thumb|right|EBT cards from several states

Electronic benefit transfer (EBT) is an electronic system used in the United States that allows state welfare departments to issue benefits via a magnetically encoded payment card. It reached nationwide operations in 2004.

Benefits provided via EBT are of two types: food and cash. Food benefits are federally authorized benefits that can be used only to purchase food and non-alcoholic beverages. Food benefits are distributed through the Supplemental Nutrition Assistance Program (SNAP), formerly the Food Stamp Program, and the WIC program (Special Supplemental Nutrition Program for Women, Infants, and Children). Cash benefits include state general assistance, Temporary Assistance for Needy Families (TANF) benefits, and refugee benefits. The average monthly EBT disbursement for SNAP is $211.45 per participant as of 2023.

History

thumb|right|Traditional paper food stamps with an early EBT card

Before the introduction of electronic benefit transfer (EBT), government benefit programs primarily relied on paper-based methods. The Food Stamp Program (FSP), for example, utilized color-coded paper coupons ("stamps") that were redeemable at authorized retailers. Other programs, such as Aid to Families with Dependent Children (AFDC) and Temporary Assistance for Needy Families (TANF), typically distributed benefits through mailed checks. These systems presented numerous challenges, including logistical complexities associated with printing, distributing, and processing paper documents, along with increased vulnerability to fraud, theft, and counterfeiting, all resulting in significant administrative costs.

The development of EBT began with pilot programs in the 1980s. In 1984, Reading, Pennsylvania, piloted the first program that used an EBT card for food stamp benefits. This initial experiment aimed to assess the feasibility and potential advantages of transitioning to an electronic system for the delivery of benefits. The Hunger Prevention Act of 1988 provided legislative authorization for further pilot projects to evaluate the use of benefit cards and automated systems. This exploratory phase continued with the Mickey Leland Memorial Domestic Hunger Relief Act of 1990, which formally recognized EBT as a viable alternative to paper-based methods and authorized further demonstration projects.

The 2008 Farm Bill (Food, Conservation, and Energy Act of 2008) formally changed the name of the Food Stamp Program to the Supplemental Nutrition Assistance Program (SNAP) and codified EBT as the standard method of benefit issuance. This legislation removed all references to "stamps" or "coupons" from federal law, replacing them with "cards" or "EBT," thereby cementing the shift to electronic benefit delivery. The 2008 Farm Bill also addressed issues such as transaction fees and established programs to incentivize the purchase of healthy foods using SNAP benefits.

In 2023, the payment industry began collaborating to revise the ISO standard governing EBT cards to enable the integration of EMV chip technology. This security enhancement is designed to mitigate the risk of fraud, particularly skimming attacks. In 2025, California and Oklahoma are slated to be the first states to implement this updated standard, transitioning to EBT cards equipped with EMV chip technology.

Usage

Through EBT, a recipient uses their EBT card at participating retailers to purchase food items authorized by the USDA's SNAP program. Cash benefits may be used to purchase any item at a participating retailer, as well as to obtain cash-back or make a cash withdrawal from a participating ATM.

State agencies work with contractors to procure their own EBT systems for delivery of SNAP and other state-administered benefit programs. In the United States, all SNAP benefits are now being issued via EBT.

For example, recipients apply for their benefits in the usual way, by filling out a form at their local food stamp office or online. Once eligibility and level of benefits have been determined, information is transferred to the state's EBT contractor. Once they are approved for benefits, an account is established in the recipient's name, and their SNAP benefits are deposited electronically in this account each month. A plastic debit card is issued and a personal identification number (PIN) is assigned or chosen by the recipient to control access to their account.

All states have systems that use magnetic stripe cards and "online" 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 the PIN 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 physical money changes hands. Payment is made to the retailer through an ACH settlement process at the end of the business day. Most states' online EBT systems are interoperable through the Quest network, which is sponsored by the Electronic Benefits and Services Council (formerly the EBT Council) of NACHA.

Many states stagger the issuing of benefits to EBT SNAP accounts, with the particular day of the month determined for each recipient based on the case number, Social Security number, or date of birth. The states of Alaska, Idaho, Nevada, North Dakota, Oklahoma, Vermont, along with Guam and the US Virgin Islands, credit accounts on the first of the month to all recipients, New Hampshire credits on the 5th, and South Dakota on the 10th.

Taxation

It is illegal for anyone to charge sales tax, surcharges or card processing fees from an EBT SNAP account, according to federal law and USDA SNAP Guidelines. New state and federal law grants new provisions to law enforcement and state agencies to investigate the criminal use, including taxation on EBT purchases, of state and federal benefits.

References

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  • App to "Access HRA" (NYC)