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Electronic Benefit Transfer (EBT) - SNAP (Food Stamps)

Electronic Benefit Transfer (EBT) is an electronic system that allows a recipient to authorize transfer of their government benefits from a Federal account to a retailer account to pay for products received. EBT is currently being used in all States to issue Supplemental Nutrition Assistance Program (SNAP, formerly Food Stamp Program) and other benefits, and distribution of the older paper Food Stamps has been completely superceded.

Food Stamp coupons are no longer being produced or issued by states and inventories are being destroyed. However, coupons that have already been issued will continue to be honored until June 17, 2009.

NOTE: On June 18, 2008, Congress enacted Public Law 110-246, The Food, Conservation and Energy Act of 2008 (FCEA). Section 4100 includes a provision that renames the Food Stamp Program the "Supplemental Nutrition Assistance Program" or SNAP and renames the Food Stamp Act of 1977 the Food and Nutrition Act of 2008, effective October 1, 2008. State agencies may continue to use state-specific program names.

Additionally, Section 4115(a) contains a provision that prohibits State agencies from issuing paper coupons as of the date of enactment, June 18, 2008. This provision also de-obligates paper coupons as legal tender one year from this date. Therefore, food stamp coupons may no longer be redeemed at stores after June 17, 2009. In addition, the provision requires that Electronic Benefit Transfer (EBT) cards be the sole method of delivery as of June 18, 2009.

In EBT systems, SNAP (Food Stamp) recipients apply for their benefits in the usual way, by filling out a form at their local SNAP office. Once eligibility and level of benefits have been determined, an account is established in the participant's name, and SNAP benefits are deposited electronically in the account each month.

Most states have systems that use magnetic stripe cards and "on-line" authorization of transactions. When paying for groceries, the SNAP customer's card is run through an electronic reader or a point of sale terminal (POS), and the recipient enters their secret PIN (Personal Identification Number) to access the SNAP account. Then, electronically, the processor verifies the PIN and the account balance, and sends an authorization or denial back to the retailer. The recipient's account is then debited for the amount of the purchase, and the retailer's account is credited. No money changes hands.

States may also use "smart card" microprocessor chip cards in systems that are "off-line." In these systems, the transaction is authorized between the chip in the card and the POS device. The PIN is verified by the chip and the chip is debited for the purchase amount. There is no on-line communication with a host computer during the transaction. At the end of the business day, the POS electronically contacts the host to perform settlement and update the database information.

EBT offers the following advantages over the now-discontinued paper Food Stamp distribution method:

·                   EBT users receive their benefits in their accounts automatically. They don't have to pick up food stamp coupons or wait for them to arrive in the mail.

·                   EBT reduces the incidence of fraud, theft, and abuse.

·                   EBT streamlines the benefit delivery process and eliminates the cost of printing, storing, handling, shipping, and disposing of coupons.

·                   Retailers no longer have to process food coupons or checks.

·                   With EBT, clients no longer receive cash back from purchases. The transaction debits the exact amount of the purchase from their food stamp account. The balance appears on their receipt.

·                   EBT creates an electronic record of each transaction, making it easier to identify and document instances where benefits are "trafficked," or exchanged for cash, drugs, or other illegal goods.

·                   The Federal government saves time and money by moving to EBT. The process of printing, transporting, safeguarding, distributing, accounting, and destroying the food stamp coupons is eliminated.

·                   EBT introduces card technology to participating households-assists in "mainstreaming" customers.

·                   EBT improves the ability to identify both store and household trafficking through EBT's detailed audit trail.

Source

http://www.fns.usda.gov/fsp/ebt/default.htm
http://www.fns.usda.gov/cga/PressReleases/2004/PR-0251.htm

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