with less information than a check stub. Ask how to see the extra payment information (called addenda records) so your bookkeeper can match payments to invoices.
Pay the government electronically where it offers a way. Use the agency's online portal, ACH debit or a wire instead of waiting for paper to be refused.

If you're new to bank transfers, our explainer on how ACH payments work for business covers the basics. Our guide to ACH settlement and return timelines explains when the money actually arrives.

Expect fraudsters to use the change. Watch for emails and calls that claim to come from an agency and ask you to "update" bank details through a link. Make changes only by logging in to the official system yourself.

Analysis: Will State and Commercial Payers Follow?

This section is analysis. EO 14247 applies only to federal agencies. State treasuries, cities, school districts and your business customers set their own payment policies. Nothing in the order requires them to stop writing checks or stop accepting them.

The direction is still clear. The federal government has cut its own check-printing capacity, and the IRS has said it will rely less on mailed paper payments over time. Businesses that deal with both federal and state agencies will find one electronic process easier to run than two. Large corporate payers have their own reasons to move suppliers off checks, often toward ACH or B2B virtual card programs.

Three things to watch:

Whether Treasury finalizes the Part 208 rewrite, and in what form
When the IRS sets a firm timeline for business payments
Whether your state comptroller or treasurer announces a similar policy

Reducing Check Fraud in Your Own Receivables

Nothing in the order stops you from accepting checks. But the government's reason for dropping them, theft and alteration in the mail, applies to the checks your customers send you too.

Here's an illustrative example. These aren't MannyPay prices or network rates, so use your own numbers.

Assumptions: a wholesaler receives 120 checks a month averaging $2,500. Each check takes 15 minutes of staff time at $25 an hour ($6.25) plus $0.50 in bank item fees.
Checks: $6.75 per check, or $810 a month.
ACH: at an assumed $0.75 per payment, $90 a month.
Cards: at an assumed 2.9%, each $2,500 payment would cost $72.50, or $8,700 a month.

So for large B2B invoices, push repeat customers toward ACH and keep cards available for buyers who need them. When you do take cards on large invoices, Level 2 and Level 3 processing can lower the cost on qualifying business cards. Surcharging programs can pass part of the fee to the payer where state law and card network rules allow it. Our comparison of ACH vs. credit card costs, speed and risk walks through the tradeoffs. For card payments you type in from a phone call or an invoice, a virtual terminal means nothing has to go through the mail.

Electronic payments have their own fraud risk, mainly fake requests to change your bank details. Check any such request by calling a number you already have on file, never one given in the email.

This week, pull your list of federal payers and confirm the bank account each one has on file. Then decide which business customers you'll ask to switch first. If you want help setting up card and online payments for those customers, request a free quote, and a MannyPay specialist will respond within one business day.

Sources

About the author

Adrian Reyes

Adrian Reyes is Senior Payments & Fintech Editor for Beyond the Swipe, covering credit card processing, merchant accounts, payment technology and processing fees.

This article is for general educational purposes and is not legal, tax or financial advice. Card network rules and state laws change; confirm current requirements for your business.