August 10, 2017
Technologies are enabling the payments industry to accommodate the ways that consumers want to shop and pay bills today. To date, electronic benefits transactions (EBT) recipients have faced problems in paying their bills and shopping, especially shopping online. Now, new technologies are providing a facelift to EBT, which will solve many recipients’ problems and improve the effectiveness of government assistance.
Most food retailers are set up to accept EBT payments for food assistance programs such as SNAP and WIC. But, generally, only the big retailers are set up to accept EBT payments from cash account programs. That’s a problem because such payments make up more than $10 billion of the government funds for temporary assistance for needy families (TANF), energy assistance, employment training, child care assistance and other programs. Many retailers, including some big ones, do not currently accept payments from cash accounts.
EBT recipients often use cash to pay bills owed to individuals, like a plumber, as well as businesses that don’t accept EBT payments. As a result, needy families must convert their funds to cash, or its equivalent, in order to pay bills or make purchases. But, here’s the irony in the conversion: Consumers who most need the money often pay the highest fees to obtain cash. In California, for instance, more than half of EBT users pay an ATM fee when they withdraw cash from their accounts. EBT-related ATM fees in that state alone added up to nearly $20 million in 2012, the most recent year figures were reported.
If that wasn’t enough, many cash account recipients live in so called “ATM deserts” – areas where cash machines are very hard to access. What do you do if you have no transportation to a remote ATM or if the cost of the gas to get to the ATM plus your fee outweighs the benefit that you receive?
Here’s an example of how new technologies are enabling EBT recipients to retain more of their cash benefits. Suppose “Alice” receives $200 per month from the government – about the average payment for EBT recipients. With digital access to her EBT cash account, Alice can now log into an EBT payments portal on a computer and set up her accounts – utilities, daycare provider and more – to be paid with funds from her EBT cash account. Soon, she even will be able to use her mobile phone to access her EBT cash account. That gives Alice the convenience of converting EBT cash benefits without taking a trip to the ATM. She also avoids the drawbacks of cash, such as loss and theft.
Payments Leader from FIS provides insights on credit, loyalty, fraud and emerging payments strategies through blog posts from our industry experienced authors.