Electronic benefits transfer (EBT) is an electronic system that allows recipients of government benefits to authorize transfer of their monetary benefits to a retailer in order to purchase products. EBT is also used in many states to issue food stamps. EBT recipients receive a plastic card and a personal identification number (PIN), similar to a debit card, which is connected to an account that is replenished on a monthly basis.
At the point of sale (POS), an EBT recipient's card is swiped through a terminal and the recipient enters the PIN number to access his or her account. The processor then verifies the PIN and the account balance, and sends an authorization or denial back to the retailer. If authorized, the recipient's account is then debited for the amount of the purchase, and the retailer's account is credited. No money and no food stamps change hands. Payment is made to the merchant through a settlement process normally at the end of the business day.