Military Advantage

Deadline for Ending Paper Checks


Source: DFAS  - Customers respond to mandatory EFT effort

Following several months encouraging customers to switch from pay checks delivered by mail to electronic payments delivered directly to their bank accounts, the Defense Finance and Accounting Service is beginning to show some results.

New rules from the Treasury Department require recipients of payments from DFAS, the Veterans Administration and other federal pay and benefit agencies, to use electronic fund transfer methods to receive funds rather than mailed checks.

Of the various DFAS customer groups, military retirees, annuitants and former spouses receiving portions of military retired pay accounted for the largest numbers of monthly hardcopy checks.

“After about five months of alerting customers of the Treasury mandate, more than 23,000 retirees, annuitants and former spouses have set up direct deposit and are now receiving pay via their checking or savings accounts,” said David McDermott, DFAS Operations Director.

That means 23,000 fewer paper checks and savings of nearly $265,000 per year.  These 23,000 people have joined the more than 99 percent of DFAS customers already receiving their pay electronically.

“I know moving from the traditional hardcopy check to electronic deposits hasn’t been easy for everyone,” McDermott said, “but those who’ve done it are part of an effort to save money for taxpayers at a time we are all working hard to stretch our budgets.”

The Treasury Department has estimated that eliminating hardcopy check payments would save the federal government about $20 million each year.

DFAS officials are currently working with the military services, DoD agencies and federal ePayroll customers to continue the all-EFT transition. Customers without direct deposit should see the DFAS website for instructions on how to comply with the law before the March 1, 2013, deadline.

The Treasury's rules call for issuing debit cards to payees without a bank account or who fail to register their account for direct deposit. DFAS is working to finalize a debit card alternative with the Treasury. Until plans are complete, check recipients will continue to receive their pay via mail.

The agency’s website has more information at

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