Discover the news about SNAP EBT chip card technology, how skimming has become a serious problem, and new security-compliant EBT chip cards are essential to combat it.
Here’s What You Need to Know about Making the Switch
In a move that aims to prevent scammers from stealing millions in SNAP benefits, the modernization of Electronic Benefit Transfer (EBT) cards with chip-and-tap technology is finally underway. Planning stages began in 2023, and new EBT chip cards will be rolled out in California in early 2025 and in Oklahoma by summer 2025. Other states will likely follow, but the USDA does not have a timeline for a full nationwide transition to new cards.
According to the USDA, the updated cards represent a significant advancement in safeguarding SNAP benefit participants from the persistent threat of skimming. Chip technology enhances security by making it more difficult for bad actors to capture card data, addressing vulnerabilities present in the current magnetic strip cards. The new EBT chip technology cards include several enhanced security features, such as:
- A microchip that generates a unique code for each transaction
- Advanced encryption that makes card information difficult to duplicate
- Customer information moved to the back of the card
- The ability to tap the card on a contactless card reader
- A 3-digit card security code on the back of the card
It is important to note that the adoption of these enhanced security features will be optional, with each state having the final authority to decide which features to implement based on their unique needs and preferences.
How Skimming Puts SNAP Benefits at Risk and How New EBT Chip Cards Combat Fraud
Skimming has become a serious problem, and new security-compliant EBT chip cards are essential to combat it. Skimming devices, discreetly placed on point-of-sale (POS) terminals, make it easy to replicate magnetic stripe information like card numbers, PINs, expiration dates, CVC codes, and personal data like names, addresses, and phone numbers.
Once criminals capture card information, they can create counterfeit cards to drain victims’ accounts, often without the victims realizing it until their funds are gone. They can also sell the stolen information to other bad actors on the black market.
Skimming fraud has skyrocketed since at least 2021. USDA data reveals over $211 million in stolen SNAP benefits have been replaced for at least 442,000 households since 2023, the result of more than a million fraudulent transactions. These figures represent a 96% increase from 2022 and a 129% increase from 2021. However, these statistics likely underrepresent the overall problem, as many cases go unreported.
Retailers’ Guide to Preparing for the New SNAP EBT Chip Cards
The primary compatibility issue with the new EBT chip technology cards is the need for updated software at retailers’ POS systems. Many existing POS terminals lack the necessary software capabilities to fully support the new cards. To address these concerns, merchants will need to implement software upgrades that enable their systems to process chip transactions or “fallback” to the magnetic stripe if the chip functionality cannot be fully supported. Without these updates, merchants may be unable to accept SNAP EBT transactions from the new chip-and-tap cards.
Here’s what you need to know to get ready for the new EBT chip technology cards:
- Talk to your POS provider: This is the first and most important step. Your POS provider will handle the technical side of things, so reach out to them to discuss what updates you’ll need to accept EBT cards.
- Check compatibility: Make sure your current POS system supports chip/EMV technology. If it’s not compatible, you’ll need to make upgrades. Your POS provider can help with this.
- Test your system: Once your system is set up to accept EBT chip cards, test it using the guidelines provided by your EBT provider to ensure that transactions are processed smoothly.
For detailed technical guidance, refer to the USDA’s EBT Chip Card Implementation Details. Or visit the SNAP EBT Modernization Technical Assistance Center for additional resources.
What Retailers Need to Know About the Costs of Upgrading to EBT Chip Card Systems
Transitioning to EBT chip technology offers merchants several benefits while requiring minimal investment for most businesses. Merchants partnering with goEBT gain access to industry expertise and tailored guidance, ensuring a smooth transition without disruptions. Unlike percentage-based fees for credit card transactions, EBT purchases with goEBT are typically processed with a flat fee, a structure that is unlikely to change with the adoption of chip technology.
Why Accepting New EBT Chip Cards Benefits Your Business: Key Advantages for Merchants
Whether you are a single-store or multi-store owner, embracing the benefits of chip technology not only protects your SNAP participants from fraud but also enhances your checkout experience. By accepting SNAP benefits in a safer and more secure way, you can enjoy advantages such as:
- Increased customer trust: Build loyalty by offering secure payment options.
- Streamlined transactions: Chip technology ensures faster and smoother checkout processes.
- Enhanced security: Reduce the risk of fraud and safeguard both your business and your customers.
- Attract more shoppers: Providing reliable EBT payment options can bring more customers to your store.
Looking to enhance your business with secure and reliable EBT payment solutions? Contact us today! Our team of experts is ready to provide you with tailored guidance.