MULTISTATE EBT SYSTEM PLANNED FOR 1996 START

WASHINGTON -- Retailers in seven Southern states are gearing up to take part in an electronic benefits transfer pilot that seeks to standardize procedures across state lines.EBT, the electronic distribution of government benefits such as food stamps, has been tested at supermarkets in clusters of counties across the country and, to a lesser degree, on a statewide basis. However, only recently have

WASHINGTON -- Retailers in seven Southern states are gearing up to take part in an electronic benefits transfer pilot that seeks to standardize procedures across state lines.

EBT, the electronic distribution of government benefits such as food stamps, has been tested at supermarkets in clusters of counties across the country and, to a lesser degree, on a statewide basis. However, only recently have plans and timetables for a card-based national EBT model begun to take more definite shape.

With an eye on a March 1996 launch for a multistate EBT program, the U.S. Department of the Treasury put out bids last month for a financial institution to provide a link between all parties.

By 1997, a uniform EBT system is scheduled to be fully operational at retailers who make up the Southern Alliance of States -- Alabama, Arkansas, Florida, Georgia, Missouri, North Carolina and Tennessee.

"The SAS project will be the first to use national standards and existing commercial networks," said Peter Larkin, vice president of state government relations and environmental affairs for the Food Marketing Institute, Washington. "That will allow the investments and equipment that retailers have already made to pay off."

However, retailers who have not invested in electronic payment processing technology like debit and credit card readers question where responsibility falls for buying necessary equipment and software to process EBT: the government or the retailer?

That question was among several unresolved issues raised last month by a retail advisory group for the Southern Alliance of States EBT Project.

Larkin said retailers should invest in their own electronic payment systems but "for those retailers who want to keep accepting food stamps but cannot

make the investment in the equipment they will need, our position is that those retailers need to have some kind of government assistance." Other concerns raised by the retail advisory group, which supports the SAS project, relate to transaction fees.

"Transaction fees could potentially shift significant EBT program costs from the government sector to the retail community. That is unacceptable," stated the advisory committee in a report issued last month.

"While many retailers may be willing to pay commercial transaction fees for some types of transactions, many others see no reason why they should now have to pay fees to financial institutions in order to facilitate the delivery of government benefits," the report continued.

The advisory committee report also addressed implementation schedules, costs of converting point-of-sale systems and the need for continued retailer input after EBT is in place.

The Southern Alliance of States EBT pilot getting under way represents the first test of the government's proposed national EBT system, called EBT II.

Traditional EBT, which replaces paper-based government benefits with a card-based system, has been rolled out in Maryland statewide and on a county-by-county basis in nine states.

But where state pilots only offered food stamp benefits and, in some cases, Aid to Families with Dependent Children, the national EBT II system will encompass cash-based federal benefits like Social Security and veterans payments.

"The SAS is going to be the first group of states to work together to bring up an EBT system," Larkin said. "Each state may have different parts of their AFDC program, and some of them may have benefit programs that differ from other states, but they're all going to be using the same systems, specifications and rules."

EBT advocates maintain that the SAS pilot will demonstrate how EBT processing costs can be reduced by expanding the number of benefits available on one card.