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Say Goodbye to Paper Checks: What Business Owners Need to Know Before September 30, 2025

Published on

September 12, 2025

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As an accountant who works closely with small and medium-sized businesses, I want to give you a heads-up about a major change coming from the U.S. federal government that could affect how you send and receive payments.

Starting September 30, 2025, the U.S. federal government will cease issuing paper checks for most federal disbursements (like tax refunds, Social Security benefits, federal contracts, and grants), and will require payments to the government to be made electronically wherever legally possible. This mandate was established under Executive Order 14247: Modernizing Payments To and From America’s Bank Account (White House, 2025).

While this does not mean private checks are being banned, it does mean that if your business sends or receives money to or from the federal government, you must transition to electronic payment methods—and soon.

What This Change Actually Means

  • Outgoing federal payments go digital: Tax refunds, Social Security benefits, vendor payments, grants, and other disbursements will no longer come as paper checks. They’ll be sent through direct deposit (ACH), prepaid debit cards, or other electronic methods (U.S. Treasury, 2025).
  • Incoming payments must be digital too: Agencies will also stop accepting paper checks and money orders for federal fees, fines, taxes, and loan repayments as soon as practicable under existing law (Executive Order 14247).
  • Deadline is firm: After September 30, 2025, federal agencies must stop issuing paper checks and transition to fully electronic disbursements.

Why the Government Is Doing This

Key reasons behind the change:

  • Security: Paper checks are 16× more likely to be lost, stolen, or altered than electronic transfers (White House Fact Sheet, 2025).
  • Speed: Direct deposits are usually received in 1–2 days versus a week or more for mailed checks (SSA, 2025).
  • Cost: Processing paper checks costs over three times as much as direct deposit (U.S. Treasury, 2025).
  • Efficiency: Going paperless reduces manual errors, mail delays, and administrative workload for agencies.

What Business Owners Should Do Now

Here’s how to prepare and avoid disruptions:

1. Update your payment info with federal agencies

  • If you receive payments from the government (contracts, grants, refunds, etc.), make sure your bank details are current in SAM.gov or with the paying agency.
  • If you still receive paper refund checks, switch to direct deposit immediately.

2. Stop sending checks to federal agencies

  • If you pay federal fees, penalties, or taxes by check, start using electronic methods (ACH, wire transfer, EFTPS, or online portals).
  • Check the specific agency’s website for updated payment instructions well before the deadline.

3. Educate your accounting/finance team

  • Ensure your staff and bookkeepers are aware of the change to avoid rejected payments or delayed disbursements.
  • Update internal procedures and vendor files to reflect digital-only payments to/from the federal government.

4. Support clients or employees still using checks

  • If you work with seniors or unbanked individuals who still rely on paper checks for government payments, guide them to sign up for Direct Express® debit cards or open basic bank accounts (FDIC GetBanked).

Important Clarifications

  • This change applies only to federal government transactions. It does NOT ban the use of paper checks between private parties or businesses.
  • There will be limited exceptions for people who lack bank accounts, emergency payments, or situations where the law still requires paper instruments (Executive Order 14247).

Bottom Line

The days of paper checks from the federal government are numbered. By September 30, 2025, it will be electronic payments only for nearly all federal disbursements and receipts. Preparing now will save your business from missed payments, rejected filings, and last-minute chaos.

As your accountant (or fellow finance professional), my advice is simple:
Audit your payment processes now, go digital early, and make sure no one in your network is left behind.

Sources for Further Reading