Family Support Division, Electronic Benefits Transfer (EBT)
Information for EBT Retailers
Frequently Asked Questions
- What is Electronic Benefits Transfer?
Electronic Benefits Transfer (EBT) is an electronic system that allows a recipient to authorize transfer of their government benefits from a federal account to a retailer account to pay for products received. EBT is currently being used in all states to issue food stamp and other benefits.
- How does EBT work?
In EBT systems, food stamp and Temporary Assistance (TA) participants apply for their benefits in the usual way, by completing an application at their local Family Support Division office. Once eligibility and level of benefits have been determined, an account is established in the participant’s name, and food stamp and/or TA benefits are deposited electronically in the account each month. A plastic card, similar to a bank card, is issued and a personal identification number (PIN) is assigned separately or chosen by the cardholder to give access to the account. Cardholders are offered the opportunity to change the PIN at any time and are offered ongoing training if they have any problems accessing the system.
When paying for groceries, the food stamp customer’s card is run through an electronic reader or a point of sale (POS) terminal, and the cardholder enters the secret PIN to access the food stamp account. Then, the processor electronically verifies the PIN and the account balance, and sends an approval or denial back to the retailer. If the transaction is approved, the cardholder’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.
EBT cardholders receiving Temporary Assistance benefits can use their EBT card to purchase non-food items or receive cash. Non-food items and cash withdrawals will be made from Third Party Processor (TPP) POS terminals only. These transactions process and settle the same way as food stamp transactions.
- What are the benefits of EBT?
EBT eliminates the cumbersome processes required by a paper system. By eliminating paper food stamp coupons and Temporary Assistance checks which may be lost, sold or stolen, EBT cuts back on fraud. EBT creates an electronic record of each food stamp transaction, making it easier to identify and document instances where food stamps are "trafficked," or exchanged for cash, drugs, or other illegal goods.
Cardholders like the convenience and security of EBT. They can draw their benefits as needed. Only the cardholder knows the PIN in the event the card is lost; and it can be easily canceled and replaced. Many cardholders have said that EBT reduces the stigma associated with food stamp coupon use.
Retailers and bankers like EBT because it offers simplicity of accounting and reduces labor costs because there are no coupons to sort, count, and bundle. All the accounting is done automatically.
- Is this new technology?
EBT systems using magnetic stripe technology for on-line authorizations use the same electronic funds transfer technology that many grocery stores use for their "debit card" payment systems. EBT is a special application of electronic funds transfer (EFT) technology, which takes money directly from one account and transfers it to another. (Credit cards, by comparison, simply record a sale for payment later.) EFT became familiar to most people in the early 1980’s when banks began using automatic teller machines. Since then, EFT has found increasing use in the private sector.
- How do I get an application to become an authorized retailer to accept food stamp benefits (EBT)?
Call USDA at 877-823-4369.
- Can sales tax be charged on food stamp purchases?
Retailers are prohibited from charging state or local taxes on food purchased with food stamp benefits. However, taxes are allowed with store or product coupons.
- Can a store give cash refunds for purchases made with food stamp benefits?
No. A store must credit the EBT card for the amount of the food stamp refund.
- How do I change banks for my EBT settlement?
If you are using government-issued equipment, call the Retail Help Desk at 1-888-227-6090.
If you use a third party provider, call your third party help desk.
State Fiscal Year 2011 Basic Facts:
- FSP Households: 429,633
- Temporary Assistance Households: 42,421
- FSP Authorized Food Retailers: 4,844
- Operational state wide: May 1998
- Current contractor: FIS eFunds Corporation
- Programs covered: FSP and Temporary Assistance