Trump Exec Order Puts Paper Checks on Borrowed Time, but Data Hurdles Loom Large
By now, President Donald Trump’s executive order to modernize how the federal government handles treasury disbursements is old news. The move, dubbed by some as “#KillTheCheck,” aims to address rising check fraud and cut costs the administration projects will exceed $650 million in fiscal 2024 alone.
Sounds great, right? There’s a catch. As Ingo Payments CEO Drew Edwards pointed out in conversation with Karen Webster recently, the bigger problem runs deeper than the paper check’s stubborn persistence. Edwards contended the real issue is that the treasury simply does not have the digital data required to make instant, accurate electronic payments to millions of Americans by the Sept. 30 mandated end of paper checks.
“Nobody thinks checks are going to stay here forever,” Edwards said. “It’s a question of how fast we can build the rails, gather the data, and guarantee security so that Americans — and the government — can trust a fully digital process.”
The executive order’s goal of modernizing the system is hindered by a data deficit. Edwards cited the Internal Revenue Service (IRS) as one of many federal agencies working from outdated frameworks that lean on physical addresses rather than digital identifiers. The IRS collects taxpayer information, he noted, but not comprehensive, up-to-date details that would enable a broad suite of electronic payment choices.
Traditionally, Edwards noted, the treasury has either mailed out paper checks or processed direct deposits via Automated Clearing House (ACH) files — both reliant on data the IRS gathers through tax returns. While some taxpayers opt to enter routing and account numbers for direct deposit, large swaths of recipients continue to receive treasury checks by mail. And if the government aims to eliminate checks entirely, it must update everything from how it collects consumer information to how it verifies recipients’ identities.
“The biggest challenge is how do they get contact information from everybody that’s receiving money from the federal government other than that name and address,” Edwards explained. “Then how do you make sure the contact you have is actually the person you think it is?”
Authentication Issues
Even if authorities identify a viable digital payment system, Edwards warned that the next obstacle lies in ensuring secure, authenticated transactions. In other sectors — such as insurance, where Ingo Money works with firms to shift from checks to digital payments — companies often tap into non-public data to confirm an individual’s identity. With government agencies disbursing everything from tax refunds to veterans’ benefits, the verification puzzle becomes even more complex.
Additionally, many Americans neither have established relationships with traditional financial institutions nor keep a standard checking account. Others use digital-first services — PayPal, Cash App, Chime — as their primary “banking” relationship. That lack of uniformity makes a one-size-fits-all approach unworkable. Edwards stressed the government should recognize consumer preferences and extend multiple digital payment options.
“Choice needs to come into this solution,” he said. “We do it today with corporations all the time.”
Fraud: Paper and Beyond
Although checks are decades old, they remain a simple fallback. As Webster pointed out, all that is required to issue a payment is a name, a mailing address, a check, an envelope and a stamp. It is precisely that simplicity, Webster said, that has made paper checks so persistent in government and business payments alike. Yet it has also made them ripe for fraud.
Federal treasury checks, particularly those mailed en masse, can be intercepted, forged or altered. Lost and stolen checks lead to costly reclamation processes and customer service tangles. Edwards recounted scenarios where multiple calls to the Treasury Department stem from missing or misappropriated checks, culminating in labor-intensive disputes over who actually endorsed or cashed them.
But fraud isn’t limited to paper. Transitioning to digital payment rails, especially those promising faster or real-time transfers, poses its own risks, he said. A direct deposit can be instantly final, leaving the government with fewer levers to pull if the payment was made in error or under fraudulent pretenses.
“When you write a check and put it in the mail, and then determine it was a mistake, you can stop payment on it,” Edwards noted. “When it’s digital and already deposited, it’s much harder to get back.”
Nonetheless, the sheer scale of paper-based fraud — and the manual processes that trail it — makes the digital transition a compelling long-term fix, Edwards said. Done right, new systems could tap multiple data sources, confirm identities and reduce the incidence of erroneous disbursements.
Looking Ahead: What Must Change
For the executive order to deliver its intended outcome — cutting costs, reducing fraud and boosting citizen satisfaction — Edwards argued that the government must tackle three major fronts in tandem:
- Data Collection and Engagement: Government agencies must shift from sporadic data points (name and mailing address) to more robust, continually-updated data sets that enable seamless electronic payments. This likely requires creating mechanisms that encourage or mandate citizens to supply up-to-date digital contact information.
- Authentication and Verification: Even with a solid data backbone, ensuring the recipient truly is who they claim to be is paramount. Edwards said the federal government’s wide-ranging records could be an advantage if integrated properly. Social Security, the Department of Veterans Affairs and the IRS all maintain detailed files on beneficiaries. Tying that data into modern ID verification solutions could help weed out fraud.
- Technology Partnering: The tight timeframe means building a new system from scratch is improbable. To scale effectively, those FinTech solutions would likely pair with an established bank partner. “They (the federal government) almost certainly need to partner with a modern FinTech that has already solved these problems for enterprises. Because they will be similar and they may be different. But engaging, closing those gaps, managing fraud, presenting choices, ledgering all the transactions, making sure you don’t lose the money. All those are the just the core tenets that companies can solve for those guys. And my other opinion is that they’re very bank-centric at the treasury, and they need a FinTech partnered with a bank to actually solve the government’s problem. It won’t be a government-grown solution.”
The stakes are high, with an estimated 40% of U.S. adults receiving some form of government disbursement each year, and billions of dollars riding on the success of this treasury check transformation. While many observers hail the Executive Order as long overdue, Edwards emphasized that no one should underestimate the complexity inherent in revamping the disbursement infrastructure of the largest payer in the country. Although September 30, 2025, looms as an official deadline, whether the government can navigate procurement processes, budget constraints and interagency coordination in that window remains an open question. For Edwards, though, the end goal is crystal clear.
“I applaud the Executive Order,” he said in closing. “I don’t necessarily believe it can happen in that timeframe, but it needs to. This is a catalyst to get the government to move, and it’s a good thing.”
The post Trump Exec Order Puts Paper Checks on Borrowed Time, but Data Hurdles Loom Large appeared first on PYMNTS.com.