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Electronic Benefits Transfer (EBT) is the delivery of government benefit funds, such as food stamps and cash benefits (TANF - Temporary Assistance to Needy Families) to recipients utilizing a magnetic stripe card that works like a debit card, point-of-sale terminals, the host mainframes and telecommunications technology. The end result is the elimination of paper coupon benefits distribution. The electronic process results in increased security, thereby reducing fraud and benefit misuse.

Each year, federal and stated programs deliver almost $500 billion in cash benefits and food assistance. Every state, at this point in time, has an EBT program established or pilot project underway to replace paper delivery methods.

The US government has mandated that all federal financial support services and entitlements be distributed through direct electronic deposit by the year 2002. Initially, the effort to implement federal related EBT will be on a small scale which will include the Food Stamp Program and Aid to Families with Dependent Children. This is in addition to, and parallel with, individual state programs who have similar benefit programs. The Federal Government's strategy is to piggy-back upon the state programs rather than creating a separate delivery method. Since all states will be providing these benefits via electronic access, the Government will be able to use the existing state card to distribute its funds as well.

For recipients with bank accounts, direct deposit of benefits will be the most cost effective means of delivery. For those individuals who do not have bank accounts, and account will be provided to the recipients through special banking arrangements made by the State and Federal agencies.

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