Frequently Asked Questions About EBT

1. What is Electronic Benefit Transfer?
   
   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 used in States to issue food stamp and other benefits.
   
   State food stamp agencies work with contractors to procure their own EBT systems for delivery of Food Stamp and other state-administered benefit programs.
    

2. How does EBT work?
   
   In EBT systems, food stamp recipients apply for their benefits in the usual way, by filling out a form at their local food stamp office. Once eligibility and level of benefits have been determined, an account is established in the participant's name, and food stamp benefits are deposited electronically in the account each month. A plastic card, similar to a bank card, is issued and a personal identification number (PIN) is assigned or chosen by the recipient to give access to the account. Recipients are offered the opportunity to change the PIN number at any time, and are offered ongoing training if they have any problems accessing the system. 
   
   When paying for groceries, the food stamp customer's card is run through an electronic reader or a point of sale terminal (POS), and the recipient enters the secret PIN number to access the food stamp 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 and no food stamps change hands. Payment is made to the retailer through a settlement process at the end of the business day. 
    

3. Is this new technology?
   
   EBT systems using magnetic stripe technology for on-line authorizations use the same electronic funds transfer technology that many grocery stores use for their "debit card" payment systems. EBT is a special application of electronic funds transfer (EFT) technology, which takes money directly from one account and transfers it to another. (Credit cards, by comparison, simply record a sale for payment later.) EFT became familiar to most people in the early 1980's when banks began using automatic teller machines. Since then, EFT has found increasing use in the private sector. 
    

4. What are the benefits of EBT?

EBT eliminates the cumbersome processes required by the paper food stamp system. In Fiscal Year 1997, the Food Stamp Program issued almost $20 billion worth of benefits. In a single month, retailers made 1.7 million deposits of food stamp coupons in more than 26,000 banks. Banks in turn made almost 27,000 deposits in Federal Reserve District Banks. Coupons are counted at each step, making the accounting enormously complex and labor intensive. EBT eliminates much of the paper handling involved in the food stamp system, and automates the accounting process. 

By eliminating paper coupons that may be lost, sold or stolen, EBT may help cut back on food stamp fraud. EBT creates an electronic record of each food stamp transaction, making it easier to identify and document instances where food stamps are "trafficked," or exchanged for cash, drugs, or other illegal goods. 

Recipients have reported that they like the convenience and security of EBT. They no longer have to go to the food stamp issuance office to pick up their food stamps. They can draw their benefits as needed instead of receiving a month's allotment at one time. If the card is lost or stolen, it can't be used by anyone who doesn't know the PIN, and it can be easily canceled and replaced. Surveys have shown that most participants prefer an EBT system to the paper coupon system it replaced. Many recipients have said that EBT reduces the stigma associated with food stamp coupon use. 

Retailers and bankers like EBT because it offers simplicity of accounting and reduces labor costs because there are no coupons to sort, count, and bundle. All the accounting is done automatically. 

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. 
 

5. What's the cost?
   
   Initially, EBT systems were more expensive to operate than conventional food stamp issuance systems. EBT reached a milestone in June of 1993, when evaluations of EBT projects in New Mexico and Minnesota showed that both cost less than the estimated cost of paper coupons in the same time period. Costs were also reduced for retailers, recipients and financial institutions.
   
   The Federal government shares Food Stamp Program operating costs with the States, including the costs of EBT up to the cost of conventional coupon issuance systems. 
    

6. What has been done so far?
   
   All States are using EBT as an alternative for food stamp issuance and, in some cases, for other programs such as USDA's Special Supplemental Nutrition Program for Women, Infants and Children (WIC); and the Temporary Assistance to Needy Families (TANF) program, the Federal block-grant program operated by the Department of Health and Human Services. As of July 2004, all 50 States, the District of Columbia, Puerto Rico, the Virgin Islands, and Guam were operating state-wide, city-wide, and territory-wide EBT systems to issue food stamp benefits. 
    

7. Can EBT be used for online purchases?
   
   There are technical reasons why food stamp EBT cards cannot be accepted by online shopping services. Currently, only credit cards are accepted as payment for Internet purchases. Some sites accept debit (ATM) cards, but only if they are branded with a MasterCard or Visa logo. Branded debit cards can be treated like credit cards if a seller decides to accept them that way. These types of sales do not require the customer to enter his or her personal identification number (PIN).
   
   EBT transactions performed at the store are done with a point of service (POS) terminal. There are very strict encryption requirements for the PIN entry piece of the POS terminal. This keeps the customer's PIN secret. With EBT cards, the PIN is the only thing that guarantees that the person using the card is authorized. There is not a similar level of security for entering PINs over the Internet, even with newer browsers that have 128-bit encryption. This is because they have to convert the PIN from Internet-style encryption to the encryption format used in the POS machine. There are currently no controlled standards for doing this. Because the PIN is readable for a short time in this process, it is possible for employees or hackers to steal the PINs and use them fraudulently. Online shopping services are not willing to accept the potential liability that would be involved.
    

8. When will my Food Stamp benefits be available on my EBT card?

   Once you are certified and have received your first allotment, Food Stamp benefits will be made available to you on a monthly basis. Some states issue every client’s benefits on the first day of the month while other States issue benefits on different days of the month.  The day on which your food stamp benefits become available may depend on your last name, the last digit of your social security number, or on some other factor. Please refer to the chart below to determine when your food stamp benefits will be available to you each month of your certification period. Find the State in which your card was issued in the left hand column. The third column across from the State name contains the information on how and when benefits are distributed each month according to your last name, social security number, or some other factor. You will need this information to interpret the chart. Some States have complicated issuance schedules. If you are unable to determine from the chart when your benefits will be issued to you each month, you can also refer to the information provided to you by the local food stamp office when you became certified to receive benefits or contact your local caseworker for this information. Your state may also provide this information through its toll-free customer service number, usually located on the back of your EBT card.

     State Issuance Chart

9. What is the future for EBT?

The USDA continues to work with States to improve EBT in the following ways: 

• Assuring that stores are entered into, or taken out of, EBT systems timely and correctly. 

• Using EBT data efficiently to detect and pursue abuse. 

• Maintaining vigilance on security measures and privacy protections. 

• Working with States to make their cards usable in other systems, but without risking duplicate participation by recipients and without exceeding cost neutrality. 

For the WIC program, the challenge is to use EBT to provide food prescriptions and health information in addition to a payment system. Some States are proceeding with similar pilot projects which will provide more information on the costs and benefits of EBT for WIC. 

For more information:

For more information, contact the USDA Food and Nutrition Service Public Information Staff at 703-305-2286, or by mail at 3101 Park Center Drive, Room 914, Alexandria, Virginia 22302. The Food and Nutrition Service was formerly known as the Food and Consumer Service. Information on FNS programs is also available on the World Wide Web at www.fns.usda.gov/fns/.