Electronic Benefit Transfer- What Is It?

Credit Cards are being used extensively for Electronic Benefit Transfer (EBT). Electronic Benefits Transfer uses credit cards for the electronic delivery of benefits and entitlements to individuals who otherwise may not have bank accounts. In an EBT system, recipients access their benefits in the same way that consumers use credit cards to access their bank accounts electronically: the card is inserted into or swiped through a card reader and the cardholder must enter a PIN associated with that card. The benefit recipient can then access his or her benefits to make a purchase or obtain cash. For example, food stamp purchases are charged against the participant's allotment and other purchases or cash distributions are charged against the participant's cash assistance program allotment. Benefits that can be delivered via EBT generally fall into three categories: federally funded, but state administered benefits such as food stamps, aid to families with dependent children programs; state funded and state administered benefits (such as general assistance, heating assistance, refugee assistance and supplemental or emergency payments) and benefits that are both federally funded and federally administered (such as Social Security and Veteran Benefits through EBT, exciting networks and technologies can provide a benefit recipient with online access to their funds at Point Of Sale (POS) devices and ATMs. In an EBT process, no paper changes hands, except for the receipt printed for the purchaser by the POS device or the ATM. Recipients can access cash through any number of establishments, including grocers, drugstores and financial institutions, as well as ATMs. Installing POS devices in housing authority and utility company offices to accept rent and bill payments can also facilitate certain cash payments. Electronic Benefit Transfer has several advantages over paper-based benefit distribution systems. First, EBT is less costly. Currently, many recipients of federal and state benefits must pay significant fees to cash their checks. EBT systems are designed to provide no-cost or low-cost access methods. Second, EBT is more convenient than paper methods. EBT eliminates the need to carry food stamp coupons, stand in long lines to cash checks, or accept the entire benefit amount at one time. EBT programs also provide recipients with toll-free customer service lines and multilingual support to handle questions or problems. EBT is safer than cash or coupons, which can be lost or stolen. In EBT, benefits are stored electronically and can be used only when needed and in the amounts required. Recipients control all access to their benefits through their cards immediately and request a replacement card by a toll-free phone call. Third, EBT is convenient for retailers. It eliminates the time-consuming task of handling food stamp coupons, making grocery checkout procedures faster and easier. By eliminating checks and coupons, EBT reduces losses associated with theft, forgery and fraud. Finally, EBT is convenient for the government. Its inherent audit and tracking advantages enhance investigations into suspicious conduct by retailers. EBT improves benefit program management by creating an audit trail and record of benefit usage, ensuring that programs are working properly and effectively.