New Letter: ABA Expresses Strong Support for Treasury’s Effort to Increase Efficiency in the Payments System

In a new letter to the Department of Treasury today, the American Bankers Association expressed strong support for the administration’s effort to increase the efficiency of the payment system while at the same time improving its security and providing an enhanced service to the public. The letter, written in response to the agency’s Request for Information regarding modernizing payments to and from the United States government, outlines recommendations to help Treasury achieve its goal of transitioning all federal payments that are currently made by paper check—including Social Security benefits, tax refunds and vendor payments—to be made electronically by September 20, 2025. 

“We strongly support the effort to increase the efficiency of the payment system while at the same time improving its security and providing an enhanced service to the public,” ABA wrote. “Removing the paper check from the payment system will result in a cheaper, faster, and more secure payment system.”

• In the letter, ABA outlined three guiding principles to help Treasury achieve its goal: 
• Increase the number of consumers and businesses with bank accounts capable of receiving electronic payments;
• Increase the number of consumers and businesses with bank accounts that migrate to faster, safer, and cheaper electronic payments instead of paper checks; and
• Concentrate initial efforts on the payment flows with the largest volume of paper checks.

ABA explained that one of the critical barriers preventing many payees from receiving electronic payments is the lack of a bank account. To address this, ABA made several detailed recommendations to promote Bank On accounts, which are safe low-cost accounts that enable individuals to enter the financial system to get paid more efficiently and make use of conventional products such as debit cards.

ABA recommended that Treasury promote Bank On-certified accounts to new recipients of federal payments who do not have a bank account as well as current recipients of paper checks. “Individuals without bank accounts would be able to review the list of nearly 500 available Bank On account providers with the knowledge that the accounts are certified to be safe and low-cost,” ABA wrote. 

The association made several other recommendations to Treasury including: 

• Recognize that some programs will be more difficult to convert to electronic payment than others. For these types of programs, it will be more important to solve the challenge of ensuring data integrity first before forcing an electronic payment into the mix.
• Set a reasonable deadline for businesses receiving payment set a reasonable deadline to migrate towards electronic payments understanding that significant and costly changes will need to be made by these organizations. 
• Improve the Pay.gov site by including all of the federal government’s incoming payments flows, standardize the payment types accepted, and remove any impediments to an electronic payment including fees.
• Be aware that scammers will be following this effort and will attempt to impersonate payment recipients or even the federal government with the intent to defraud payment recipients.

Read the full letter.