ICBA seeks clarifications in Treasury rule restricting federal use of paper checks

ICBA said it supports the overall objectives of a Treasury Department proposed rule to reduce the federal government’s use of paper checks while requesting clarifications.

Details: In a comment letter to the Treasury’s Bureau of the Fiscal Service’s on its proposal released in April, ICBA said:

• To avoid disadvantaging bank accounts relative to nonbank options, the final rule should clarify that all payment endpoints used to receive federal disbursements—including prepaid cards and digital wallets—must meet equivalent baseline standards for security, transparency, and consumer protection.

• Recipients who genuinely need paper checks should be accommodated, so Treasury should provide agencies with uniform standards for hardship and reasonable-need exceptions.

• Treasury’s approval process for one-off paper checks should be timely and efficient to avoid undue burdens on affected businesses.

• Treasury should periodically publish aggregate implementation data and coordinate with related federal efforts.

Background: The Treasury rule implements Executive Order 14247, which directed Treasury to transition from paper checks to electronic payments for all federal disbursements and receipts. Issued in March 2025, the EO notes the use of checks imposes unnecessary costs and raises the risks of fraud, lost payments, theft, and inefficiencies.

ICBA View: ICBA applauded the Trump administration for working to combat the threat of check fraud by addressing Treasury’s use of paper checks.

Latest on Check Fraud: A recent blog post from ICBA details how community banks are making progress in the fight against check fraud through sustained advocacy, strong partnerships, and policy successes.