Ladies and Gentlemen:
The Bank Policy Institute,[1] The Clearing House Association,[2] and the Consumer Bankers Association[3] (collectively, the “Associations”) appreciate the opportunity to respond to the notice of proposed rulemaking issued by the Bureau of the Fiscal Service of the U.S. Department of the Treasury (“Treasury”) regarding the management of federal agency disbursements.[4] Consistent with the Associations’ letter[5] responding to Treasury’s 2025 request for information related to Executive Order 14247,[6] we strongly support this effort to limit the circumstances in which federal agencies may disburse funds using paper checks. It is an important step forward to deliver faster, more secure, and modern payment solutions for payments from the federal government, and we applaud Treasury’s efforts to work collaboratively with the private sector.
1. The Associations Support Treasury’s Proposed Changes to Reduce the Number of Government Disbursements Made by Paper Check
The Associations are appreciative of Treasury’s efforts to revise 31 CFR part 208 (“Part 208”) in an effort to increase the proportion of federal government payments made electronically. Transitioning to electronic payments is important because, among other reasons, check fraud remains prevalent, with criminals continuing to exploit this legacy payment system. In 2024, check fraud accounted for 32% of all fraud losses.[7] Treasury checks are a particular target given the large number of these checks issued and delivered through the U.S. mail in distinctive envelopes. Treasury checks also attract fraud because funds from deposited Treasury checks are generally subject to the “next day availability” rule under the Expedited Funds Availability Act (“EFAA”) and its implementing regulation, Regulation CC.[8] As a result, fraudsters may withdraw funds made available from an altered or counterfeit Treasury check before the depositary bank learns that the check is returned unpaid. Removing paper Treasury checks from circulation is an important step toward reducing theft and the related losses to the federal government and financial institutions. Treasury’s efforts to phase out paper checks in government payments represent a critical opportunity to modernize America’s payment infrastructure, reduce fraud, and increase financial security for American taxpayers.
2. Treasury Should Expand Its Use of Private-Sector Electronic Payment Networks for Federal Disbursements
Section 208.3 of Part 208 requires that all federal agency payments be made by electronic funds transfer except under the limited circumstances set forth in section 208.4. Although Part 208 does not require agencies to use any particular electronic payment network,most agencies rely primarily on Federal Reserve Bank payment systems to send electronic payments. The Associations encourage Treasury to evaluate how agencies can also leverage private-sector payment platforms developed by financial institutions. Expanding agency payments to privately owned networks would provide resiliency by offering the government alternative payment rails it could use if Federal Reserve-operated payment systems were disrupted or experienced an outage. We recommend that Treasury consider using The Clearing House’s EPN® ACH or RTP® instant-payment networks, Early Warning Service’s Disbursements with Zelle®, or other modern payment solutions that are both secure and user-friendly.[9] To that end, we support Treasury’s proposed revision to the definition of “electronic fund transfer” in section 208.2 to include “instant payment networks,” a broad term that would encompass both the RTP network and the Federal Reserve’s FedNow® Service.[10]
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[1] The Bank Policy Institute is a nonpartisan public policy, research and advocacy group that represents universal banks, regional banks, and the major foreign banks doing business in the United States. BPI produces academic research and analysis on regulatory and monetary policy topics, analyzes and comments on proposed regulations, and represents the financial services industry with respect to cybersecurity, fraud, and other information security issues.
[2] The Clearing House Association L.L.C., the country’s oldest banking trade association, is a nonpartisan organization that provides informed advocacy and thought leadership on critical payments-related issues. Its sister company, The Clearing House Payments Company L.L.C., owns and operates core payments system infrastructure in the United States, clearing and settling more than $2 trillion each day.
[3] The CBA is a member-driven trade association, and the only national financial trade group focused exclusively on retail banking—banking services geared toward consumers and small businesses. As the recognized voice on retail banking issues, CBA provides leadership, education, research, and federal representation for its members. CBA members operate in all 50 states. They include the nation’s largest bank holding companies as well as regional and super-community banks. The overwhelming majority of CBA’s members are financial institutions holding more than $10 billion in assets.
[4] Department of the Treasury, Bureau of the Fiscal Service, Management of Federal Agency Disbursements, 91 Fed. Reg. 23039 (Apr. 29, 2026) (to be codified at 31 CFR pt. 208).
[5] Comment from the Bank Policy Institute, The Clearing House Association, and the Consumer Bankers Association of July 1, 2025, available at https://www.regulations.gov/comment/TREAS-DO-2025-0004-0212.
[6] Department of the Treasury, Request for Information Related to the Executive Order “Modernizing Payments To and From America’s Bank Account,” 90 Fed. Reg. 23108 (May 30, 2025).
[7] Federal Reserve Financial Services, “Key Findings From the Annual Federal Reserve Financial Services Financial Institution Risk Officer Survey” (2024), available at https://www.frbservices.org/binaries/content/assets/ crsocms/news/research/2024-risk-officer-survey-results.pdf.
[8] 12 U.S.C. § 4002(a)(2)(A); Regulation CC, Availability of Funds and Collection of Checks, 12 CFR § 229.10(c)(1)(i). The EFAA and Regulation CC allow for an exception hold where the depositary bank has “reasonable cause” to believe that the check is uncollectible, but this determination cannot be made based on any class of checks. 12 U.S.C. § 4003(c)(1)-(2); 12 CFR § 229.13(e)(1).
[9] “EPN” and “RTP” are registered service marks of The Clearing House Payments Company L.L.C. “Zelle” is a registered service mark of Early Warning Services, LLC.
[10] Along these lines, Treasury should consider amending the definition of “electronic fund transfer” in section 208.2 to replace the term “Fedwire” with the broader term “wire-transfer systems.” Doing so would confirm that federal agencies are not limited to using the Federal Reserve Banks’ Fedwire® Funds Service for wire transfers but could also use private-sector wire-transfer systems, such as The Clearing House’s CHIPS® network. This change would also be consistent with the definition’s existing reference to “Automated Clearing House transfers,” a generic term that encompasses both EPN and FedACH® transfers. “FedNow,” “Fedwire,” and “FedACH” are registered service marks of the Federal Reserve Banks.
