Electronic Benefit Transfer (EBT)

Electronic benefit transfer is a system that allows state governments to provide and track benefits to authorized recipients via a plastic debit card. Common benefits provided via EBT are food stamps and cash benefits. Recipients receive a plastic payment card with a magnetic strip and a PIN is issued. Cash benefits include state general assistance, TANF (Temporary Aid for Needy Families) benefits and refugee benefits. Cash and food stamp benefits are deposited into electronic benefit accounts which can be accessed using a Common Benefit Identification Card (CBIC) and PIN number. The card can be used at EBT participating merchants and ATM machines and point-of-sale (POS) terminals throughout the state.

As of 2008, Congress renamed the Food Stamp Program the Supplemental Nutrition Assistance Program. Electronic Benefit Transfer (EBT) has been adopted nationwide since 2004. 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.

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.

All states have systems that use cards with magnetic stripes and online authorization of transactions. When paying for groceries, the SNAP customer's EBT card is run through an electronic reader 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 actual cash changes hands. Payment is made to the retailer through an ACH settlement process at the end of the business day.

The food stamp program used to use paper denominated stamps or coupons worth $1 (brown), $5 (blue), and $10 (green). In the late 1990s, the stamps were phased out in favor of the EBT system. Many states merged the use of the EBT card for public-assistance welfare programs as well. The 2008 farm bill renamed the Food Stamp Program as the Supplemental Nutrition Assistance Program (as of October 2008), and replaced all references to "stamp" or "coupon" in federal law to "card" or "EBT."