Electronic Benefit Transfer

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Electronic Benefit Transfer (EBT) is an electronic system in the United States that allows state governments to provide benefits to authorized recipients via a plastic debit card. Common benefits provided via EBT are typically sorted into two general categories: Food Stamp and Cash benefits. Food stamp benefits are federally authorized benefits that can only be used to purchase food. Cash benefits include State General Assistance, TANF (Temporary Aid to Needy Families) benefits and refugee benefits.

[edit] Usage

Through EBT, a recipient uses their EBT card to make purchases at participating retailers. Food Stamp benefits can only be used to purchase food items authorized by the USDA's Food Stamp 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 food stamp agencies work with contractors to procure their own EBT systems for delivery of food stamps and other state-administered benefit programs. In the United States, all food stamp benefits are now being issued via EBT.

For example, in the Food Stamp Program, 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, information is transferred to the state's EBT contractor and a pseudo-account is established in the participant's name, and food stamp benefits are deposited electronically in the account each month. A plastic debit 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 at any time, and are offered ongoing training if they have any problems accessing the system.

All but two States have systems that use magnetic stripe cards and "on-line" authorization of transactions. 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 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. 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-The Electronic Payments Association.

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 food stamp accounts are often recharged at the beginning of each month; in New Hampshire it is the 5th of each month. However, Arkansas recharges EBT food stamp accounts at different times of the month for each recipient based on their Social Security number.