What Is Electronic Benefits Transfer (EBT)?

Electronic benefit transfer is a card-based system similar to a debit card that allows recipients of government assistance such as food stamps to pay retailers directly for their purchases. State governments provide benefits and track their use via the EBT system.

The EBT system has been in place since 2004 for payments through the Supplemental Nutrition Assistance Program (SNAP) in all 50 states, while its use is being phased in for other government nutritional programs.

Key Takeaways

  • Through the EBT program, recipients of nutrition assistance are issued an electronic card similar to a debit card for payment of benefits directly to retailers.
  • The EBT has replaced the old-style color-coded paper food stamps.
  • Some states have incorporated other public assistance programs into the EBT systems they administer.
  • The use of EBT programs has expanded recently in response to the COVID-19 pandemic through a program called the Pandemic Electronic Benefits Transfer (P-EBT).
  • EBT is used most commonly for a program called SNAP, which provides food-purchasing assistance for low- and no-income people.

Understanding Electronic Benefits Transfer (EBT)

Benefits recipients are issued a plastic payment card with a magnetic strip and a PIN. In addition to SNAP, programs using or being tested for use of EBT include the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC); Temporary Aid for Needy Families (TANF), and some state general assistance programs.

Cash and food stamp benefits are deposited into electronic benefit accounts which can be accessed using a PIN number. The card can be used at EBT participating merchants as well as at ATM machines and point-of-sale (POS) terminals.

History of EBT

The Food Stamp Program was renamed the Supplemental Nutrition Assistance Program by Congress in 2008. Its programs are funded by the federal government but administered by the states, which work with contractors to procure their own EBT systems for the delivery of SNAP and other state-administered benefit programs.

When a recipient is approved for benefits, the state's EBT contractor establishes an account, and the recipient's SNAP benefits are deposited electronically in the account each month.

All states now have systems that use cards with magnetic strips and online authorization of transactions. The processor verifies the PIN and the account balance and sends an authorization or denial back to the retailer.

The card system is used by all SNAP benefit recipients and is being phased in for other benefits programs. The details vary by state.

The recipient's account is then debited for the amount of the purchase, and the retailer's account is credited. No cash changes hands. No surcharges, sales taxes, or "processing fees" may be added to the accounts by federal law.

Payment is made to the retailer at the end of each business day.

Supplemental Nutrition Assistance Program (SNAP)

The 2008 Farm Bill renamed the Food Stamp Program as the Supplemental Nutrition Assistance Program and replaced all references to stamps or coupons in federal law with card or EBT.

In order to receive SNAP benefits, you must meet certain eligibility requirements. As of 2021, a four-person household must have a gross monthly income not exceeding $2,839 in order to qualify for benefits. The amount of funds loaded onto an EBT card depends on the size and income of the household. As of 2021, the maximum monthly allotment for a household of four is $782.

Recipients can only use their EBT cards at qualified retailers. SNAP excludes certain types of goods such as food that is hot at the time of sale, alcohol, tobacco, vitamins, supplements, and any non-food items like pet food, cleaning supplies, or hygiene items.

Another federal program that uses the EBT card is the Special Supplemental Nutrition Program for Women, Infants, and Children, better known as the WIC program. The WIC program protects the health of low-income pregnant, postpartum, and breastfeeding women, infants, and children up to age 5 who are at nutritional risk by providing nutritious foods to supplement diets, information on healthy eating including breastfeeding promotion and support, and referrals to health care.

For information on the WIC program, check the USDA's website.

Example of EBT

The use of electronic benefits transfer has expanded due to the COVID-19 pandemic. The Pandemic Electronic Benefits Transfer (P-EBT) is one such program used by the federal government to respond to the needs of families impacted by the pandemic that utilizes the convenience of the EBT card.

P-EBT provides children who would have received free or reduced-price meals under the National School Lunch Act with temporary emergency nutrition benefits loaded on EBT cards that are used to purchase food. Recently, the pandemic has proven that the convenience and speed at which eligible citizens can receive their benefits through EBT cards is a vital tool.

EBT FAQs

What Is an EBT Card?

Electronic Benefits Transfer cards are cards on which benefits such as SNAP and Cash Assistance are issued to clients. EBT cards function similar to debit cards, however, the funds loaded onto the card can only be used at certain retailers and for certain goods.

Is EBT Like a Credit Card?

An EBT or electronic benefits transfer card is a card with a magnetic strip issued to eligible citizens on which benefits for programs like Supplemental Nutrition Assistance Program (SNAP) and Cash Assistance are loaded. EBT cards function more like debit cards; each month recipients receive an allotted amount depending on their income and size of household and their balance decreases with every purchase.

What Are EBT Cash Benefits?

A certain amount of money—depending on the recipient's income and size of household—is loaded onto the recipient's cards each month, however, this money can only be used for certain goods, depending on the program. SNAP benefits, for example, only cover foods for the household. It does not cover alcohol, tobacco, or vitamins, and health supplements.

What Is the Difference Between SNAP and EBT?

SNAP or Supplemental Nutrition Assistance Program is the program whose benefits are loaded on an EBT card. EBT or electronic benefits transfer is merely the process through which eligible citizens receive their benefits.