Electronic Benefits Transfer (EBT) is coming of age. Twenty-two states have piloted or implemented magnetic stripe programs as of September 1997 and four more are expected to be up and running by year-end. As the states push to meet the 1999 deadline for electronic distribution of benefits, merchant interest in EBT is growing. All this adds up to opportunity for financial institutions and independent sales organizations that provide electronic payments to smaller merchants.
Although many states are providing "free" terminals to supermarkets for food stamp benefits, smaller retailers usually do not qualify for the state terminals. They are looking for service providers who can support EBT on their existing POS equipment or on equipment that is similar in scale. One third-party processor who has capitalized on providing EBT service is BUYPASS Corporation of Atlanta, Georgia.
BUYPASS, a subsidiary of Electronic Payment Services, Inc., has matched the states' rapid implementations, linking to each state's program as it comes live. With connections to all 22 magnetic-stripe state EBT programs, BUYPASS Corporation has earned a reputation as a "third-party expert" on EBT.
"BUYPASS has seen tremendous EBT growth over the past year," says VP of Indirect Sales, Jim Maher. "At the end of last year, we offered links to 10 states. This year we have added 12 states so far, and we will add four more before year-end. We have signed significant numbers of new sales organizations who are expanding their sales and service staff to meet snowballing merchant demand."
BUYPASS entered the EBT arena to support its supermarket customers, "EBT was a natural extension for us," said Ruth Ann Marshall, BUYPASS president. "Now our financial institution and other indirect sales customers are finding added value in our EBT investment."
Through its "EBT Partners" program, BUYPASS offers EBT education to distributing financial institutions and independent sales organizations. Representatives of authorized agents attend a half-day training session at BUYPASS that includes information on contracts, setting up merchants, government and processor regulations, and more.
BUYPASS supports EBT transactions on more than 30 integrated and dial-up platforms, many of which use BUYPASS-developed software products. Of particular interest to resellers are the Hypercom T7P and the VeriFone TRANZ 330, which are popular with small merchants.
Although food stamps are driving current EBT growth, the payment type will become increasingly important as other benefits go electronic. The State of Alabama implemented EBT for Social Security recipients this year, enabling retirees to access their funds using a magnetic-stripe card at ATMs across the state. As this kind of program increases, even non-food retailers will want to accept EBT payments.
[RETURN]
