With a federal deadline for eliminating paper checks looming on September 30, numerous entities are rallying behind Executive Order 14247 aimed at moving towards full electronic payments. This order, titled Modernizing Payments To and From America’s Bank Account,” mandates that the government cease issuing and accepting paper checks in its transactions.
Nacha Supports the Initiative
In line with this initiative, Nacha, which operates the ACH payment network, submitted a supportive letter. The organization highlighted that transitioning from checks to electronic payments is not constrained by technical readiness but rather by policy considerations. Noting that recipients of government payments must already have bank accounts, Nacha advocates minimizing hardship exceptions requiring paper checks.
Statistics reveal that last year, the Treasury Department issued over 1.86 billion ACH transactions totaling more than $8.5 trillion, compared to around 36 million paper checks. The shift would save the federal government approximately $68 million by utilizing ACH payments instead. Additionally, Nacha suggested reducing ACH credit settlement times to match industry standards.
Zelle Sees an Opportunity
Early Warning Services, parent company of Zelle, also chimed in with its support for the executive order. Their comments underscore how phasing out paper checks could enhance the government’s ability to detect and prevent payment fraud. Zelle positions itself as a viable alternative service, citing that Treasury checks are 16 times more likely to be reported lost or stolen than digital payments.
Since early 2021, Early Warning has partnered with the Treasury through its Verify Account solution, which is credited with preventing about 179,000 improper payments across various government agencies. The company asserts that Zelle’s transactions are near flawless, with over 99.95% completed without incidents of scam or fraud.
Joint Letter from Banking Associations
A joint letter was also submitted by banking associations including the Bank Policy Institute, The Clearing House Association, and the Consumer Bankers Association. They echoed the need for modernizing payment infrastructure to reduce fraud and increase financial security among taxpayers. Their support emphasizes that the transition represents a crucial step towards achieving these goals.
