Last month, the US Federal Government issued an executive order focused on modernizing bank payments. In an effort to improve security and reduce costs, the government plans to phase out paper check disbursements and receipts by September 30, 2025.

This directive applies to all executive departments and agencies, which are required to transition from checks to electronic fund transfer (EFT) via methods including direct deposit, prepaid cards, and other digital payments.

While limited exceptions are possible, the bulk of federal bank payments issued and collected after the deadline must be digital. Agency heads are required to submit a compliance plan and detailed strategy for eliminating paper-based transactions by June 23, 2025—within 90 days of the Executive Order’s release date.

Whether you’re part of a government agency or a company in the private sector, the following best practices will help your team quickly and securely build out a payment modernization strategy and digital disbursements.

How to set up digital disbursements

The transition from paper checks to EFT requires a thoughtful strategy focused on speed, security, efficiency, and cost-savings. Here are steps organizations can follow to modernize payments:

Explore digital payment options

According to the Executive Order, the following EFT methods have been approved for agency use:

• Direct deposits

• Debit and credit card payments

• Digital wallets and real-time payments  

• Other modern electronic payment options

Organizations may choose to focus on one digital disbursement method or vary methods depending on the use case. To choose between payout options, leaders will need to assess available payments infrastructure and consider the population of recipients.  

With Tango’s Disbursement Link, teams can send digital payouts at scale, giving recipients a choice among all the above-listed EFT options as well as PayPal and Venmo.  

Implement modern and secure payments technology

Sending a high volume of bank payments without paper checks—or intense manual work—requires integration and automation. To streamline payouts at scale, agencies will need a robust API for digital disbursement.  

Tango’s API is easy to implement and can be used to send payouts, as well as rewards and incentives. We also offer integrations to essential tools for tracking and managing programs.  

One of the primary purposes cited in the Executive Order for this payment modernization is a desire to reduce fraud. Digital payments, however, also pose risk.  

When payments move and settle faster, transaction monitoring needs to happen 24/7 as part of a comprehensive security and compliance program.

Optimize recipient experience

The move to modernize government disbursements aligns with increasing desire for digital payments among businesses and consumers.  

For digital disbursements, organizations should consider the importance of protecting recipient data. To send a payout via Tango requires only a name and email address. Any sensitive information (including PII and bank data) is encrypted between a customer’s endpoint and our hosting platforms or data centers.

Agencies should also consider ways to support digital payment recipients who may need technical service. Partnering with a provider like Tango that offers top-level customer support at no extra cost could save teams valuable time and ensure a better recipient experience.

According to the Executive Order, one challenge the Secretary of the Treasury will be addressing is access to digital payments for unbanked and underbanked populations. Nearly half of this population as of 2023 was using online payment services like PayPal or Venmo, both of which are available to recipients through Disbursement Link.    

Manage costs

Given the US government’s efforts to save taxpayers over $657 million per fiscal year by eliminating checks, federal agency leaders will need to closely consider the costs involved with sending payments—especially in the case of mailed prepaid cards. Digital disbursements eliminate the need for physical packaging and shipping—where costs are on the rise— significantly reducing cost per payment.

Per the Executive Order, Department of the Treasury checks are 16 times more likely than EFT to be reported lost or stolen, returned undeliverable, or altered. Prepaid cards sent via post still run the risk of mail fraud.  

Be on the lookout for technology partners with robust security, no subscription fees, and very low transaction costs on all desired disbursement types to ensure your agency maximizes ROI.  

Why payment modernization matters now  

Government agencies will need to move fast on this executive order to:

• Meet quickly approaching deadlines: Agency heads were given only 90 days from the issue date of the Executive Order to submit a compliance plan and strategy for eliminating paper-based payments. After September 30, 2025, paper checks will need to be completely phased out.  

• Provide a better experience for recipients and team members: The best payout experience for recipients is fast, secure, and flexible. A transition to digital payments should also be easy to manage for agency employees—a solution like Tango, with a centralized portal and integrated reporting, greatly simplifies onboarding and payment operations.  

• Save time and money: Sending money shouldn’t require a big spend, especially given the scale of federal payments—according to The Fed, the US government processed 36 million paper checks in 2024. Whether you’re sending a few one-off payouts or thousands, an automated solution for digital disbursements can minimize costs and increase efficiency.  

Reach out to the Tango Team today to learn more about our solutions for payment modernization and digital disbursements.

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