for a smart card infrastructure to develop. Nevertheless, Schwartz believes that early implementation of the smart card system puts the state in a position to keep up with the technology as it changes.

"Smart cards will be the technology of choice in the future," said Schwartz, "and, for once, government took the lead when we decided to roll out the smart card project. I think most states are waiting to see what happens with Ohio."

Card Security

As customers enjoy the speed and convenience of online transactions, merchants appreciate the security. "Retailers and banks are excited about the electronic trail these cards leave behind," said O'Conner. "They will have a better ability to find certain types of fraud and go after it."

When people lose their smart cards, they can place a lock on the card by calling an 800 number. If the lost or stolen card is placed into a reader, the PIN will fail. This is because the readers go online every 24 hours to upload the day's transactions and download information. A missing card is simply replaced with another card, which contains the same information that was last uploaded before the first card was reported lost or stolen.

What if welfare recipients use their EBT cards to buy liquor or other non-food items? It happens all the time. Sometimes clients even walk into stores and buy liquor and other non-food products for 50 cents on the dollar. Fortunately, the information acquired from the stores' daily uploads helps EBT investigators cut down on such fraud by leaving an electronic trail.

"We look at all that data and do statistical analysis to see what looks out of the ordinary," said Joyce Kohler, a federal EBT account executive. "We can go to the store with the data and say, 'We believe you are trafficking, and we want you to withdraw from the program.' We just want them out.

"There's also an inhibition for welfare recipients who sell their cards for cash to purchase non-food merchandise," added Kohler. "Cardholders would have to give away their [personal identification] numbers, and buyers never know for sure how much is left on the card. They could be getting ripped off themselves. So the street trafficking is not as prevalent either."


Like Ohio, Wyoming benefited from smart card pilot programs. The rural state is one of USDA's designated sites to test "advanced card technology." It's been running the field demonstration since April 1995, and the state intends to maintain it until a contract for a statewide roll out is chosen.

Wyoming's system has welfare recipients personalize their smart cards at a nearby clinic by selecting a PIN and three convenient retailers. At the beginning of each month, they stop at any of the selected stores and enter their card and PIN into the machine. Their first transaction loads any benefits they have coming to their card and provides them with a receipt. After the money downloads onto the card, they can shop at any authorized retailer.

"Our experience is that smart cards make a lot of sense, particularly in a rural, frontier environment -- where there aren't always phones lines," said Terry Williams, Wyoming EBT smart card project manager. "Since the benefits are downloaded to the card, there's no need to dial up for long-distance authorization every time a transaction takes place. We are also looking at it as an electronic service platform [from which] we can run multiple programs."

Wyoming already runs the Women, Infants and Children (WIC) program with smart cards and plans to administer several more offline schemes as well. Williams believes that improved smart card technology allows Wyoming to enjoy an efficient, smooth-running and paperless welfare system capable of adapting as needs change now and into the future.