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Chip cards are coming to state benefit programs, with the latest development emerging from Alabama. The state’s Department of Human Resources is mailing electronic benefit cards embedded with chips as a means to combat fraud, according to an announcement early Friday from the chip card supplier, Conduent Inc.
The chip technology is expected to reduce fraud by reinforcing the security of beneficiaries’ accounts at a time when states nationwide are reporting a rising volume of fraud attacks on EBT cards, according to Florham Park, N.J.-based Conduent.
Typically, thieves obtain card data through devices they are able to affix to point-of-sale terminals. Chip cards are seen as more secure against such schemes than traditional magnetic stripes, as they generate a one-time, encrypted code for each transaction, rendering them useless to thieves. Numbers were not immediately available regarding how many of the chip cards will be issued.
The expansion of the Alabama program follows a pilot Conduent and the state have conducted since December. Alabama is the first state using Conduent to adopt the technology for EBT cards, and only the second across the country to do so with any vendor, according to the company. California is the other state. Seven states have similar programs in progress. More states “are preparing similar rollouts,” Conduent says. The Alabama Department of Human Resources had previously initiated a program to automatically block use of EBT cards for out-of-state and online transactions.
“Wth this chip technology upgrade, our clients can have more confidence that their benefits will be there when they purchase groceries,” said Nancy Buckner, DHR commissioner for the state, in a statement. “This is not the end; we will continue to work and develop new and innovative ways to better protect our clients and their benefits.”
Conduent says it processes payments for public programs in 37 states, and also handles health-care claims processing and other duties for U.S. government agencies.
