Two executive orders (EO) issued by President Donald Trump on Tuesday are directing the Treasury Department to modernize and centralize its payment system in an attempt to root out Federal fraud and waste.
The orders signed by Trump direct the Treasury to transition to electronic payments for as many Federal disbursements as possible and to centralize all Federal payment processing and information under the Treasury.
“It’s basically modernization of equipment and methods,” Trump said while speaking at the White House on Tuesday. “We’re doing this, and we have other modernization programs going on we could let … whoever’s next … do it, but it’s something that should have been done 25 – 30 years ago.”
Under Trump’s first executive order titled “Modernizing Payments To and From America’s Bank Account,” beginning on September 30 – the end of the current fiscal year – the Federal government will no longer issue paper checks for most payments – including those between government entities, benefits, payments made to vendors, and tax refunds.
All executive departments and Federal agencies will be required to transition to electronic funds transfer (EFT) methods and payments made to the Federal government – including fees, loans, and taxes – will also be processed electronically “as soon as practicable.”
Most Federal transactions are already made using EFT methods, following pushes by the government in recent years to transition to digital payments. In the 2023 fiscal year, 99.9 percent of Federal revenue receipts were settled electronically and 96.5 percent of payments made out by the Federal government were electronic, according to the Treasury.
While the EO aims to close the remaining gaps in paper payments, there are some exceptions for those without banking or electronic payment access, in emergency situations where “where electronic disbursement would cause undue hardship,” and for certain law enforcement activities where “non-EFT transactions are necessary or desirable.” Other exceptions may be allowed under the discretion of the Treasury secretary.
The White House also shared its plans to launch a public awareness campaign that it said will “inform Federal payment recipients of the shift” and include “guidance on setting up digital payments.”
The second EO – “Protecting America’s Bank Account Against Fraud, Waste, and Abuse” – requires agency heads to work with the Treasury to share payment processing information to ensure that payments are going to the correct recipients.
It also directs agencies to consolidate their core financial systems under “standardized solutions” to improve “reporting and traceability.”
“Financial fraud threatens the integrity of Federal programs and undermines trust in Government,” reads the EO. “Agencies’ past underinvestment in technology and longstanding challenges with access to accurate data has prevented them from more fully safeguarding taxpayer dollars against fraud and improper payments.”
“This order … promotes operational efficiency by returning disbursing functions to the Department of the Treasury when possible,” the EO says.
Entities outside the Treasury that are authorized to distribute payments are set for reduction under the EO, with payments previously managed by Non-Treasury Disbursing Offices (NTDOs) now transitioning to the Treasury’s oversight.
The Department of Government Efficiency was granted access to the Treasury’s payment systems last month, landing the Trump administration in various legal battles with mixed success. Last week, Trump signed an EO to expand the use of unclassified data at Federal agencies to help pursue “the identification and elimination of waste, fraud, and abuse.”
