The Nutrition Assistance Program in the Commonwealth of Puerto Rico provides a monthly benefit for food to low-income households that includes both cash and noncash portions. Three-fourths (75 percent) of the benefit must be redeemed for eligible food items through electronic benefit transfer (EBT) at certified retailers. The remaining 25 percent may be redeemed in cash. The entire benefit (both the noncash and cash portions) is to be used only for the purchase of eligible food items.

This report explores the feasibility and potential cost of enabling EBT systems to differentiate between program-eligible and ineligible items. It considers the cost of upgrading systems in stores that now have scanners and the cost of installing new systems in stores without scanners. The report also examines the potential for the purchase of ineligible items even with the introduction of new technological controls.