Expiration Date: October 31, 2026

To: Heads of Government Departments, Entities, and Others Concerned

Subject: Improving the Federal Payment Experience by Increasing Electronic Payments 

 1. Purpose

This bulletin serves as a reminder of the requirement to issue payments electronically and to decrease the use of checks. This bulletin shares emerging trends on mail theft-related check fraud and provides a list of electronic payment options for agencies to employ to comply with this requirement.

 2. Authority

31 U.S.C. § 3332 requires that all Federal payments, other than payments under the Internal Revenue Code, be made by electronic funds transfer (EFT). The Secretary of the Treasury is authorized to grant waivers to this requirement on a limited basis. 

 3. Background

Given the continued proliferation of mail theft (FinCen Alert), the US Department of the Treasury (Treasury) strongly encourages agencies to maximize their use of electronic payments. For instance: 

• Check fraud has increased nationwide by some estimates as high as 385% since the pandemic (FrankonFraud), increasingly involving United States Postal Service (USPS) employees (USPSOIG).
• In just a six-month period, Financial Crimes Enforcement Network (FINCEN) reported receipt of over 15,000 Bank Secrecy Act (BSA) reports related to mail theft-related check fraud, tied to more than $688 million in transactions. 
• In Fiscal Year 2023, Treasury accelerated the identification and recovery of over $375 million in altered Treasury checks (Treasury Press Release).
• Paper checks place additional safety and security burden on the public to access their money, and are 18 times more expensive and historically at least 16 times more likely to have an exception (e.g., reported lost or stolen, returned undeliverable, or altered) in comparison to electronic disbursements.

For these reasons, Treasury emphasizes the importance of agencies meeting the requirement to disburse payments electronically and minimize the use of checks for federal payments. 

Federal agencies can work with Treasury’s Bureau of the Fiscal Service (Fiscal Service) to reduce checks and increase electronic payments by:

• Leveraging electronic payment options such as Automated Clearinghouse (ACH), Direct Express, U.S. Debit Card, Digital Pay, Same-Day ACH, Fedwire, FedNow, direct deposit abroad and International Treasury Services (ITS.gov),
• Using the Fiscal Service’s payment integrity services such as the Account Verification Service (AVS) to validate bank account status and ownership ahead of disbursement, and 
• Leveraging G-Invoicing which is used by federal agencies for electronic intra-governmental buy/sell transactions.

 4. Treasury’s Agency Priority Goal

Fiscal Service co-leads Treasury’s Agency Priority Goal of creating a modern, seamless, inclusive, and secure Federal payment experience. When Treasury disburses by paper check, rather than an electronic method, it introduces additional fees, potential risk to personal safety, and delays access to funds for the recipient. Treasury is also seeking to expand financial inclusion and meet the American public’s demand for more flexible payment options providing greater choice, speed, security, and mobility. Through the collaboration of Fiscal Service and Internal Revenue Service (IRS), by September 30, 2025, Treasury is targeting to: 

• Increase the electronic rate for non-tax Treasury-disbursed payments to 98.4% by the end of FY 2025, compared with 98.22% in FY 2023, 
• Raise the electronic rate for IRS individual tax refunds to 80.7% by the end of FY 2025, compared with 79.7% in FY 2023, and
• Grow the electronic rate for IRS individual and business tax receipts to 84% by the end of FY 2025, compared with 82% in FY 2023.

 5. Application

Federal agencies still making check disbursements should seek out opportunities to improve the federal payment experience by maximizing electronic payments. In support of electronic payment efforts, agencies still issuing checks should: 

• Collaborate with Fiscal Service to apply paper check reduction strategies to enhance the customer experience,
• Promote the benefits of receiving electronic payments to your recipients through use of targeted messaging and resources such as the Federal Deposit Insurance Corporation’s (FDIC) Get Banked initiative, and 
• Review the electronic funds transfer (EFT) regulation at 31 CFR Part 208 to understand the strengthened waiver requirement for agencies.

 6. Effective Date
This bulletin is effective immediately.

 7. Inquiries
Direct questions concerning this bulletin to: apg@fiscal.treasury.gov