EBT Plans Continue Across the District

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Just as the federal government is trying to cut back the number of payments made by check, many states are working toward the same goal.

The Personal Responsibility and Work Opportunity Act of 1996 requires all states to distribute their food benefits electronically by 2002. The electronic disbursement of benefits is called electronic benefits transfer, or EBT. As states prepare to adhere to this law, many also are planning to convert cash benefits, such as Temporary Assistance for Needy

Families (or TANF, formerly known as AFDC), to EBT as well. State governments face a big challenge in helping benefit recipients adjust to receiving benefits electronically. Instead of distributing food stamps, the government will provide recipients with EBT cards, which are similar to debit cards. Beneficiaries can use their EBT cards to pay for food at point-of-sale (POS) machines at grocery and convenience stores.

In states requiring cash benefits to be distributed electronically, recipients who have accounts at financial institutions will receive their payments by direct deposit. This is the government's preferred way to distribute benefits because it is less expensive and does not require the issuance of plastic cards and pin numbers. If recipients do not have bank accounts, they will receive EBT cards that they can use to withdraw cash benefits from ATMs. EBT cards will be accepted at any store or ATM displaying the Quest®; sign, the nationwide logo for EBT transactions.

How can you participate in EBT? By making arrangements with your ATM network to accept EBT cards; any certified ATM network can sign up to provide EBT services. This will expand the number of ATM transactions at your institution and, subsequently, increase your revenue. You also can operate POS devices for food stamp merchants, which will provide you with a new source of POS transactions.

This is a good way to provide services to the unbanked and increase your revenue. In addition, experience with other states already using EBT shows that once they get used to having an account, many beneficiaries develop good cash management practices and expand their banking needs.

As states roll out their EBT programs, they will send area bankers a letter describing in more detail how to participate in EBT. In the meantime, if you have questions on EBT, contact Cheryl McCarthy in St. Louis at (314) 444-8459.