HOUSTON -- The largest rollout of electronic benefits transfer is under way here with a pilot program that will be expanded statewide next year.
About 550 retailers, including supermarkets, began accepting EBT cards in place of paper stamps Oct. 1 in parts of Harris County and all of neighboring Chambers County.
The pilot, which started this month, is now in a "shakedown" period, when the system can be evaluated for problems before further expansion, state officials said.
The remainder of Harris County, including much of Houston, will go on line Feb. 1, encompassing another 2,000 retailers and bringing the number of recipients to 200,000. The EBT program will then expand to other sections of Texas every two months, starting with the Dallas/ Fort Worth metropolitan area, according to state officials.
"By January 1996, [paper] food stamps will no longer exist in Texas," said Joe Williams, president of the Gulf Coast Grocers Association, Houston. When it completes its rollout, Texas will have the largest EBT program in the nation, state officials said.
Texas' rollout comes as EBT is expanding in both federal efforts and state programs. A federal program, consisting of a national EBT system that incorporates a dozen benefit programs, is being developed now and is expected to be operational by 1999.
State-level EBT rollouts in New Mexico, Iowa, New Jersey, Ohio, Minnesota and Pennsylvania are at various stages of development.
"The nice thing for retailers that have their own point-of-sale systems is that EBT keeps the
amount of equipment and terminals at a minimum at the front end, where real estate is so valuable," Williams said. "The state worked with us real well on that."
Gary Huddleston, manager of consumer affairs at Kroger Co.'s Houston division, said the chain currently has 15 stores accepting EBT as part of the pilot.
EBT presents several benefits for retailers, Huddleston said. "It's faster at the checkstand, and in the long term by eliminating the paper from the business, it will definitely save us money," he said. "It will save some time in our accounting procedures by not having to count paper food stamps [and] it can be reconciled very quickly."
For retailers who already have POS equipment, accepting EBT means an investment in new software. To offset that cost, the state's contracted vendor, Transactive Co., Austin, will pay retailers 2.5 cents for each EBT transaction.
Retailers without POS systems will be supplied a basic system free of charge by Transactive, though they will not receive any transaction payments from the vendor. The systems consist of a dedicated phone line, an in-store processor and for each checkout lane, a POS terminal scanner for the EBT card and a printer, a Transactive spokesman said.
Kroger is following a third option. Though the retailer has POS equipment in place, it chose to accept Transactive's hardware until its own systems are upgraded.
"Because we rolled this thing out as a pilot, we're using the vendor's equipment in those 15 stores," Huddleston said. "We are reprogramming our own POS units to do EBT when it starts totally in Houston on Feb. 1." Retailers choosing this option are reimbursed 1 cent per transaction.
The "shakedown" period, which began on Oct. 1, is being run in rural Chambers County and urban sections of Harris, including southeastern Houston, as a test to see how EBT fares in both climates.
"You're certainly eliminating a lot of paperwork. You're eliminating the storage and the time it takes to actually process a recipient of stamps," Williams said. "Retailers right now have to make a pretty good [investment] to make the software changes, the implementation and the training of their clerks. But in the long term, retailers will benefit substantially."
Another benefit of using EBT is the next-day payback retailers will receive from the state, as opposed to the lengthy process of redeeming paper food stamps. "If a retailer cuts off [EBT] and settles by 2:30 p.m., he receives his funds the next day," he said. "And if you don't cut off at 2:30, it's still just two days."
Kroger's Huddleston said that the long-term benefits of EBT outweigh the cost of training and upgrading systems.
"It takes some training for our employees, but the biggest training challenge is to train the food stamp recipient on how to use their debit cards," he said. "I think the state is doing a good job on that."
In a broader sense, state officials and retailers see EBT as a way to reduce state and federal government spending. "The federal government has the food stamps printed, and the state has to distribute them to recipients," Williams said. "The stores have to count them, bundle them and turn them in. And they're all checked and stamped and verified and the banks send them to federal reserve banks, who shred them.
"Look at how many hands that piece of paper goes through for just one time," he added. "From that standpoint, the savings [from EBT] will be enormous."