Dive Brief:
- The USDA proposed a rule that would require all states to issue SNAP EBT cards with chip and tap-to-pay capabilities, the agency noted in the Federal Register on Friday.
- The department said these payment technologies can reduce SNAP fraud.
- The proposal comes at a time when the USDA is looking to modernize the SNAP program as well as reduce EBT fraud.
Dive Insight:
The newly proposed rule would require states to issue EBT cards with chip and tap-to-pay technology and also require SNAP-authorized retailers to accept them.
Chip cards are a more secure payment option because cards with chips are harder to copy, making it more difficult to steal SNAP account information, according to the USDA.
The National Grocers Association said in a Friday press release that it supports the proposal.
“States that adopted SNAP EBT chip cards have seen a significant drop in skimming fraud, and we appreciate USDA and the [White House] Task Force to Eliminate Fraud for moving every state toward that standard,” Stephanie Johnson, senior vice president and head of government affairs at NGA, said in a statement.
If the proposal becomes a final rule, states would have two years to comply.
Nearly a dozen states, including California, Oklahoma, Alabama, Michigan, Virginia and Massachusetts, have already issued EBT chip cards to their SNAP participants, and half a dozen more are in the process of doing so, according to the USDA.
In the proposed rule, the USDA said the transition to chip and tap-to-pay tech for EBT cards “will come at a financial cost to the State agencies administering SNAP and to other entities involved in the operation of EBT systems. However, the Department believes that it is critical for SNAP clients to have reliable and secure access to the benefits that they use.”
The USDA pointed to the use of these technologies by credit and debit card issuers, noting they have “proven the effectiveness of the technology involved in reducing incidents of fraud.”
Retailers would need to ensure that their point-of-sale machines can accept these types of payment capabilities, the USDA noted.
The USDA is accepting public comments on the proposed rule until Dec. 22.
