The size and scope of paper checks sent in the service of government benefits and payments is staggering — even if those transactions are a relatively slight sliver of overall disbursements.
The Federal Reserve reported that last year, the government processed 36 million paper checks, representing an aggregate $175 billion in payments across benefit payouts, tax refunds, vendor payments and inter-agency transactions. The volume of checks was down 9.3% from 2023, and the value decreased by 38.7%.
However, there’s some volatility here. In 2021 during the pandemic, for example, the values and volumes spiked 56.6% and 32.4% to a respective $273 billion and 131 million, amid waves of stimulus checks.
The latest tally indicated that paper checks average $4,861 per payment.
Separate data from the Government Accountability Office showed that improper payments — where, say, payments should not have been made, or the incorrect amounts were paid (which would include checks) — have totaled $2.8 trillion since fiscal year 2003. A total of 16 agencies reported about $162 billion in improper payments across 68 programs last year alone.
The Department of Government Efficiency estimated that the physical lockbox maintained by the Treasury costs $2.40 per check to maintain. Overall, eliminating checks would save an attendant $750 million.
A post on…paper checks!
-Treasury processed 116 million paper checks in FY2024.
-In FY2023, $25 billion in tax refunds were delayed or lost due to returned or expired checks.
-Treasury maintains a physical lockbox network to collect checks for tax (IRS), passport (State…— Department of Government Efficiency (@DOGE) February 17, 2025
This week’s executive order from President Donald Trump seeks to bring government payments more fully into the digital age, with a mandate to move to electronic payments. In addition, the government will stop accepting paper checks for payments from households.
The Federal Reserve Bank of Atlanta estimated that 7.7% of payments for government fees and taxes are paid through paper means.
There’s a deadline to get to the phaseout, as the order stated that the issuing of paper checks shall cease by Sept. 30.
Paper checks have been stubbornly entrenched in daily life depending on where you look, especially in B2B, as 40% of commercial payments are still done with paper checks.
Beyond what might be termed a top-down approach — the White House ordered the transition to digital payments and set a deadline — there is also a bottom-up groundswell of enthusiasm for digital payments.
The PYMNTS Intelligence report “Measuring Consumers’ Growing Interest in Instant Payouts” found that roughly half of consumers in the United States received at least one government disbursement in the year before being surveyed, and 77% of consumers who primarily receive instant disbursements are highly satisfied.
Meanwhile, the PYMNTS Intelligence report “Measuring Consumer Satisfaction With Instant Payouts” found that satisfaction with instant payments is the highest for government disbursements, at 89% — 15 percentage points higher than the 74% of consumers receiving government disbursements via non-instant methods who are satisfied. Money mobility — ensuring the faster and safer flow of funds to bank accounts or digital wallets — is improved.
Even government officials have found a need to transition to digital channels. The PYMNTS Intelligence report “Accelerating Aid: Digital Payouts for Government Disbursements” revealed that nearly half of government officials said their payment experiences — for constituents — were only “fair” or even worse than that. In the meantime, it’s estimated that it takes 22 months for the IRS to resolve identity theft cases tied to government payments.
