As part of the current U.S. administration’s push for faster, more secure and cost-effective payments, the use of paper Treasury checks is set to end by September 30, 2025, through an Executive Order. While federal government payments have been moving toward digital methods, there were still approximately 36 million checks issued by the federal government in 2024 worth $175 billion according to Federal Reserve data.

As the government is phasing out check payments, the Federal Reserve’s instant payment rail, the FedNow^® Service, has been ramping up. Launched in the summer of 2023, the system includes 1,400 credit union and bank participants just two years later. With government disbursements going all digital, volume on the FedNow rail is set to increase as the federal government steadily transitions toward real-time digital payments – and that means credit unions must prepare for what comes next.

The question isn’t if change is coming – it's how ready you are to support your members when it does.

Why the government is moving away from Treasury checks

Paper checks have long been a part of the federal payment system, but they come with increasing challenges:

• Delays in delivery and clearance
• Higher risk of fraud, theft or loss
• Significant printing and postage costs
• Inefficiency in emergency relief or rapid response payments

In a March 25 fact sheet on the cessation of government check issuance, the White House stated that check fraud was on the rise with 680,000 reports of fraud in 2022 alone, double the prior year. The fact sheet also mentioned that government checks are 16 times more likely than electronic payments to be lost, stolen or undelivered.

As the government adopts a more modern payment infrastructure, including the use of real-time rails, we’re seeing the beginning of the end for paper-based disbursements – like tax refunds, Social Security, and other federal benefits.

Enter FedNow: Instant Payments, powered by Catalyst

FedNow, the Federal Reserve’s real-time payments service, is designed to offer instant, 24/7/365 clearing and settlement of payments on an open network available to all banks and credit unions. The FedNow rail is available for all forms of payment. While consumer payments and P2P use cases are common, instant payments through FedNow can speed bill payments, facilitate instant closing and funding of loans, enable real-time business-to-business invoice payments and much more. Eventually, most payments will occur digitally and faster with the FedNow rail as a primary driver of the transition and a necessary foundational piece of payment infrastructure for all financial institutions, regardless of size.

With FedNow, you can:

• Receive federal payments in real time, directly to member accounts
• Provide immediate access to funds, even on weekends and holidays
• Improve member satisfaction with faster service and fewer delays
• Streamline back-office operations, reducing costs and errors

Why now is the time to act

The shift away from paper checks isn’t just a government initiative – it reflects a larger, irreversible trend toward digital-first payment. Credit unions that wait too long risk falling behind in both technology and member service expectations.

By acting today, you’ll:

• Future-proof your payments infrastructure
• Strengthen member trust through reliability and speed
• Position your credit union as an innovator

Catalyst is your instant payments partner

Catalyst was live on the first day of launch of the FedNow platform and has developed an instant payment solution that makes it easy for credit unions to start benefiting from the FedNow service today while being prepared for tomorrow’s payment innovations. Our FedNow solutions are built with credit unions in mind, ensuring seamless integration, compliance and member-focused delivery while delivering additional benefits such as an extended settlement window, intuitive online reporting, a dedicated account to track FedNow transactions and easy integration to our open-network P2P solution.

The era of Treasury checks is winding down. Instant payments are here to stay. Partner with Catalyst to stay ahead of the curve and bring your members the speed, security and service they deserve.