The magnitude of paper checks issued for government benefits and payments is remarkable — despite these transactions being a comparatively minor component of total disbursements.
According to the Federal Reserve, last year the government handled 36 million paper checks, amounting to $175 billion in payments including benefit distributions, tax refunds, vendor payments, and transactions between agencies. The number of checks decreased by 9.3% from 2023, with a value drop of 38.7%.
Statistical Insights
There is some fluctuation in these figures. In 2021, amid the pandemic, both the values and volumes surged by 56.6% and 32.4% to reach $273 billion and 131 million, largely due to stimulus checks.
Current data shows that the average amount for paper checks is $4,861 per disbursement.
Additional statistics from the Government Accountability Office reveal that improper payments — where payments should not have been made or were made in incorrect amounts (including checks) — have accumulated to $2.8 trillion since the fiscal year 2003. Last year alone, 16 agencies reported around $162 billion in improper payments across 68 programs.
The Department of Government Efficiency calculated that maintaining the physical lockbox system by the Treasury costs $2.40 per check. In total, discontinuing checks could save approximately $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 aims to bring government payments more completely into the digital era, mandating a transition to electronic payments. Additionally, the government will cease accepting paper checks for household payments.
The Federal Reserve Bank of Atlanta has estimated that 7.7% of payments for government fees and taxes are made using paper methods.
There is a deadline for this phase-out, as the order specifies that the issuance of paper checks must stop by September 30.
Paper checks have remained firmly established in everyday transactions, particularly in B2B, with 40% of commercial payments still occurring via paper checks.
Growing Support for Digital Disbursements
In addition to a top-down approach—where the White House has mandated a transition to digital payments with a set deadline—there is also a grassroots enthusiasm for digital payments.
The PYMNTS Intelligence report “Measuring Consumers’ Growing Interest in Instant Payouts” found that about half of U.S. consumers received at least one government disbursement in the prior year, with 77% of those who primarily receive instant disbursements expressing high satisfaction.
Simultaneously, the PYMNTS Intelligence report “Measuring Consumer Satisfaction With Instant Payouts” indicated that satisfaction with instant payments is highest for government disbursements, reaching 89% — which is 15 percentage points above the 74% of consumers receiving government funds through non-instant methods who are satisfied.
Enhancing the mobility of money — ensuring a quicker and safer flow of funds to bank accounts or digital wallets — becomes increasingly feasible.
Government officials have also recognized the urgency to shift to digital channels. The PYMNTS Intelligence report “Accelerating Aid: Digital Payouts for Government Disbursements” found that nearly half of government officials rated their payment experiences for constituents as only “fair” or worse. Meanwhile, it is estimated that it takes up to 22 months for the IRS to address identity theft cases related to government payments.
