The U.S. Department of Agriculture (USDA) is proposing chip-enabled food-assistance cards to curb benefit theft, estimating the changes could prevent at least $1.5 billion in stolen benefits over 10 years.
The proposed rule covers the Supplemental Nutrition Assistance Program (SNAP), the federal food assistance program. USDA's Food and Nutrition Administration (FNA), which administers SNAP, cited card skimming as a reason for the plan. Skimming involves thieves obtaining card data at payment terminals and using it to empty accounts. NPR reported that most SNAP cards continue to rely on magnetic stripes, which can expose account details to that kind of fraud.
At the state level, the planned upgrade is to chip-equipped Electronic Benefits Transfer (EBT) cards. Participating retailers would separately need checkout terminals that accept tap transactions, NPR reported. USDA estimates the changes could prevent at least $1.5 billion in stolen benefits over 10 years.
USDA figures cited by NPR showed fewer than one-third of states had upgraded or were working on the transition at the time of the report. The Government Accountability Office (GAO) found chip cards cost about 10 times as much to produce as magnetic-stripe cards.
Higher costs have slowed the change. States would pay to switch card systems, while retailers must ensure terminals can process tap transactions. SNAP households could gain protection from theft, while the expense of stolen benefits can fall directly on them. Propel, an app for checking food benefits, says stolen aid is not replaced in most states. NPR reported that recipients may then borrow to buy groceries or skip meals.
Many U.S. banks adopted chip and tap-to-pay cards more than a decade ago, while state EBT systems have lagged.
USDA is accepting public comments for 60 days before issuing a final rule. The agency is weighing a two-year compliance window after the final rule is published and has asked whether that gives states enough time.
