Evaluation of the

Expanded Off-Line

EBT System in

Ohio

Moving to a

Statewide EBT

System Using

Smart Cards for

Food Stamps

FNS 53-3198-4-022

March 1999

Prepared for

Jenny Genser

USDA/FNS/OANE

3101 Park Center Drive

Alexandria, Virginia 22302

Prepared by

Paul Elwood

John Kirlin

Seth Cooper

Sandra Nolden

Christopher Logan, Abt Associates

Eugene Costa

Cheryl Owens, Phoenix Planning &

Evaluation
Project Director

Technical Reviewer

Management Reviewer

Internal Review
Abt Associates Inc.

Acknowledgments

On behalf of the authors, I would like to thank the many individuals at the Ohio Department of Human

Services (ODHS), the EBT vendors, and at FNS who assisted us in the preparation of this report.

Within ODHS, special thanks go to Mr. David Schwartz, the project director for the Direction CardK

system. Mr. John Scaggs and Ms. Elinor Kohler of ODHS also assisted with our data collection efforts. 

We would also like to thank those county staff who provided information on county implementation

efforts. There are too many staff to enumerate them all here, but we would especially like to express our

gratitude to Janet Converse of the Montgomery County Department of Human Services (CDHS), K’Anna

Black of the Miami CDHS, Linda O’Neal of the Clark CDHS, Charlotte Rangi of the Greene CDHS, and

David Erbaugh of the Preble CDHS. These EBT coordinators were quite willing and gracious to spend

time with us and explain the EBT implementation process during our site visits and follow-up telephone

calls.

A team led by Citicorp Services, Inc. (Citibank) is responsible for the design, development,

implementation and operation of the Direction CardK system. The Citibank project director is Mr. Marc

Abramson, and he is assisted by Ms. Lucy Roberts. Both were quite willing to work with us as we

endeavored to learn how the system operates and how it is being implemented. Other members of the

Citibank team who have been equally helpful to us are Mr. Charles Feicht and Mr. Joseph McCorkhill of

Century Technologies, Inc. (CENTECH), and Mr. John Bianco of Stored Value Systems (SVS).

At FNS, I would like to thank Ms. Joyce Kohler, who is FNS’ EBT liaison for the State of Ohio. She

helped us considerably in our efforts to understand the relationship between FNS and ODHS as the state

embarked on this ambitious project. Most especially, however, I wish to thank Ms. Jenny Genser, who

serves as the FNS project officer for the evaluation of the Direction CardK system. Ms. Genser has

provided thoughtful guidance and considerable support to this evaluation. I would also like to thank

those staff, past and present, within the FNS Office of Analysis and Evaluation who reviewed the draft of

this report and provided many useful comments and suggestions. These reviewers include Mr. Steven

Carlson, Ms. Julie Kresge, Ms. Margaret Andrews, and Ms. Carol Olander.

Finally, I wish to thank the other members of the evaluation’s project team who contributed to this report. 

The project’s technical reviewer is Mr. Chris Hamilton, and Ms. Carissa Climaco provided analytic

support. Ms. Susan Byers Paxson produced this report and its graphics. I am also indebted to the

support provided by Mr. Eugene Costa and his staff from Phoenix Planning & Evaluation, subcontractor

to Abt Associates on this evaluation.

John Kirlin

Project Director
Abt Associates Inc. Contents i

Contents

Executive Summary ................................................................ 1

Chapter 1: Introduction ............................................................ 7

1.1 Evaluation Objectives ...................................................... 7

1.2 On-Line and Off-Line EBT Systems .......................................... 8

1.3 Previous Off-Line EBT Demonstrations ....................................... 9

1.4 The Ohio Direction CardK System .......................................... 10

1.5 Report Organization ...................................................... 11

Chapter 2: System Description and Operation ........................................ 13

2.1 Introduction ............................................................ 13

2.2 Organizations ........................................................... 13

The Ohio Department of Human Services ................................. 13

County Departments of Human Services .................................. 13

The Citibank Team ................................................... 14

The Food and Nutrition Service, USDA ................................... 14

2.3 Overview of the Direction CardK System ..................................... 14

Smart Cards ......................................................... 15

System Processor Host Computer ........................................ 15

State Recipient Information System ...................................... 17

Card Management System .............................................. 17

POS Equipment ...................................................... 17

Telecommunications Facilities .......................................... 18

2.4 Operations Overview ..................................................... 19

Card Issuance and Training ............................................. 19

Benefit Issuance and Collection ......................................... 21

Benefit Redemption ................................................... 23

Manual Transactions .................................................. 23

Retailer Settlement .................................................... 24

2.5 Differences Between the Direction CardK and PayEase Card Systems .............. 25

Equipment .......................................................... 25

Operational Improvements ............................................. 26

Reporting ........................................................... 27

Security ............................................................ 28

Chapter 3: System Design and Development .......................................... 31

3.1 Introduction ............................................................ 31

3.2 Contract Procurement ..................................................... 31

3.3 System Design .......................................................... 33

System Design Activities ............................................... 34

Detailed System Design Document ....................................... 38

3.4 System Development ..................................................... 40

3.5 System Testing .......................................................... 41
ii Contents Abt Associates Inc.

Test Plans ........................................................... 42

Acceptance Test ...................................................... 43

Chapter 4: Design and Development Costs ............................................ 45

4.1 Introduction ............................................................. 45

4.2 Research Design and Data Sources ........................................... 45

4.3 Overview of Design and Development Costs ................................... 47

4.4 Vendor Design and Development Costs ....................................... 48

Citibank ............................................................ 49

Century Technologies, Inc. .............................................. 49

Stored Value Systems .................................................. 50

4.5 Ohio Department of Human Services Design and Development Costs ............... 50

4.6 County Design and Development Costs ....................................... 51

4.7 Comparison of Design and Development Costs to the Pilot ....................... 52

Chapter 5: System Implementation .................................................. 55

5.1 Introduction ............................................................. 55

5.2 Sequencing of System Implementation ........................................ 56

5.3 Implementation Plan ...................................................... 58

5.4 Retailer Conversion Activities .............................................. 60

5.5 County Conversion Activities ............................................... 61

5.6 Recipient Conversion Activities ............................................. 64

5.7 Implementation Problems .................................................. 67

Software Problems .................................................... 67

Hardware Problems ................................................... 68

Chapter 6: Current System Operations ............................................... 69

6.1 Introduction ............................................................. 69

6.2 Benefit Issuance and Collection Activities ..................................... 70

6.3 Benefit Use ............................................................. 71

6.4 Settlement .............................................................. 73

6.5 Card Deployment ........................................................ 74

6.6 Customer Service ........................................................ 75

6.7 Conclusion .............................................................. 78

Appendix A: Glossary ............................................................. 79
Abt Associates Inc. Executive Summary 1

Executive Summary

To explore the suitability of off-line electronic benefits transfer (EBT) as an alternative to paper issuance

and on-line EBT issuance systems, the U.S. Department of Agriculture’s Food and Nutrition Service

(FNS) has supported the Ohio Department of Human Services (ODHS) in expanding off-line EBT

issuance to all Food Stamp Program (FSP) recipients in the state. A pilot project in Dayton, Ohio and a

demonstration of a combined WIC-EBT off-line system in Wyoming have clearly established the

technical feasibility of off-line EBT for FSP benefit issuance. Both the Ohio and Wyoming pilot

projects, however, were small in scale, and both incurred higher administrative costs than the paper

coupon issuance systems they replaced.

Now nearing the latter stage of statewide implementation, the Ohio Direction CardK system will provide

FSP benefits to about 300,000 households in 88 counties when it is fully operational in August 1999. 

This report describes how the new Direction CardK system works; the process undertaken by ODHS and

its EBT vendor to design, develop, and test the system; early implementation experiences; and the cost of

system design and development. The evaluation’s final report will compare the ongoing administrative

costs of system operations and system levels of benefit loss and diversion to those of on-line EBT

systems and the Dayton pilot, as well as provide an estimate of system implementation costs.

Off-line Versus On-line EBT Systems

The most distinguishing feature of the Direction CardK system is that it is an off-line EBT system. 

Nearly all EBT systems operating in the country today are on-line systems that work very much like bank

debit card systems. That is, recipients are issued magnetic stripe EBT cards that are used at food store

point-of-sale (POS) terminals to access their FSP benefits. At the checkout counter, the recipient enters

his or her personal identification number (PIN) in the terminal to authorize EBT payment of the food

stamp purchase. The terminal immediately uses a telecommunications network to connect to the EBT

system’s host computer, which maintains a special EBT account for the recipient. If the PIN is verified

and benefits remaining in the account are sufficient to cover the requested purchase, the transaction is

authorized and the recipient’s remaining balance is reduced by the amount of the sale. The retailer is

reimbursed at the end of the day during system “settlement,” which leads to an electronic transfer of

funds from an EBT account maintained at the U.S. Treasury to the retailer’s depository institution.

In contrast, an off-line EBT system maintains current information about a recipient’s remaining balance

within the card itself. Both Ohio and Wyoming use “smart cards,” plastic cards the size of a credit or

debit card, but which have a microprocessor and memory chip embedded within the card. These elements

allow the card to store information and to perform a range of mathematical calculations and logic checks. 

This functionality allows all EBT transaction processing to be conducted within and between the POS

terminal and EBT card; there is no need to immediately contact the system’s host computer for PIN

verification or remaining balance information, thereby speeding up the checkout process and eliminating

system downtime due to telecommunications problems. During system settlement, information about the

day’s EBT purchases is transmitted over a telecommunications network to the host computer, which then

initiates reimbursement to the retailer as in an on-line system.
2 Executive Summary Abt Associates Inc.

Another important distinction between on-line and off-line EBT systems is that, because off-line systems

use cards with greater data storage capacity than magnetic stripe cards, the potential exists to expand offline systems to include a wider range of applications than on-line systems. The Wyoming off-line EBT

system serves the Special Supplemental Food Program for Women, Infants, and Children (WIC) as well

as the FSP, and some states are proposing to use smart cards to carry health data. The Ohio Department

of Health and FNS currently are considering whether to add WIC to the Direction CardK system.

Selection of EBT Vendor

In February 1994, the ODHS issued a Request for Proposals (RFP) for the development, implementation,

and operation of a statewide off-line EBT system. Responses to the RFP were received in July 1994, and

Ohio awarded a contract to Citicorp Services, Inc. (Citibank) in September 1994. Work on system

design and development was delayed, however, by a legal conflict that arose after another bidder,

National City Processing Company (NPC), contended in court that the contract award process had been

flawed. The procurement problems were resolved in April 1996 when Citibank added Stored Value

Systems (SVS), a subsidiary of NPC, as one of its subcontractors for the EBT project. SVS is

responsible for the design and development of the Direction CardK system, transaction processing at the

system’s host computer, retailer settlement, and operation of the EBT Customer Service Center. 

Citibank’s other major subcontractor, Century Technologies, Inc. (CENTECH), is responsible for

installing EBT equipment at retail and county office locations and training retailer and county staff in

how to use the system.

The problems with the procurement process delayed the start of the design and development phase, but

the resolution vastly simplified the design and development process by allowing Citibank to build its

EBT system directly on the existing PayEase EBT system that NPC had developed for the Dayton pilot. 

As a result, the vendors were able to proceed with system development activities concurrently with the

system design effort.

System Design

Although its basic design is quite similar to the predecessor PayEase EBT system, the Direction CardK

system does contain a number of enhancements. The most significant is that the system takes advantage

of a new generation of smart cards and POS terminals to improve system security. Using a smart card

with more processing capacity than the one used in the PayEase system, the system’s designers have

moved critical security operations from the POS terminal to the smart card itself. This change was

needed because ODHS required that retailers in the Direction CardK system be allowed to integrate EBT

processing into their existing POS systems, if desired. (To date, however, none have done so because of

the expense involved.) The Direction CardK terminals also can accept new software downloads via the

telecommunications network from the system’s host computer. This greatly facilitates the introduction of

system upgrades.

In the PayEase system, retailers received a “negative file” during daily settlement. The file contained

records of all EBT cards reported as lost, stolen or damaged and prevented these cards from being

accepted at the POS terminal. Due to the larger size of the statewide Direction CardK system, smaller

stores (i.e., those with only one POS terminal) now receive a regional negative file. (Multi-lane stores are
Abt Associates Inc. Executive Summary 3

equipped with a personal computer with memory and processing capacity capable of handling a large,

statewide negative file.) With regionalization, the negative file sent to a particular single-lane store

includes only those cards reported as lost, stolen or damaged by recipients in the same or nearby counties. 

If recipients from outside the retailer’s region attempt to use their EBT card at the store, the transaction

must be authorized by a phone call to EBT Customer Service.

Another added feature of the Direction CardK system is that, in those counties serving at least 10,000

FSP recipients, county workers can use a special administrative terminal to access the EBT host directly

to perform certain EBT functions (e.g., review transaction history for a recipient; obtain authorization to

replace a lost, stolen or damaged card). In the PayEase system, county staff had to call Customer Service

to perform these functions.

System Development and Testing

Even though much of the software required for the Direction CardK system had already been developed

for the PayEase system, the changes in system design and equipment noted above required additional

development effort. With a new smart card with increased functionality, the card’s internal operations

had to be programmed. Similarly, software programs had to be developed for the system’s new POS

terminals.

The host computer’s software had to be changed to accommodate some of the new security features of

the Direction CardK system. One major change was that store refunds and other “value-adding”

transactions could no longer be written directly to the card. Instead, in order to protect the system from

potential fraud and error, all value-adding transactions are sent to the host computer for verification and

later downloading to the recipient’s card. Other security-related changes include adding sequential host

reference counters (HRCs) to all value-adding transactions and adding an industry-standard message

authentication code (MAC) to all POS transactions.

Other system development activities included: preparation of training materials and procedures for

county staff, retailers, and recipients; preparation of user manuals for county staff and retailers;

development of standard retailer EBT participation agreements; and development of procedures for

installing EBT equipment at retail and county office locations.

System development efforts took place in the summer and fall of 1996. FNS, the system vendor, and

ODHS then prepared for a three-day test of the system in December. Due to the extensive testing and

operational experience with the predecessor PayEase system, the test of the Direction CardK system

focused on those aspects of the system which had been changed. Only minor problems were noted during

the test, and FNS formally approved the system on December 17, 1996.

The cost to design, develop and test the Direction CardK system is estimated at $2.4 million. This figure

represents the incremental costs of designing and developing the statewide system and does not include

the system design and development costs of the pilot system (which were of approximately the same

magnitude.) The sheer size of the Ohio caseload, and the administrative fragmentation that accompanies

a county-administered FSP, has required the development of complex logistical systems to support

system rollout. As a result, about 60 percent of the $2.4 million in development costs was incurred by

CENTECH.
4 Executive Summary Abt Associates Inc.

System Implementation

The overall success of the design and development effort was evident in the smooth transition to the new

system in January 1997. Households and retailers that had participated in the pilot PayEase system in

Montgomery County were the first to convert to the Direction CardK system. Then, in August 1997,

Montgomery County staff began to convert remaining food stamp recipients from outside the pilot area

to EBT. The county’s entire FSP caseload was converted to EBT by January 1998.

Beginning in the summer of 1997, Citibank and its subcontractors began to convert other counties in the

southwestern portion of Ohio. The first step was typically an EBT information meeting for county

retailers, during which time CENTECH representatives and ODHS staff explained the new system and

addressed technical and programmatic questions. CENTECH then mailed information packages to all

FSP-authorized retailers in a county, together with retailer POS agreements. Once a retailer returned a

signed agreement, SVS established an EBT account on the host system for the retailer, and CENTECH

shipped EBT equipment to the store. A CENTECH crew then installed the equipment. Finally,

CENTECH staff visited the store (or its regional or corporate office) to train its employees on how to use

the new system.

At approximately the same time within each county, CENTECH staff contacted the county DHS office

and scheduled a date for a site visit. The site visit included a one-hour presentation, a video describing

the Direction CardK system, and a demonstration of the off-line EBT equipment. CENTECH staff also

determined the office’s wiring and equipment needs during the site visit. Thereafter, CENTECH ordered

and installed the EBT equipment and trained county staff in all EBT functions for which they were

responsible, including card issuance and recipient training.

By June 1998, conversion was complete or underway in 19 counties, including Hamilton County in which

Cincinnati is located. In the period between January 1997 and June 1998, the system issued

approximately $76.0 million of food stamp benefits in nearly 537,000 transactions. There were

approximately 48,000 food stamp cases on the system in June, representing about 15 percent of the

statewide caseload.

System Operations

The first 18 months of system operations have been relatively free of problems. Some county staff have

had difficulty with their EBT equipment, however, and a pervasive problem during recipient training has

been absenteeism, with many counties reporting that only one-quarter to one-half of their FSP recipients

show up for their initial appointments to receive training and their Direction CardsK. County staff and

system operators also identified a significant problem with the HRC sequencing of value-adding

transactions. In certain situations, problems with the assignment of the counter prevented clients from

accessing an end-of-month supplemental benefit until the next month’s regular benefit had been accessed. 

This problem, which was serious but affected a limited number of recipients, was corrected in September

1998.
Abt Associates Inc. Executive Summary 5

Next Steps

Since information about implementation experiences was collected for this report, conversion activities

have continued in Ohio. In July 1998, county staff in Franklin County (Columbus) and Cuyahoga

County (Cleveland) began converting recipients to EBT. Together with Montgomery County, three of

the state’s largest metropolitan areas are now fully converted or well on their way toward EBT

conversion. Retailer and county conversion activities are expected to be completed throughout the state

by August 1999, with recipient conversion continuing into early 2000.

As noted earlier, the state and FNS are considering whether to add a WIC demonstration to the Direction

CardK system. The state also plans to pilot test the addition of its Temporary Assistance for Needy

Families (TANF) program to EBT in 1999. Either of these additions would represent a significant

change for the system. Adding TANF would make the Direction CardK system more similar to multiprogram EBT systems implemented in other states with on-line systems. If WIC is added, the state will

be taking advantage of the increased multi-program functionality offered by a smart-card based, off-line

EBT system.

One of the primary goals of the evaluation is to determine the FSP costs of operating a statewide, off-line

EBT system and to compare these costs to statewide on-line EBT systems. Another goal is to document

the process of system implementation and system operations, and problems encountered, so that FNS and

other states will have more information upon which to base future decisions about EBT system choice. 

Thus, the next two years will be important for the Direction CardK system as the evaluation monitors

system implementation, system operations, administrative costs, and the impact of possible changes in

programs served on operations and cost. The evaluation’s final report, scheduled for release in mid2001, will address these significant issues.
1 Contract #53-3198-4-022, Evaluation of Expanded Off-Line EBT (Ohio).

2 The scheduled release date for the evaluation’s final report is the summer of 2001.

Abt Associates Inc. Chapter 1: Introduction 7

Chapter 1

Introduction

In 1994, the Food and Nutrition Service (FNS) of the U.S. Department of Agriculture authorized

expansion of a pilot electronic benefits transfer (EBT) system operating in Dayton, Ohio. The pilot

system was the first EBT system to employ off-line technology to deliver program benefits in the Food

Stamp Program (FSP). As described later in this chapter, “off-line” EBT systems differ from “on-line”

systems in several important ways. FNS authorized the expansion so that the technical and cost

feasibility of a large-scale, off-line EBT system could be tested.

1.1 Evaluation Objectives

FNS awarded a contract to Abt Associates Inc. in September 1994 to evaluate the expanded EBT

system. The evaluation has the following four objectives: 1

1) Describe any additional development, the implementation, and operation of the off-line EBT

system as it expands beyond the pilot site.

2) Quantify and compare the administrative costs of the expanded off-line EBT system with

those of the pilot EBT demonstration in Ohio, with an off-line EBT demonstration in

Wyoming, and with other on-line EBT systems.

3) Quantify and compare losses and diversions of the expanded off-line EBT system with those

of the pilot demonstration and with other on-line EBT systems.

4) Assess the conditions under which a statewide, off-line EBT system is most likely to achieve

cost-neutrality and cost effectiveness.

The Ohio Department of Human Services (ODHS) is currently in the last year of a three-year rollout of

the expanded EBT system, which it calls the Direction CardK system. This report addresses the first

objective above by describing the new system and the process that ODHS and its EBT vendors followed

to develop and implement the Direction CardK system. The report also presents estimates of the costs

incurred to design and develop the new system. The evaluation’s remaining objectives will be addressed

in its final report, which will be prepared after the system is rolled out and operating throughout the

state.2
8 Chapter 1: Introduction Abt Associates Inc.

1.2 On-Line and Off-Line EBT Systems

FNS has been fostering the development and use of on-line EBT systems since the early 1980s. An online EBT system works very much like debit card (also called bank card or ATM card) systems offered

by financial institutions. The food stamp recipient is issued a plastic card that has a magnetic stripe

affixed to the back of the card. A limited amount of information about the recipient and the card is

encoded on the stripe; typically this information includes the recipient’s name, a unique card number, a

unique EBT account number related to the card (which is known as the primary account number, or

PAN), and the recipient’s personal identification number (PIN), which is encrypted for security purposes. 

The EBT account linked to the card and recipient is established by the EBT system processor. All FSP

issuance amounts are posted to this electronic account.

When the recipient uses the EBT card to buy food at a program-authorized retailer, the PIN must be

entered into a special EBT terminal at the point of sale (POS) to verify the recipient’s identify. The

requested food stamp purchase amount is then key entered into the EBT terminal, and a message is sent

immediately to the EBT system’s host computer over a regular or dedicated telephone line. The host

computer verifies that the correct PIN has been entered and checks to see if the recipient’s EBT account

has enough funds to cover the requested purchase amount. If it does, then the purchase transaction is

authorized and the amount is debited from the recipient’s account balance. Later in the day, the retailer is

reimbursed for all EBT transactions during system “settlement,” when an electronic funds transfer is used

to move funds from the EBT vendor’s account at a financial institution to the retailer’s financial

institution. The retailer’s financial institution then credits the retailer’s account for the prior day’s

transactions.

An off-line EBT system differs from an on-line system in several ways. First, current information about

the recipient’s balance of food stamp benefits is maintained in the EBT card itself rather than at the

system’s host computer. Because the card’s data storage requirements in an off-line system are greater

than can be provided with a magnetic stripe card, a different card technology is needed. The most

commonly used technology is the “smart card,” which has a microprocessor and memory chip embedded

in the plastic. When the recipient uses the smart card to buy groceries, the EBT card is inserted into the

EBT terminal and the PIN is entered. Software within the terminal and card perform a PIN verification. 

Once the PIN is verified, the store clerk enters the requested food stamp purchase amount into the EBT

terminal. This information is passed to the smart card, which compares the requested purchase amount to

the balance information stored in the card. If the remaining balance is sufficient to cover the planned

purchase, the transaction is authorized and the remaining balance is reduced by the amount of the

purchase. No phone call to the host computer is needed to authorize the purchase transaction. Instead,

the EBT terminal (or a small computer linked to all the EBT terminals in a store) dials into the system

host computer once a day to transmit information about the day’s EBT transactions. The host computer

uses this information to initiate system settlement so the retailer can be reimbursed for the day’s

transactions. The information also is used to maintain a “shadow” EBT balance for each recipient. This

shadow balance, which does not reflect purchases made during the day until retailers upload their daily

files to the host computer, is used to restore benefits to a recipient if his or her EBT card becomes lost,

stolen or damaged.
3 Gary L. Glickman et al., Evaluation of the Off-Line Electronic Benefits Transfer Demonstration: Summary of Findings,

Rockville, MD: Phoenix Planning & Evaluation, Ltd., May 1994.

Abt Associates Inc. Chapter 1: Introduction 9

1.3 Previous Off-Line EBT Demonstrations

The expansion of the off-line EBT system in Ohio is taking place in the context of two prior off-line EBT

demonstrations for FNS. The first is the EBT pilot demonstration in Dayton, Ohio. In 1990, FNS

awarded a contract to National City Processing Company (NPC) to design, develop, implement, and

operate a demonstration off-line EBT system in Dayton. The purpose of the demonstration was to test

the technical and financial feasibility of using off-line EBT technology for delivering food stamp benefits. 

Seventeen months later, in February 1992, food stamp recipients began using the system. By June 1992,

the off-line EBT system, called “PayEase,” was fully operational and delivering food stamp benefits to

over 10,000 recipient households.

An evaluation of the Dayton EBT pilot concluded that the PayEase system was technically viable and

that, compared to paper benefit issuance, it reduced recipient, food retailer, and financial institution costs

to participate in the FSP. The PayEase system also reduced levels of benefit loss and diversion, again

compared to the paper issuance system. The administrative cost of the PayEase system, however, was

nearly triple the cost of the paper issuance system it replaced. Nevertheless, the evaluation concluded

that a potential for significant cost reductions existed, especially in a statewide system where economies

of scale could be realized.3

In 1991, the State of Wyoming conducted a small pilot test of a smart card-based, off-line EBT system

delivering benefits for the Special Supplemental Food Program for Women, Infants and Children (WIC). 

In 1993, with support and funding from FNS, Wyoming initiated a larger EBT demonstration involving

both the WIC and FSP programs. Wyoming selected NPC to design and develop the “PayWest” system. 

The system, which was implemented in the spring of 1995, serves all WIC and FSP clients in Natrona

County (Casper), and also serves all WIC clients in six other Wyoming counties. The fundamental

difference between the PayWest system in Wyoming and the PayEase system in Ohio arises from

differences between the WIC and FSP programs. Although FSP benefits are dollar denominated and can

be spent on any food stamp-eligible food items in program-authorized stores, WIC benefits are a

prescription for a specific list and quantity of food items. Thus, unlike the food stamp PayEase system in

Ohio, the PayWest system has to compare the specific items being purchased against the WIC

participant’s food prescription. Information about the food prescription is loaded and stored on the

PayWest smart card.

The evaluation of the Wyoming EBT demonstration concluded that the PayWest system was technically

feasible and that its reliability matched that of early EBT demonstrations of on-line systems. It offered

more customer services than the paper system it replaced, especially for WIC clients, and program

participants almost universally viewed the EBT system as a more convenient, secure, and dignified way

to deliver benefits than either WIC checks or food stamp coupons. It was, however, considerably more

expensive to operate than the paper delivery systems it replaced. The evaluation concluded that several
4 William Hamilton et al., Costs and Impacts of the Wyoming Smartcard EBT System, Cambridge, MA: Abt Associates Inc.,

May 1997.

5 Ohio Department of Human Services, Food Stamp Electronic Benefits Transfer System RFP, February 28, 1994, p. 3.

6 The evaluation’s final report will provide estimates of implementation costs, as well as ongoing operating costs and levels of

benefit loss and diversion within the Direction CardK system. These estimates will be compared to those for the pilot PayEase

system and for on-line EBT systems.

10 Chapter 1: Introduction Abt Associates Inc.

factors, including operating the system on a larger scale, could dramatically reduce system operating

costs.4

1.4 The Ohio Direction CardK System

Based on its experience with the PayEase system in Dayton, the Ohio Department of Human Services

(ODHS) became “convinced of the efficiency and cost effectiveness of off-line technology, as well as its

acceptability to recipients, retailers, and financial institutions.” ODHS therefore decided that it wanted 5

to implement a statewide EBT system using off-line technology. The expanded system initially would

issue food stamp benefits, although there was also interest in adding other programs to the system,

including WIC and cash benefit programs.

In February 1994, ODHS issued a Request for Proposals (RFP) for the development, implementation and

operation of a statewide, off-line EBT system. ODHS awarded the EBT contract to Citicorp Services,

Inc. (Citibank) on September 20, 1995, and contract work began October 30. A suit seeking an

injunction against the award was filed soon thereafter, however, and a lengthy period of legal activities

and negotiations ensued. Citibank ultimately submitted a revised proposal with a new set of

subcontractors, which was acceptable to all parties, and contract work resumed in July 1996. Seven

months later, on January 1, 1997, recipients in Dayton converted to the new Direction CardK system. 

Since that time, the new system has been rolled out throughout the rest of Montgomery County and in a

number of other Ohio counties. Exhibit 1-1 presents key dates for the process of designing, developing,

and implementing the statewide EBT system in Ohio.

1.5 Report Organization

This report has several objectives. The first is to describe how the new Direction CardK system works. 

To this end, Chapter Two describes the Direction CardK system and identifies those areas in which the

new system differs in design and operation from the pilot PayEase system. The report also documents

the process by which the Direction CardK system was designed and developed, which is the subject of

Chapter Three. Chapter Four presents the results of an analysis of the costs of designing and developing

the Direction CardK system. Chapter Five documents the process of implementing the system, both in

Montgomery County where the pilot system operated, and in other counties where EBT is a totally new

method for delivering FSP benefits. (No information on implementation costs is presented herein

because implementation efforts will not be completed until late 1999.) Finally, Chapter Six describes 6

system operations in June 1998, providing a “snapshot” of system characteristics in the second year of

the three-year process of statewide implementation. A glossary of acronyms and technical terms is

included as an appendix.
Abt Associates Inc. Chapter 1: Introduction 11

Exhibit 1-1

Key Events in Design, Development, and Implementation of the Direction CardK System

September 1990 FNS awards NPC a contract to design, develop, implement, and operate a

demonstration off-line EBT system in Dayton, Ohio.

February 1992 First recipients converted to pilot PayEase EBT system.

July 1993 ODHS submits to FNS a Planning Advanced Planning Document (PAPD) for

statewide rollout of off-line EBT.

February 1994 ODHS issues RFP for the development, implementation and operation of the

Ohio Electronic Benefit Transfer Food Stamp benefits distribution system. 

July 1994 Citibank submits its proposal to the RFP. 

September 1995 ODHS signs EBT contract with Citibank.

October 1995 NPC files suit against ODHS and Citibank.

Initial kick-off meeting for the Ohio EBT project.

January 1996 Judge rules in favor of NPC, directs Ohio to re-solicit cost proposals from

Citibank and NPC.

April 1996 Citibank submits revised Final Proposal with NPC as a subcontractor.

June 1996 Ohio approves revised proposal.

July 1996 Second kick-off meeting for the Ohio EBT project. 

October 1996 Citibank submits final version of Detailed System Design Document.

December 1996 Citibank team begins three-day acceptance test of EBT system.

FNS approves Direction CardK system.

January 1997 Direction CardK system begins operations.

September 1997 Expansion begins in Montgomery County
1 The PayEase EBT system became operational in March 1992 and delivered food stamp benefits to a segment of the food

stamp population in Montgomery County. The demonstration was split into five distinct phases, lasting over 30 months. 

Design of the system began in September 1990, and development was complete by December 1991. The system began

operations in March 1992, with all recipients in the demonstration area converted by June 1992. This project ran through

December 31, 1996 before converting to the Direction CardK system.

Abt Associates Inc. Chapter 2: System Description and Operation 13

Chapter 2

System Description and Operation

2.1 Introduction

The Direction CardK program represents the first statewide initiative to use smart cards for off-line EBT

applications. This program builds on the state’s EBT pilot project, known as the PayEase system, that

was used to deliver FSP benefits to a segment of the food stamp population in Montgomery County.1

Once completed, the Direction CardK system will provide access to food stamp benefits for over

300,000 households across all 88 counties in Ohio.

2.2 Organizations

The design, development, implementation, and operation of the Direction CardK system for the delivery

of food stamp benefits involved the coordination of several public and private organizations. Their

principal roles and responsibilities are outlined below.

The Ohio Department of Human Services

The ODHS administers the federally-funded FSP, serving all households who meet the eligibility criteria

based on income and household size. The ODHS administers the contract with the EBT service

provider—Citicorp Services, Inc. (Citibank)—and assumes all contract management functions. In this

capacity it serves to assure that the system being developed satisfies the requirements outlined in its RFP

and contract. Its data center operates and maintains the state’s integrated public assistance system

(known as the Client Registry Information System – Enhanced, or CRIS-E) that interfaces with the EBT

service provider’s computer system on a daily and monthly basis to effect the transfer of issuance data

and other information necessary to operate the EBT system.

County Departments of Human Services

In Ohio, the 88 County Departments of Human Services (CDHS) assume direct responsibility for FSP

administration. Five different operational areas within each CDHS are affected by EBT. The five areas

are:

• Caseworkers, who determine recipient eligibility during certifications and recertifications. 

Caseworkers gather data from recipients during the eligibility process to help establish a

record on the EBT system and to authorize issuance of an initial Direction CardK.
2 SVS, a wholly-owned subsidiary of NPC, was created at about the same time that Citibank added NPC to its EBT project

team.

14 Chapter 2: System Description and Operation Abt Associates Inc.

• The Fiscal Control Office, or FCO, which performs all terminal-based transactions that

update the Direction CardK or the EBT host computer, including card issuance and card

replacement.

• The Assistance Control Office, or ACO, which provides EBT training to recipients and

assists them with account balance problems. The ACO also provides authorization to the

FCO to replace cards and performs administrative actions that would change a balance on a

recipient’s card.

• The Cashier Office, which handles the process of converting EBT balances to food stamp

coupons when recipients move to an area not served by the Direction CardK system.

• The Accounting Office, which is responsible for the security and accountability of the

inventory of smart cards maintained in the office. In some counties this may be handled by

the FCO supervisor.

The Citibank Team

The Citibank team consists of Citibank and its subcontractors, Stored Value Systems, Inc. (SVS) and

Century Technologies, Inc. (CENTECH). Citibank, as the prime contractor, serves as the project 2

manager and is responsible for providing the state with EBT services in accordance with its contract. 

SVS is primarily responsible for the design, development and integration of all software and hardware for

system operations, including the EBT host system, retailer POS terminals, and the card management

system (CMS) in each CDHS office. SVS is also responsible for the actual operation of the EBT host

system, customer service for both retailers and recipients, retailer settlement services, all communications

facilities, and the generation of all fiscal and management reports. CENTECH is primarily responsible

for all contacts with retailers, including initial visits, sign-up, equipment installation and servicing, and

training; and contact with each CDHS office, including installation and servicing of CMS and POS

equipment, training of workers in each operational area, and supplying card inventory.

The Food and Nutrition Service, USDA

FNS is the federal agency charged with the administration of the FSP nationally. Through its local field

offices, FNS authorizes retailers to participate in the FSP and, when necessary, withdraws such

authorization. FNS provides store authorization numbers and other retailer information to the Citibank

team for entry into the EBT system.

2.3 Overview of the Direction CardK System

The Direction CardK system comprises six main components that interact to provide recipients with

their food stamp benefits, including the provision of the monthly FSP allotment, the capture and
3 The descriptions for these transactions are adopted from the Direction CardK reference manual supplied by Citibank to

retailers participating in the system.

4 The card being used for the statewide rollout of EBT is the PayFlex purse card manufactured by Schlumberger, Inc. The

PayFlex card has 1 kilobyte of data storage that can have multiple purses and allows for enhanced security functionality.

Abt Associates Inc. Chapter 2: System Description and Operation 15

processing of EBT transactions, and the reimbursement of participating retailers. These six components

are:

• recipients’ smart cards

• the system processor’s host computer

• the state’s recipient information system (CRIS-E)

• the card management system (CMS) at county offices

• retailer point-of-sale (POS) equipment; and

• telecommunications facilities.

Together, these six components support a number of different types of EBT transactions. Some of these

transactions involve credits or debits to retailer and recipient accounts, whereas others provide

information without any change in value to retailer or recipient accounts. To facilitate later discussion of

system design and operations, these transaction types are defined in Exhibit 2-1. In the discussion that 3

follows, “staged” transactions are those that either provide a credit to the recipient’s Direction CardK or

cannot be completed immediately because the EBT terminal is not working (or both). When a staged

transaction is initiated at a retailer’s location, the credit is not applied immediately to the card. Instead,

information is passed to the host computer, which then downloads the credit to selected retail locations 

and the recipient’s CDHS for subsequent collection by the recipient.

The six main components of the Direction CardK are described below.

Smart Cards

Each FSP recipient in the state will be provided with a smart card that is used to access their benefits at

authorized retailers. This card, named the Direction CardK, contains an embedded microprocessor chip 4

that interacts with retailer POS systems when recipients shop. The card maintains the recipient’s current

benefit balance and information on the ten most recent transactions in which the card was used (e.g.,

purchase, balance inquiry, refund). In addition to the embedded chip, the blue and white Direction

CardK contains the state-approved logo and design graphics, the required regulatory disclosure

statements on the back of the card, and a laser-engraved personal account number (PAN).

System Processor Host Computer

The EBT host computer is located at the SVS facility in Louisville, Kentucky. It consists of four “faulttolerant” processors; such processors include internal back-up of all critical components to ensure

continuous processing capability. Additional processors will be added, as necessary, during the statewide

rollout to satisfy performance standards for central file processing. (This system also supports the

Wyoming EBT system.) There is also a two-processor backup system located at SVS’ customer service

center facility in El Paso, Texas. The EBT host system is dedicated to EBT functionality, including 
16 Chapter 2: System Description and Operation Abt Associates Inc.

Exhibit 2-1

Direction CardK Transaction Types

Terminal sign-on and sign-off, which allow cashiers to log on and log off the EBT terminal in their

checkout lane.

Food stamp purchase, which is used when a food stamp client wants to use his or her food stamp

EBT benefits to pay for program-eligible food items.

Food stamp purchase reversal, which gives the cashier the ability to negate, with the client

present, an incorrect amount on a just-completed purchase transaction.

Food stamp refund, which is a staged transaction to be used when a food stamp client returns

items originally purchased with food stamps. It requires a manager password.

Food stamp refund reversal, which is used to negate a just-completed food stamp refund

transaction. It is used when the value of the refund transaction was incorrect.

Balance inquiry, which allows recipients to determine the amount of food stamp benefits remaining

on the card.

Food stamp manual purchase, which stages a debit for the purchase amount to be subtracted

from the recipient’s EBT card at a later date. It is to be used only when the EBT terminal is not

working. Recipients are limited to one manual purchase transaction not to exceed $50 outstanding

at any given time.

Food stamp manual refund, which stages a credit for the amount of the refund to be added to the

recipient’s card. It is to be used only when the EBT terminal is not working.

Forced credit, which stages a credit to the recipient’s card if the recipient is accidentally

overcharged.

Delivery debit, which debits the recipient’s Direction CardK for the amount of the sale. It is used by

retailers who do not have EBT terminals (e.g., route vendors who deliver milk or produce directly to a

recipient’s home).

The descriptions for these transactions are adopted from the Direction CardK reference manual supplied by Citibank to

retailers participating in the system.

For security purposes, some transactions (e.g., refunds and all manual transactions) require the intervention of the manager

through entry of a manager’s password. Purchase and refund reversals require that the transaction being reversed be the last

transaction posted to the card, the last transaction performed at the POS terminal, and that the retailer has not yet settled for

the day.

initial account setup of recipient information from CRIS-E and the CMS, receipt of issuance-related data

from CRIS-E and its delivery to recipient-selected issuance collection locations, Direction CardK

updating, retailer settlement, downloading of data to retailer systems and the CMS, customer service, and

reporting.
5 If a retailer processes a manual purchase transaction for an amount that is subsequently discovered to be greater than the

recipient’s remaining balance, then the retailer is liable for the excess amount. The retailer, however, can “re-present” the

transaction in following months after additional benefits have been added to the recipient’s card. This is done by mailing a

re-presentation form to EBT Customer Service, which forwards the form to the appropriate CDHS office for evaluation. If

approved, the CDHS office processes a re-presentation transaction, which leads to a retailer credit and a staged debit to the

recipient’s card. Program rules state that up to $50 may be deducted from the recipient’s EBT account in the first month

($10 if the recipient receives less than $50 per month). Thereafter, the maximum deduction is $10 or 10 percent of the

regular recurring allotment, whichever is greater.

6 See FNS regulations at 7 CFR 274.12(g)(4)(ii) for the regulatory requirements related to EBT POS terminal equipment.

Abt Associates Inc. Chapter 2: System Description and Operation 17

State Recipient Information System

CRIS-E is the state’s integrated public assistance system. It determines eligibility and then calculates

benefits for all state and federal public assistance programs for which a recipient is eligible, based on the

information entered by caseworkers in each CDHS office. On a daily and monthly basis, CRIS-E

provides the necessary data to the CMS and the EBT host system to support card issuance and to provide

recipients with their benefit allotments.

Card Management System

The CMS consists of one personal computer (PC) and one DataCard POS terminal. The system resides

in the FCO in each CDHS office and is primarily used to issue Direction CardsK to recipients. Clerklevel activities using the CMS include card issuance and replacement, card unlock, changing a recipient’s

personal identification number (PIN), converting card balances to coupons (when the recipient is

present), re-presentation debits, and delivery debits. CMS functions requiring greater security and 5

supervisory action include dealing with forgotten PINs, converting card balances to coupons (when the

recipient is not present), return of benefits, daily settlement, changing a recipient’s number, reviewing

manual debits, card recycling, disposition of returned or damaged cards, and card inventory and control.

The CMS provides on-line access to necessary information in CRIS-E and has dial-up access to the EBT

host. At the end of each day, all information entered into the CMS is uploaded to the EBT host.

POS Equipment

Retailers participating in the Ohio EBT system are provided with DataCard POS equipment capable of

accepting the Direction CardK. The POS terminal equipment configuration deployed at retailer sites is

different for each of three types of retailers: single-lane stores, multi-lane stores, and route vendors.6

Single-lane retailers receive one DataCard 680 terminal, a VeriFone P250 printer, and a pedestal mount

to hold the terminal. The DataCard 680 is a “stand-alone” terminal consisting of a built-in modem for

communication to the EBT host during daily settlement, 2 megabytes of memory for database and

transaction file storage, a display, a magnetic stripe and smart card reader, and a keyboard.

Multi-lane retailers are provided with a local area network-based POS configuration. The in-lane

configuration consists of a DataCard 485 POS terminal, a VeriFone P250 printer, and a pedestal mount. 

Multi-lane retailers also receive one terminal controller (a personal computer) and one network interface
18 Chapter 2: System Description and Operation Abt Associates Inc.

controller for each 30 lanes of installed POS equipment. Like the DataCard 680, the DataCard 485

contains a display, a magnetic stripe and smart card reader, and a keyboard. All databases, transaction

files, and the modem for communicating with the EBT host reside in the PC. In addition, a balance

inquiry device is provided to all multi-lane retailers redeeming over $30,000 a month in food stamp

benefits to allow recipients to verify the food stamp balance on their Direction CardK prior to shopping.

Route vendors deliver milk, produce, or other food items directly to customers’ homes, and hence cannot

use a regular POS terminal. They therefore receive one DataCard 680 POS terminal, along with two

battery packs to power the terminal. The terminal is programmed to provide the same functionality as is

present in a single-lane retailer site, except for receipt printing capability. In lieu of a printed receipt, the

terminal displays the necessary information for preparation of a manual receipt.

In August 1998, the Citibank Team began to deploy DataCard “Jigsaw” terminals instead of the

DataCard terminals described above. The Jigsaw terminal provides the same functionality as the older

models, but is smaller and sturdier.

Because of retailers’ concerns regarding scarce counter space in the checkout lanes, and to facilitate a

more efficient checkout process, an “integrated” solution is also available to retailers in lieu of the Ohio

EBT system’s “stand-beside” POS configurations (DataCard 680 or 485). The integrated solution

allows retailers to modify their existing POS systems, which can accept credit cards and debit bank cards,

to accept the off-line Direction CardK. This approach requires retailers to attach a PIN-pad and a smart

card reader to either their in-lane debit/credit terminals or their electronic cash registers (ECRs). The

integrated solution also requires each retailer to decide whether to eliminate or keep the EBT store

controller personal computer. If this is eliminated, the retailer is responsible for maintaining the

programs and files that currently reside on the EBT store controller and establishing the data transfers

between the controller and the PIN-pad and smart card reader. If the EBT store controller is maintained,

the retailer is only responsible for routing the messages from the PIN-pad and smart card reader to the

EBT store controller.

Regardless of the approach they take, retailers that choose an integrated solution need to modify their

existing systems’ software. A detailed specification is available to retailers to assist them in identifying

the necessary modifications. To date, no retailers have selected the integrated solution approach.

Telecommunications Facilities

The EBT system’s host computer exchanges data via telecommunications facilities with several

organizations: ODHS’ CRIS-E system, the card management system at each CDHS office, FNS, the

system’s concentrator bank (to support automated clearinghouse settlement), and participating retailers. 

SVS uses a shared CompuServe network to support the required communications with these

organizations. The EBT host computer accesses this network through four dedicated communications

lines to CompuServe; each line can handle up to 56 kilobytes of data per second (kbps).

A dedicated 56 kbps line is used to support the large batch data transfers between the EBT host and the

CRIS-E system. Each day, the EBT system transmits transaction data to CRIS-E and receives issuance

information for recipients.
7 A recipient who was being recertified and already had a card from a previous certification would be directed to the ACO. 

There, the ACO would verify that the recipient remembered his or her PIN and that the card was still operational.

Abt Associates Inc. Chapter 2: System Description and Operation 19

At least once a day, the host computer establishes a direct connection to each participating retailer and

CDHS office. In single-lane retailer stores, where data transfer requirements are much smaller, the

modems built into the DataCard terminals handle up to 2400 bytes of data per second. The back-room

PCS provided to multi-lane retailers use a 14.4 kbps modem. For both single-lane and multi-lane

retailers, regular telephone lines are used to transfer data back and forth to the host during daily

settlement.

The PC-based CMS in each CDHS office uses a 14.4 kbps modem to transfer information to the EBT

host over the CompuServe network. Additionally, in the larger CDHS offices, terminals in the ACO are

equipped to access the EBT host system on-line via CompuServe private dial.

In order to obtain up-to-date information on the authorization status of FSP retailers, SVS and

CENTECH use a dial-up telephone line to FNS’ Minneapolis data center to access the Retailer EBT Data

Exchange (REDE) system. The system identifies both authorized retailers in EBT states and retailers in

adjacent, non-EBT states that have received FNS’ permission to accept food stamp EBT benefits.

Finally, the EBT host routes retailer settlement data via a dial-up line to NPC’s host computer, which in

turn transfers the data to National City Bank in Columbus (the system’s concentrator bank) for

origination of automated clearinghouse (ACH) credits to retailers’ depository institutions. This routing

of data through NPC allows the use of an existing private T-1 data network to transfer the data from

NPC to National City Bank.

2.4 Operations Overview

Card Issuance and Training

Once a recipient has been certified or recertified by a caseworker, the recipient is provided with a card

authorization form indicating the recipient’s name, recipient ID number, and other information (see

Exhibit 2-2). If the recipient has not previously been issued a card, then the recipient is instructed to go

to the FCO area. There the FCO worker, using the CMS, identifies the recipient via the password 7

identification information that is contained in the CRIS-E system. If the recipient is positively identified,

the worker will automatically transfer the necessary information in CRIS-E into the CMS and proceed

with card issuance.
20 Chapter 2: System Description and Operation Abt Associates Inc.

Exhibit 2-2

Card Authorization Form
8 The card issuance process writes an encrypted PIN to the card’s memory using a data encryption standard (DES) process.

9 Although the system allows a recipient to go to any one of four locations to collect each month’s FSP allotment, controls are

in place to ensure that any given allotment is posted to the card only once. As the benefit amount is written to the card, a

sequential code known as the host reference counter (HRC) is updated in the card’s memory. This code prevents multiple

access to the same allotment.

Abt Associates Inc. Chapter 2: System Description and Operation 21

The worker removes a Direction CardK from inventory, updates the inventory control log, and inserts the

card into the card reader input/output (I/O) device, which is attached to the CMS. The I/O device reads

the card automatically and adds the card number to the recipient set-up information. The recipient selects

and inputs a five-digit PIN. The system requires double entry of the PIN before it is written to the card.8

Upon completion of PIN selection, the FCO worker helps the recipient identify a maximum of three

authorized retailer locations at which the recipient can collect food stamp benefits by having them posted

to the card. The FCO worker then enters these selections into the CMS. The CMS automatically selects

the local CDHS office as the fourth location at which the recipient can collect food stamp benefits. Each 9

evening, the information contained on the CMS is transferred to the EBT host system over the

CompuServe network.

The card replacement procedure is similar to new card issuance, although a card replacement

authorization form (Exhibit 2-3) must be completed by an ACO worker. Once the form is complete, the

recipient goes to the FCO area, and an FCO worker follows the card replacement procedures.

New EBT clients receive training during the card issuance visit on how to use the EBT system. During

training, which lasts about one hour and is conducted by ACO personnel, recipients attend a classroom

session, watch a video, and obtain “hands-on” experience by completing a practice exercise using actual

POS equipment.

Benefit Issuance and Collection

Each day, Ohio’s CRIS-E system transfers FSP issuance information for individual recipients to the EBT

host. The host processes the issuance information and readies it for downloading to the recipient’s

CDHS offices and those retailer locations selected by the recipient for benefit collection. Supplemental

benefits are downloaded during the next daily settlement process, whereas regular recurring benefits are

held by the host until the assigned issuance date. (Recurring monthly benefits are staggered for collection

by recipients over the first five to 15 calendar days of each month, depending on county.)

During the retailer’s daily settlement of its POS system, a two-way exchange of data occurs between the

retailer and the EBT host. EBT transaction data are uploaded from the retailer’s system to the host, and

the EBT host downloads issuance records and other staged transaction for recipient collection. Staged

transactions include refunds, purchase reversals, re-presentation debits, and manual transactions

processed by retailers for purchases, forced credits, and delivery debits. “Negative files” are also

downloaded to retailers during the settlement process. Negative files contain the primary account number

(PAN) of damaged, lost, stolen, or suspect cards, and are used to prevent transactions with these cards

until the negative flag has been removed.
22 Chapter 2: System Description and Operation Abt Associates Inc.

Exhibit 2-3

ACO/FCO Authorization Form
10 It may appear that the off-line EBT system design places greater demand on recipients than an on-line system because the

recipient must go to a collection location to have benefits loaded onto the card. (In an on-line system, benefits are

automatically posted to the recipient’s account maintained by the host computer.) These benefits, however, are loaded onto

the card during transactions that recipients would perform anyway.

11 The receipt will also reflect any automatically posted activity, such as issuances, other staged credits (e.g., refunds), and

staged debits for manual transactions in calculating the ending card balance.

Abt Associates Inc. Chapter 2: System Description and Operation 23

Benefits may be “collected” (i.e., written to the card at the recipient’s selected issuance site location) and

become available to recipients on a specified benefit availability date. Benefits are added automatically

to the card when the recipient performs any transaction at the POS terminal, such as a balance inquiry or

purchase transaction. All benefits must be collected by the last day of a benefit month, although the 10

benefits do not have to be used during the benefit month. That is, once posted to the card, unused

benefits can be carried over from one month to the next.

The EBT host also downloads the issuance and staged transaction files to each CDHS office as the

offices perform their daily settlements. Recipients can collect benefits at the CDHS office as well as at

selected retailer sites. Recipients might elect to collect their benefits at the CDHS office if they have

other business there. Also, benefit issuances may be available sooner at the CDHS office than at selected

retailers because benefit issuances are not downloaded to retailers until the retailer initiates settlement at

the end of the day.

Benefit Redemption

Food stamp benefits are redeemed through the execution of EBT purchase transactions. The recipient

inserts the card into the POS terminal and enters a PIN. Upon a successful PIN verification, the POS

terminal displays the recipient’s FSP balance on the card. The cashier rings the grocery order, and at the

conclusion of the transaction, the cashier enters the food stamp purchase amount. The POS terminal

displays the purchase amount for the recipient to validate. The recipient validates a correct total by

pressing the “yes” key on the keypad. If the “no” key is pressed, a new purchase amount must be entered

by the cashier and the recipient must again validate the transaction. Both an EBT receipt and a cash

register receipt are provided to the customer. The EBT receipt indicates the beginning card balance, the

purchase amount, and the ending card balance. Because the system uses smart card technology, the 11

transaction is recorded both on the recipient’s smart card and on the retailer’s system. Each recipient’s

smart card retains a transaction history comprised of the last ten transactions executed, and the retailer’s

system retains all POS transactions in memory until retailer settlement occurs. At settlement, the

transaction data are uploaded from the retailer to the EBT host. The account balance for each recipient is

maintained on the EBT host and on the Direction CardK. Therefore, with the off-line system, there are

two balances for each recipient: a card balance and a EBT host-derived balance. The host-derived

balance, however, will not reflect transactions performed since retailer settlement.

Manual Transactions

Retailers can perform manual transactions for recipients when the store is experiencing system or

equipment problems. Manual transactions differ from regular transactions because the Direction CardK

is not used. Instead, the store calls EBT Customer Service to request approval for the transaction; the

retailer provides the recipient name, PAN, purchase amount, store number, and the type of manual
12 Codes are used to identify four types of manual transaction: purchases, refunds, forced credits, and delivery debits.

24 Chapter 2: System Description and Operation Abt Associates Inc.

transaction to the Customer Service agent. Customer Service enters the transaction information into the 12

EBT host. The system checks the negative file, the host-derived balance, and any outstanding manual

transactions for the card. If the transaction is approved, based on the host-derived balance, the EBT host

assigns the transaction an authorization number, provides a check digit (a number generated through a

mathematical algorithm that is used to verify that the underlying information was entered into the system

correctly), and places the transaction in a pending file. The Customer Service agent provides the

authorization number to the store cashier, who completes a manual transaction receipt. The recipient

signs the receipt, and the retailer provides one copy to the recipient and keeps the other copy.

When the system becomes available, the information from the manual purchase receipt must be entered

into the retailer’s POS system. The entry of the manual transaction information into the system requires

the use of the manager’s password. The one exception is for delivery debits, which are used to

accommodate the inclusion of certain special types of retailers, such as “meals on wheels” and certain

food cooperatives, without providing a special mobile terminal. Because these retailers do not have EBT

equipment, they provide their receipts to the CDHS, and the transaction information is entered into the

system by the FCO.

Retailers receive credit for manual purchases and delivery debits after the EBT host receives an

acknowledgment that the transaction has been written to the recipient’s card. Manual refunds and forced

credits are “settled” from a retailer’s settlement on the day they are entered into the POS system.

Retailer Settlement

The process for reimbursing retailers for food stamp redemptions begins with the retailer’s daily

settlement with the EBT host. The retailer chooses a convenient time for performing the end-of-day

settlement transaction. Retailers can activate settlement each day, but many retailers choose automatic

daily settlement, with settlement initiated automatically at a specific time each day. When retailers settle,

the POS system accesses the EBT host. All POS transactions conducted at the store since the last

settlement are uploaded to the EBT host, and the negative files, issuance records, and other data are

downloaded to the retailer. Upon receipt of the retailer settlement data, the EBT host verifies that the

retailer identification is valid and that the detail records in the batch equal the totals in the header and

trailer records. The host also assigns a settlement reference number that is unique to the retailer and to

the batch. A confirmation receipt indicating a successful settlement is printed at the retailer terminal. 

The receipt includes the retailer name, address, and phone number; the settlement amount; and the

settlement reference number. Successfully performing end-of-day settlement clears all transaction data

from the retailer’s system.

The Federal Reserve system maintains an automated clearinghouse (ACH) network for handling

electronic funds transfers between member banks, and this network is used to reimburse retailers for the

net total of their daily EBT settlement. After the Direction CardK system settles with each retailer at the

end of the day, the EBT host prepares an ACH file with records indicating each retailer’s depository

institution and the amount of funds to be deposited to the retailer’s account. SVS sends this ACH file to

National City Bank—Columbus (NCB), which serves as the system’s concentrator bank. In both on-line
13 Europay, Master Card and Visa (EMV) have jointly defined a set of standards for use of smart cards in payment systems. 

See “EMV ‘96, Integrated Circuit card Specification for Payment Systems,” May 31, 1998.

14 An electronic purse is an application in a card where value can be stored.

Abt Associates Inc. Chapter 2: System Description and Operation 25

and off-line EBT systems, the “concentrator” bank must be a member of the ACH network. The

concentrator bank serves as an intermediary in the settlement process, temporarily providing funds for

transfer to retailers’ accounts and then being reimbursed from an EBT account maintained at the U. S.

Treasury.

NCB sends the file to the ACH network. The network debits NCB’s account at its Federal Reserve Bank

for the total value of the daily settlement and transfers funds to each retailer’s depository institution. The

off-set for the transfer of funds from NCB to the retailers’ receiving depository institution will be a credit

to NCB’s federal reserve account. The credit results from a request made each day to the Automated

Standard Application for Payments (ASAP) system operated by the Department of Treasury. The ASAP

system verifies that funds are available through the state’s EBT letter of credit. Once the availability of

funds is confirmed, the Department of Treasury sends the ACH credit entry to NCB’s account at the

Federal Reserve Bank, completing the reimbursement process.

2.5 Differences Between the Direction CardK and PayEase Card

Systems

The Direction CardK system is built directly on the PayEase system. The differences between the two

systems represent a set of incremental improvements to the PayEase system. Several of the changes were

identified during the PayEase pilot operations, and some were partially implemented or tested prior to the

start of the Direction CardK’s statewide rollout. Other changes resulted directly from the specifications

issued in the state’s RFP for a statewide EBT system. Taken together, the changes are designed to

provide a more efficient, effective, and secure system.

The basic differences between the Direction CardK and PayEase systems can be grouped into four main

areas: equipment, operational improvements, reporting, and security. The main changes within each of

the four areas are summarized below.

Equipment

• New smart card. The Direction CardK system uses the PayFlex smart card from

Schlumberger. This card replaces the Schlumberger ME2000 card used for the PayEase

system. The PayFlex smart card was selected because it provides the range of features

needed to be compliant with EMV standards, the capability to establish several “electronic 13

purses” for use with multiple benefit programs, and the ability to provide for an increased 14

level of security over value-adding transactions. (For instance, the chip within the PayFlex

card can be programmed to perform the security functions that were previously performed by

the POS software during the PayEase pilot.)
26 Chapter 2: System Description and Operation Abt Associates Inc.

• Host system upgrade. In order to meet the processing and performance standards

requirements of a statewide EBT system, the EBT host system was upgraded to Tandem’s

Himalaya family of systems, with K2002 RISC-based processors replacing the Tandem

CLX Model 800 processor used for the PayEase system. The system will initially have four

processors; additional processors will be added as needed during the rollout.

• POS terminal equipment. The PayEase pilot used a POS configuration based on retrofitted

VeriFone equipment. Significant software development was required to enable the system to

exchange data with the smart card reader. During the pilot, a multi-lane DataCard 485 POS

platform was tested and implemented in several large stores. The application was then

adapted to a single-lane configuration using the DataCard 680, and tested in one store. The

DataCard POS platform operated successfully and is being used in all retailer locations for

the statewide Direction CardK system.

• Remote software download. The DataCard POS platform makes it possible to remotely

download new software releases for all POS terminals and the personal computers used in

multi-lane stores. This capability was tested and used in those stores that had the DataCard

POS platform installed during the PayEase pilot.

• New balance inquiry terminal. In order to provide recipients with easy access to their card

balances, a separate stand-alone balance inquiry terminal was developed using a VeriFone

SC45 card reader/PIN device. This device can be placed anywhere within a retail

establishment.

Operational Improvements

• Elimination of manager cards. The PayEase pilot used a manager card to complete POS

functions requiring the added security of supervisory personnel intervention, e.g., refund or

manual transactions. This approach became somewhat problematic as the cards and PINs

were frequently lost and the cards sometimes failed, resulting in delays in the checkout lane.

The Direction CardK system eliminates the use of manager cards and instead uses manager

passwords. As many as ten manager passwords can be assigned by each retailer at any given

time.

• Elimination of duplicate card lock. Duplicate card lock prevents the issuing of multiple

cards to the same recipient. In the PayEase pilot, the EBT host was programmed to suspend

any card setup record received from the CMS if the recipient ID was already on the EBT

host and was associated with an active card. The second card was effectively “locked,”

because no benefits would be directed to it. Benefits received by the EBT host from CRIS-E

would be directed to the card associated with the first setup record. Any card that was

locked would be reported to customer service, which would then contact the CDHS office

that issued the second card.

Although effective in a confined pilot area, many believed that the existing process would

prove too cumbersome to manage once the state began to implement statewide, and
Abt Associates Inc. Chapter 2: System Description and Operation 27

recipients moved and changed households over a greater geographic area not under the

control of one CDHS office. Therefore, in the Direction CardK system, the EBT host was

modified to not lock the newly-issued card when an active one existed on the EBT host. 

Instead, the EBT host automatically performs a card replacement transaction when a

duplicate card condition exists. This process transfers any remaining value to the new card

and blocks the previous card.

• Regionalization of negative file. The PayEase pilot sent all negative records to all retailers. 

With the planned growth of the Direction CardK system to statewide operations, it was

recognized that the size of the statewide negative file would probably exceed the memory

capabilities of the DataCard terminals used by single-lane retailers. The concept of

“regionalization” was therefore developed to minimize the size of the negative file needed at

single-lane locations.

Under regionalization, single-lane retailers receive a negative file that contains records of

blocked cards issued only to recipients at CDHS offices within the retailer’s region. Regions

are defined as being, at a minimum, the retailer’s current county plus the immediately

surrounding counties. Depending on the combined size of the caseload served by these

counties, additional counties at the edge of the region might be included as well.

A code designating the retailer’s region is downloaded to single-lane terminals. In addition,

a code indicating the recipient’s county of residence is added to the memory within the

recipient’s Direction CardK. At the start of each EBT transaction at a single-lane retailer,

the POS terminal compares the retailer’s region to the county code on the recipient’s card. If

there is a match, the transaction continues processing. If there is not a match, the terminal

requests entry of an authorization number. The retailer must call Customer Service to

determine that the card is valid and to receive an authorization number. Once this number is

received and entered, the transaction can proceed.

As described in Chapter 5, the system began implementing the regionalization feature when

retailers in the Cleveland area began converting to EBT.

• Forced clear batch. A “batch” is a group of EBT transactions that has not been sent from

the retailer’s POS system to the EBT host for settlement. The PayEase pilot allowed

retailers to clear their batches from their POS systems with the use of a manager card. To

eliminate an inadvertent erasure of the POS database prior to the completion of a successful

settlement, an authorization code from Customer Service is now required as part of the

process to initiate the clearing of a batch from the POS system.

• On-line terminal access to the EBT host. To enhance the efficiency of ACO workers in

the larger county offices, these staff are being provided with on-line access to the EBT host.
15 A “key” in encryption is a data string that, when combined with a source of data and an algorithm, produces output that is

unreadable until it is decrypted.

16 Message authentication refers to any method used to determine the source of data and whether the data was intentionally or

unintentionally altered during the transmission process.

28 Chapter 2: System Description and Operation Abt Associates Inc.

Reporting

• On-line history. The availability of on-line transaction history was increased to 120 days

for statewide rollout. Only 90 days of history was available during the PayEase pilot.

• Lost and stolen cards. A daily report of lost and stolen cards was created that includes the

PAN, recipient number, reason code, date and time reported, and totals by reason. Prior to

this enhancement, county workers manually tracked cards reported as lost and stolen. In

addition, the EBT host will automatically provide the numbered replacement for a lost or

stolen card anytime an authorization is requested for a card replacement.

• Stale-date notices. The Direction CardK system includes the capability to establish a

dollar value parameter to determine which records are included in stale-date notices sent to

recipients. Both systems automatically generate stale-date notices for cards that have a

balance but have been inactive for 60 or 90 days. With the Direction CardK system the

state can set a threshold amount, below which a notice would not be sent to recipients.

• POS card history. Under the new system, an additional field of information is being

recorded for each transaction maintained on the card, namely, the Category of Public

Assistance (COPA) designator. The Direction CardK system must accommodate multiple

benefit programs, unlike the food stamp-only PayEase pilot. With a multi-program card, the

additional COPA information is necessary to allow recipients to identify what type of

benefits are being used for each transaction.

Security

• Additional use of key security. The PayEase pilot included a “key” encryption strategy for

all value-adding transactions that were generated by the EBT host and added to the card at

the POS. Because the Direction CardK system will serve a much larger number of 15

recipients and retailers, system designers believed that two additional security measures were

merited. The first was to add a unique key to each card. This would ensure that, in the very

unlikely event that the key was “decoded” for one card, the entire system would not be in

jeopardy. The second was to add an industry-standard method of message authentication

(MAC) to POS transactions as they are created and stored on the retailer’s POS system. 16

Special keys maintained on the cards would be used to create the MAC that would be

“decoded” when the transaction reached the EBT host.

• Staging of purchase refunds and reversals. In the PayEase pilot, a recipient received

immediate credit (i.e., value added back to the card) for all purchase transactions that were

reversed and for refunds of all or part of a prior purchase. With the Direction CardK
Abt Associates Inc. Chapter 2: System Description and Operation 29

system, these transactions are still allowed, but they are not instantaneous. First, the

transactions are uploaded from the POS system to the EBT host and then downloaded to the

recipients’ chosen issuance sites for posting to the card. This process allows for all valueadding transactions to be verified by the EBT host and the card prior to its entry into the

EBT system. This change was added as an additional security measure that would be

necessary if retailers were to integrate their store cashier systems to interact directly with the

Direction CardK. With integrated systems there would be no other method to prevent

retailers from adding value into the system.
Abt Associates Inc. Chapter 3: System Design and Development 31

Chapter 3

System Design and Development

3.1 Introduction

As noted in the previous chapter, the Direction CardK EBT system differs somewhat from its

predecessor, the pilot PayEase system. Thus, before the state and vendors could begin statewide

expansion, they needed to modify the design of the existing EBT system and develop the new software. 

This chapter discusses the activities involved in this design and development effort. It is organized into

the following four sections:

• contract procurement;

• system design;

• system development; and

• system testing.

3.2 Contract Procurement

The RFP for the off-line EBT project originally allocated a little over 14 months for system design and

development activities. With a planned contract start date of October 3, 1994, this meant that the EBT

vendor was to begin installing equipment in Montgomery County by early December 1995. Recipient

conversion in Montgomery County was to begin by April 1996. A series of unexpected delays in the

procurement process, however, put the project about 18 months behind schedule, with recipient

conversion in Montgomery County starting in September 1997. A number of factors contributed to the

delay, including extensions to the due date for vendor proposals, delays in awarding the contract, and

delays caused by the lawsuit. Exhibit 3-1 presents key milestones in the procurement process.

The initial procurement process itself took about one year longer than expected. Ohio issued two

addenda to the RFP, which pushed the due date for vendors’ proposals back about two months. The first

addendum indicated that the Ohio Department of Health would be considering using the EBT system for

the delivery of WIC benefits (although vendors did not need to make an immediate response), and that

EBT terminals deployed in retail stores had to be capable of performing third-party on-line functions as

well as off-line transactions. The second addendum clarified the process by which vendor proposals

would be evaluated. Even after proposals were received in July 1994, the process of reviewing and

evaluating the proposals, and then negotiating a final contract, took until September 20, 1995. Owing to

the novelty of the proposed off-line technology, the evaluation panel had numerous questions that had to

be addressed before a contractor could be selected.

The one-year delay created some concern due to the contract status of the pilot EBT system in

Montgomery County. FNS’ contract with NPC for PayEase operations was originally scheduled to end

March 1, 1993. When it was clear that ODHS wanted to continue pilot operations until a statewide

system could be procured, FNS agreed to extend its contract with NPC.
32 Chapter 3: System Design and Development Abt Associates Inc.

Exhibit 3-1

Key Procurement and Contract Events

1993

March 1 Original end date for PayEase demonstration. FNS agrees to extend its contract with NPC by

eight months, with ODHS assuming responsibility for contract costs.

November 1 FNS extends contract with NPC by five months

1994

February 28 ODHS issues RFP for development, implementation, and operation of the Ohio EBT system

April 1 FNS extends contract with NPC by nine months

May 12 ODHS issues RFP Addendum #1

June 27 ODHS issues RFP Addendum #2

July 21 Vendors submit their proposals to ODHS

1995

January 1 FNS extends contract with NPC by six months

January 17 Citibank responds to ODHS clarification request

July 1 FNS extends contract with NPC for fifth and last time

September 20 ODHS signs EBT contract with Citibank

October 27 NPC files suit against Citibank and the state

November 9 Preliminary hearing on NPC’s legal action begins

1996

January 18 Judge rules in favor of NPC, directs Ohio to re-solicit cost proposals from Citibank and NPC

April 25 Citibank submits revised Final Proposal, including NPC as subcontractor

June 17 Ohio approves revised proposal

September 3 FNS contract with NPC expires. Ohio contracts with NPC to continue pilot operations until

December 31, 1996

December 17 FNS approves Direction CardK system

1997

January 1 Direction CardK system begins operations

After ODHS awarded the EBT contract to Citibank in September 1995, efforts to begin development of

the statewide EBT system slowed, and then stopped, due to a legal challenge to ODHS’s contract award

to Citibank. On October 27, 1995, just three days before the scheduled kick-off meeting for the Ohio

EBT project, NPC filed a lawsuit seeking a preliminary injunction to prevent Ohio from pursuing

development of a statewide EBT system with Citibank. The basis of the suit was an allegation that

Citibank’s cost proposal had not been prepared strictly in accordance with the requirements of the RFP,
1 These other activities, which are discussed later in the chapter, include development of various materials, including a system

implementation plan, training materials, and draft language for EBT contracts with retailers. 

Abt Associates Inc. Chapter 3: System Design and Development 33

making it difficult for the state to compare NPC’s and Citibank’s proposed costs. During a preliminary

hearing in November, the court found no grounds for issuing a temporary restraining order or a

preliminary injunction, but it did warn Citibank that any continued contract activity would be at its own

risk. Then, in January 1996, the court found in favor of NPC and directed the state to re-solicit cost

proposals from Citibank and NPC.

A period of negotiations ensued between Citibank and a new subsidiary of NPC, Stored Value Systems

(SVS). Citibank agreed to drop its plan to develop an off-line EBT system from scratch and to include

SVS as a subcontractor in its proposal to Ohio. Under this proposed contractual arrangement, SVS

would serve as processor for all EBT transactions, whereas Citibank would remain as prime contractor. 

Century Technologies, Inc. (CENTECH), another subcontractor to Citibank, would be responsible for

deploying and maintaining POS devices at retailer locations and in county welfare offices.

Citibank submitted its revised proposal to Ohio in April 1996, and Ohio approved the proposal on June

17, 1996. A second kick-off meeting for the project was held on July 9. Thus, the lawsuit delayed the

start of contract activities by about eight months. During the entire procurement period (i.e., from March

1, 1994 through September 3, 1996), FNS extended its contract with NPC a total of five times. The

State of Ohio then contracted with SVS to continue operating the pilot EBT system in Montgomery

County through the end of 1996, in order to provide time to design and develop the new Direction CardK

system.

3.3 System Design

Usually there are three distinct phases associated with moving from a paper benefit issuance system to an

EBT system: the design phase, the development phase (which includes system testing), and the

implementation phase. Although these phases are normally carried out more or less in succession, design

and development activities for Ohio’s Direction CardK system were co-mingled for two reasons. First,

the pilot EBT system had already been designed and needed only a few design modifications before

statewide expansion. Second, the developer of the pilot system was part of the Citibank project team,

and the team had full access to software already developed for the pilot system.

As described below, an EBT system’s design phase encompasses two major tasks. The first task is to

decide exactly how the system will meet the EBT functional requirements specified in FSP regulations

and the vendor’s contract. The second is to prepare a “detailed system design document” to explain the

planned design to state and federal officials. Although other activities are often initiated during the

design phase to ensure completion before the system is implemented, they are not central to the design

process. Exhibit 3-2 identifies the critical design and development milestones. 1
34 Chapter 3: System Design and Development Abt Associates Inc.

Table 3-2

Key System Design and Development Events

July 1993 ODHS submits Planning Advanced Planning document to FNS

February 1994 ODHS issues RFP for the Ohio EBT food stamp benefits distribution system

September 1995 ODHS signs EBT contract with Citibank

October 1995 Initial kick-off meeting for the Ohio EBT project

June 1996 Ohio approves revised proposal

July 1996 Second kick-off meeting for the Ohio EBT project (discussed planned changes to system)

County Advisory Board members observe demonstration of pilot system in Montgomery

County

August 1996 County Advisory Board meets with ODHS and vendors to discuss planned system design

Citibank submits draft Detailed System Design Document

First formal meeting with retailer groups to discuss system design issues

September 1996 Citibank submits revised Detailed System Design Document

October 1996 Citibank team meets with Ohio and FNS to work through final questions regarding system

design

Citibank submits final version of Detailed System Design Document

Second formal meeting with retailer groups to discuss system design issues

FNS responds with comments on draft Acceptance Test Plan

December 1996 Citibank team begins three-day acceptance test of EBT system

FNS approves Direction CardK system

January 1997 Direction CardK system begins operations

February 1997 Citibank submits the Direction CardK Risk Analysis Report

System Design Activities

The RFP for the EBT project delineated the functional specifications for the planned system (i.e., what

the system had to do) as well as other design requirements, including required levels of system

performance, processing speeds, reliability, security, disaster preparedness, and client ease of use. Initial

design work on these requirements began as early as late 1995, when the original Citibank project team

met first with ODHS and then with retailers to discuss the planned EBT system. These design activities

came to a halt on January 18, 1996, however, when the court directed the state to re-solicit cost proposals

from Citibank and NPC.

Design efforts began again when representatives from Citibank, SVS, CENTECH, and ODHS met for

the project’s second kick-off meeting on July 9, 1996. The design task was now quite different than

before. Instead of designing and developing an off-line EBT system from scratch, the new Citibank team
Abt Associates Inc. Chapter 3: System Design and Development 35

could base its efforts on the pilot system already developed by SVS. Although this clearly represented a

significant reduction in needed design effort, eight months had passed since the project’s initial kick-off

meeting. The new system had to be developed, tested, and ready to process EBT transactions in less than

six months (i.e., by January 1, 1997).

The Citibank team brought to the meeting a document describing both proposed general enhancements to

the pilot system and modifications requested by the RFP. (Some of the general enhancements had

already been implemented by SVS as part of the pilot.) Team members went through the proposed

changes one by one during the meeting, seeking agreement from ODHS and FNS representatives so that

work on the Detailed System Design Document could begin. Changes receiving the most attention are

listed in Exhibit 3-3.

Exhibit 3-3

Proposed Changes to System Design

Eliminate the need for a manager card to initiate special functions at retail outlets—use manager passwords

instead.

Adopted.

“Regionalize” the system’s negative file for single-lane retailers.

Adopted.

Ensure a recipient’s ability to obtain a transaction history at the store upon request.

Adopted.

Enable EBT cards to handle two PIN numbers so that a designated “alternate shopper” could use the card.

Not adopted. Citibank indicated that this FNS request would not be possible if the card was to conform

to industry standards adopted for smart card functionality and security.

Eliminate immediate store refunds to a client’s card.

Adopted.

Although not discussed much at the meeting, several new features of the system would entail significant

design and development effort. All of the Verifone POS terminals used during the pilot were to be

replaced with DataCard POS terminals, and the system would switch to new smart cards. These changes

were not simply equipment upgrades. The Verifone POS terminals handled much of the pilot system’s

transaction processing and security functions. Because the RFP for the new system required that retailers

be offered an “integrated” terminal solution if they wanted one terminal to handle both (off-line) EBT

and (on-line) commercial credit or debit operations, the EBT vendor would no longer have complete

control over terminals handling EBT transactions. For security reasons, the Citibank team therefore

needed to move processing and security functionality out of the terminal and into the card itself. The new

card manufactured by Schlumberger could handle this added functionality. Furthermore, it had the

capacity to maintain and process benefit information for more than one program, which was crucial in

light of ODHS’ interest in ultimately adding other programs to the EBT system.
2 The six counties are Montgomery, Belmont, Cuyahoga, Franklin, Hamilton, and Henry.

36 Chapter 3: System Design and Development Abt Associates Inc.

Another issue discussed during the design phase was what came to be known as the “association/

disassociation” issue. The basic point here was what to do if a food stamp household split into two

program-eligible households. Initial solutions offered by SVS and ODHS were considered to be too

convoluted. Eventually, however, an agreed-upon process was adopted shortly before the system’s

acceptance test. The new process required both software changes at the system’s host computer and

procedural changes at the county office.

Input from County Advisory Board

After the initial EBT contract award to Citibank, ODHS formed a County Advisory Board to provide

input to the EBT planning and implementation process. Montgomery County took the lead in organizing

the board, which includes representatives from six counties within the state. Board members met in 2

Montgomery County in July 1996 to observe a demonstration of the pilot EBT system. They then met

the following month with ODHS and the Citibank team to discuss the proposed design of the new

system. Because most of the board members had no experience with EBT, much of the meeting was

spent clarifying how the Direction CardK system would work. Although the more experienced

Montgomery County representative focused her attention on the proposed changes in system design,

ultimately there was little or no critical review or feedback from the Board on the proposed design.

Input from Retailers

ODHS also sought input from several retail groups in Ohio, including the Ohio Grocers Association

(OGA), the Ohio Council of Retail Merchants, and key supermarket chains. Despite the success of the

off-line pilot, OGA and a number of retailers initially tried to dissuade ODHS from pursuing an off-line

system for statewide expansion, arguing that on-line technologies were already proven and more

compatible with grocers’ POS systems. Once the decision to go with an off-line system had been

adopted, however, the retailer groups worked with the state on system design, cost, and implementation

issues.

The main features of the planned design were presented to the retailer groups at an August 23, 1996

meeting, following distribution of the draft Detailed System Design Document. The OGA’s EBT Task

Force then responded with a document entitled “General Concerns and Positions.” The task force

identified the following major concerns:

• The state and Citibank were trying to implement the system too quickly to allow OGA and

the retailer community sufficient time to review the system design, its operating rules, and

specifications for equipment configurations.

• There was little or no information available regarding when the system would be

implemented in different parts of the state.

• No written procedures were available for how cross-border transactions would be handled.
3 For example, suppose a client with $47 of benefits in her EBT card attempted to buy $4.50 in groceries, but the store clerk

inadvertently keyed $45.00 as the EBT purchase amount. She would not be able to access the refunded benefits until they

were posted to her card at a selected store a day or two later.

Abt Associates Inc. Chapter 3: System Design and Development 37

• There was little or no information about plans for “retailer integration,” which referred to

how off-line (EBT) and on-line (commercial debit and credit) functions would be integrated

into a single terminal.

• The state was not planning to pay for deploying POS equipment at all checkout lanes in

most multi-lane stores.

ODHS immediately responded with a letter addressing the retailer concerns. The letter noted that the

rushed schedule applied only to the conversion of retailers in Montgomery County to the new system. 

Thereafter, more time would be available for retailers to review documents and provide comments. With

regard to cross-border shopping, the letter said that county offices would conduct surveys of recipients to

determine whether any out-of-state stores needed to be included in the system. The letter also said that

ODHS and Citibank would be offering retailers several options regarding transaction integration, but that

specific rules had not yet been developed. Finally, with respect to lane coverage, the letter indicated that

ODHS would be complying with FNS rules that tie the number of lanes to be equipped (at no cost to the

retailer) to the monthly level of food stamp redemptions at the store.

A second meeting with the retailer community took place in October 1996. Several of the retailers’

original concerns remained (e.g., lane coverage and integration of on-line and off-line functions), and

others were brought to the attention of ODHS. In particular, the new issues were:

• staging of purchase reversal refunds; and

• regionalization of negative file.

Retailers did not like the planned staging of refund credits to client accounts, because clients would not

have access to the refunded benefits for at least a day or two. Not only did this represent a potential loss

of sales to the store, it also meant that store employees would likely be dealing with angry clients.3

Retailers also were concerned about plans to regionalize the system’s negative file. They worried that

checkout productivity would be reduced due to the need to call Customer Service when an out-of-region

client shopped at their store. ODHS’ response to retailers’ concerns about the staging of purchase

reversals and the regionalization of negative files was to explain that security concerns necessitated the

adoption of these design features.

A third meeting with the OGA occurred late in January 1997. By this time most purely design issues had

been dealt with, so retailer concerns switched to issues relating to system implementation, including:

• Citibank’s proposed retailer agreements;

• equipment footprints;

• service agreements; and

• costs associated with additional terminals and supplies.
4 If the retailer proceeds with the transaction and it is subsequently learned that the recipient’s account did not have sufficient

funds to cover the transaction, the retailer may be able to collect funds in later months in a process known as “representation.” In re-presentation, a limited amount of funds can be subtracted from a recipient’s FSP allotment in later

months.

38 Chapter 3: System Design and Development Abt Associates Inc.

System design documentation will consist of two parts:

1. The Functional Description shall describe the operating environment of the

project, focusing on procedures and work flow. It shall address procedures,

a summary of improvements over the paper coupon issuance process, and

organizational, operational, and developmental impacts of an off-line EBT

project.

2. The System Specification shall address the design of system components. 

It shall identify the selected technology and include system performance

requirements, expected data accuracy and validity. It will identify data

elements, system interfaces, system security and the total system

component configuration.*

RFP, pp. 64-65. *

Retailers also were concerned that the off-line system left them vulnerable to losses related to manual

transactions. In an on-line EBT system, manual transactions are permitted when the store’s EBT

terminal is not working or when communications with the host computer cannot be established. In these

situations the retailer has the option of calling customer service for manual authorization of the requested

transaction. If customer service can access the EBT database, the availability of sufficient funds in the

recipient’s account can be checked and authorization provided. If customer service cannot access the

database, then the recipient’s remaining balance is unknown and the store assumes the risk of not being

reimbursed if it proceeds with the transaction.4

In an off-line EBT system, in contrast, customer service does not know the recipient’s current remaining

balance; that information is contained only in the recipient’s EBT card. Therefore, if an EBT terminal is

not working, there is no way of knowing whether the recipient’s remaining EBT balance is sufficient to

cover the intended purchase. For this reason the system limits manual transactions to $50, and retailers

assume full risk for not being reimbursed. It is the retailer’s option of whether to process manual

transactions.

Manual transactions are likely to be needed less often in an off-line system than in an on-line system,

because an off-line system does not rely on communications with the host computer to gain authorization.

Detailed System Design Document

A basic federal requirement for EBT systems is the preparation of a Detailed System Design Document. 

The box below shows a summary of the Ohio RFP’s requirements for system design documentation.
5 The consulting firm of Booz•Allen and Hamilton was under contract to FNS to help evaluate the technical and security

aspects of the Ohio EBT system.

Abt Associates Inc. Chapter 3: System Design and Development 39

Preparation and review of system design documents has often been problematic and time-consuming for

EBT vendors. One reason for these difficulties has been that vendors are reluctant to provide information

on the detailed specifications of their proprietary software, especially in a document that enters the public

domain. Another reason is the multiple layers of extensive review such documents receive. The detailed

information and extensive reviews have been necessary because system design documentation is used by

FNS to prepare for system testing, which is the point at which FNS certifies the operation of an EBT

system.

As in previous efforts to design EBT systems, final approval of Citibank’s Detailed System Design

Document also proved difficult and time-consuming. According to document reviewers, the biggest

problem was a lack of sufficient detail on exactly how the system would operate. A cumbersome review

process, however, also contributed to delays in approving a final system design.

SVS had primary responsibility for preparing the Detailed System Design Document. The first draft of

the document was submitted by Citibank to ODHS on August 20, 1996 (just in time for the previously

mentioned August 23 meeting with retailers). According to reviewers at ODHS, the document was too

much a restatement of the April 1996 proposal and lacked the detail—including flow charts—needed to

evaluate the planned system fully. Citibank then submitted a revised and—according to ODHS—much

improved document on September 13. A meeting in Columbus was convened on October 7, 1996 to go

over ODHS’ and FNS’ remaining comments on the system design. Most of the meeting centered on

detailed design questions posed by representatives from Booz•Allen and Hamilton. These questions 5

sought clarification on security issues (e.g., system use of passwords, separation of critical functions, use

and management of encryption keys) and communications protocols between terminals and the host

computer. By the end of the meeting, FNS and Booz•Allen seemed satisfied with the information they

had received. The final version of the document was submitted on October 15, 1996, and subsequently

approved by FNS and ODHS.

Aside from the need for greater detail on planned system design and operations, several issues were

discussed during the document review process. One was ODHS’ request that FNS waive the requirement

that all stores authorized to participate in the FSP be equipped with EBT terminals. Because of cost

considerations, ODHS did not want to deploy POS terminals in stores redeeming less than $100 in food

stamp sales per month. ODHS instead wanted these retailers to process manual transactions for their

limited number of food stamp sales. FNS rejected the request because, as described earlier, customer

service has no way of knowing a recipient’s current EBT balance when processing manual transactions in

an off-line EBT system. In addition, this cost-cutting feature was not in ODHS’ negotiated contract with

Citibank. Adopting this policy would have reduced costs to the EBT vendor, but not the cost to the

government.

A second issue was the previously discussed problem about how store terminals could handle large

negative files. The regionalization of negative files was not popular with retailers or FNS because it

required single-lane retailers (whose POS terminals could not handle a statewide negative file) to phone
6 ODHS and Citibank decided to implement the system’s regionalization feature in September 1998, when Cuyahoga County

(Cleveland) began converting recipients to EBT. By this point the system’s negative file had grown too large for the data to

be stored in single-lane retailers’ EBT terminals.

7 All EBT processors are required to submit state-level files to FNS each month that detail all transactions processed during

the month. FNS uses these data to identify potential instances of food stamp trafficking.

40 Chapter 3: System Design and Development Abt Associates Inc.

for verification when recipients tried to shop outside their region. Despite these concerns, the final design

includes the ability to implement regionalization, if needed.6

A final issue was more fundamental. Citibank and ODHS believed that some of FNS’ and Booz•Allen’s

comments on the Detailed System Design Document were too oriented towards on-line EBT systems. 

They argued that off- and on-line EBT systems are sufficiently different that documentation requirements

for the two types of systems should not have to be identical. This debate continued into efforts to test the

system, as described later in this chapter.

3.4 System Development

As mentioned previously, the Citibank team was able to proceed with system development even while the

design process was occurring. The major software development tasks were:

• programming the new PayFlex smart card to perform the transaction processing functions

previously done in the POS terminal;

• writing software to create system files for use by FNS; and 7

• programming the new PayFlex card and the host computer to support the addition of host

reference counters (HRCs).

The addition of HRCs added considerably to the complexity, and the security, of the system. HRCs

ensure that the both the card and the host processor process the same sequence of credit transactions, by

establishing a sequence number for each credit transaction and using that sequence number to calculate

the message authentication code (MAC) for that transaction. The card will not accept out-of-sequence

credit transactions, and only the host and the card have both the HRC and the encryption algorithm used

to calculate the MAC. The POS terminal does not have the capability to generate credit transactions; it

simply stores credit transactions generated by the host. This makes it extremely difficult to add value to

the card without establishing an auditable trail on the host system. In a major change from the

predecessor PayEase system, the Direction CardK relies on the card rather than terminal to perform these

secure message authentication functions.

The security features of the new system were documented in a key deliverable produced by the Citibank

EBT team, the Direction CardK Risk Analysis Plan. The risk analysis document discusses the potential

security risks to the system and how each is addressed by the Direction CardK system design. The risk

analysis plan was submitted to ODHS in February 1997.
Abt Associates Inc. Chapter 3: System Design and Development 41

Also included under system development activities were several tasks that CENTECH performed as part

of preparation for roll out, many of which took the whole duration of the design and development phase. 

These activities included:

• development of the Implementation Plan (described in Chapter 5); 

• development of retailer agreements and a system for executing them;

• development of a procedural approach to conducting site surveys;

• development of a technical and procedural approach to installing equipment;

• development of a technical and procedural approach to equipment maintenance;

• development of the inventory control and distribution system for hardware and cards;

• documenting these systems and approaches and training staff;

• development of the County Training Manual and the procedures documented therein; and

• development of the Retailer Training Manual and the procedures documented therein.

CENTECH had no previous experience in planning or preparing for a state-wide EBT rollout, so it had to

start “from scratch” in determining what needed to be done, how, and how quickly. For this reason, these

system development efforts were more labor-intensive, and therefore more costly, than might otherwise

have been expected. Particularly time-consuming were the development and documentation of all the

technical and procedural approaches to support the installation and maintenance of equipment. In

addition, CENTECH prepared several iterations of both the County Training Manual and the Retailer

Training Manual in response to changes suggested by ODHS.

3.5 System Testing

Any new EBT system delivering food stamp benefits must be certified by FNS before it can be

implemented. This certification process hinges on the system’s “acceptance test,” which is usually a

multi-day event consisting of the following major components:

• An exercise of all system functions and allowable transactions, following a pre-arranged

script, with subsequent review of the system’s management reports to ensure that all

transactions were correctly processed.

• A period of “what-if” testing, during which time test participants try a series of unscripted

actions to make sure that the system correctly processes any attempted transaction or

activity.

• A “stress test” of the system, to ensure that telecommunication links and processing flows

can handle expected levels of system use under full implementation.

• A “live transaction” test, during which time limited food stamp benefits are posted to a small

number of client accounts, EBT cards are issued to the clients, the clients use their cards in a

few EBT-equipped stores to purchase groceries, and retailers’ bank accounts are then

reimbursed for the EBT sales.
42 Chapter 3: System Design and Development Abt Associates Inc.

The Acceptance Test Plan shall include an acceptance test schedule, test

procedures, and test data for evaluating the project. It shall include the

methodology to be used to verify that the off-line EBT system operates in

accordance with Food Stamp Program and RFP specifications. The document

shall summarize all details necessary to operate the off-line system including

system component configurations at each retailer.

RFP, p. 66. *

The acceptance test is usually preceded by a “functional demonstration,” which occurs after basic

development work has been completed. As noted earlier, however, FNS agreed to an ODHS request that

the requirement for a functional demonstration of the Direction CardK system be waived due to the

similarity between the pilot and new EBT systems and the need for an accelerated design and

development schedule. FNS also agreed that the system’s acceptance test could focus on the functional

differences between the old and new systems.

Test Plans

Citibank, as the prime contractor to ODHS for the expanded system, had ultimate responsibility for

preparing the system’s Acceptance Test Plan, and Citibank edited, formatted, and produced the final

document. SVS, however, took the lead in proposing the testing strategy, developing the test scripts, and

writing the majority of the document. SVS’ task of developing the test plan was made easier due to the

fact that they were able to use as a model an existing Acceptance Test Plan developed for SVS’ off-line

EBT system in Wyoming.

The initial draft of the Acceptance Test Plan was submitted to FNS on October 18, 1996, approximately

seven weeks before the scheduled start of the test. FNS responded with its comments a week later. FNS

expressed concern over Citibank’s request that all plans for what-if tests be submitted two weeks in

advance of the test, noting that it is often during the testing period itself that evaluators identify new

scenarios to be tested. FNS also requested additional test scenarios and scripts to cover system

functionality not addressed in the draft plan. Several of the requests dealt with system security, an issue

that became somewhat controversial during the testing period. After several iterations of revisions to the

test plan and subsequent comments, the final Acceptance Test Plan was distributed to test participants at

the beginning of the testing period.

The effects of the compressed design and development period were clearly evident as the parties prepared

for the December acceptance test. The test could not be delayed because transaction processing in

Montgomery County had to be converted to the new system before January 1, 1997, the date when FNS’

contract with SVS for pilot operations was set to expire. At the same time, however, Citibank did not

have an approved Detailed System Design Document until November. The Citibank team was worried

about the lack of approval because any last-minute changes to system design would necessarily require a

change to test plans. As in most efforts to implement EBT systems, the time leading up to the acceptance

test became quite stressful for all parties.
8 Representatives from Abt Associates Inc. and Phoenix Planning & Evaluation were also in attendance.

9 There would be ample time to increase the capacity of the host, as needed, as the system was rolled out throughout the state

on a county-by-county basis.

10 Security keys are the tools used to manage encryption and de-encryption of protected data.

Abt Associates Inc. Chapter 3: System Design and Development 43

Acceptance Test

The acceptance test of the Ohio EBT System took place at SVS’ headquarters in Louisville, Kentucky,

over a three-day period beginning December 9, 1996. Representatives from ODHS, Citibank, SVS,

CENTECH, FNS, and Booz•Allen were in attendance. To test changes in the EBT card and transaction 8

processing flows, POS terminals were set up at SVS to represent a variety of system locations, including

a 12-lane retailer, several single-lane retailers, the Montgomery County Fiscal Control Office (FCO)

Card Management System (CMS), the county’s Assistance Control Office (ACO) Issuance Terminal,

FNS, Customer Service, and the state CRIS-E Certification System.

Five “test teams,” composed of three individuals per team, were selected to test various system functions. 

Over the three days of testing, participants followed specific test scripts and testing procedures

established by SVS. After system initialization and setup on the first day, each day generally began with

a review of system reports on the previous day’s activities. This was followed by scripted tests of

changed functionality within the system and then what-if testing. Stress testing of the host capacity for

large volumes of POS transactions was not done because off-line systems do not authorize each

transaction at the host. Sizing for the host capacity for handling retailer batches, reconciliation, report

generation, and state file transmissions was discussed. The host was sized to handle 66 percent of the

total projected caseload, which was considered acceptable. Live testing is usually done for several cases 9

loaded with about $30.00 each. This demonstrates posting, debiting, and settlement operations. Live

testing was considered unnecessary because of the extensive and on-going operations of the Dayton pilot

and the lack of system changes in these functional areas.

With respect to the what-if testing, representatives from Booz•Allen had developed an extensive list of

what-if test scenarios, many of which were hand-carried to the test. ODHS and SVS both reported that

not having these test scenarios prior to the test was a problem because SVS was not able to prepare the

system in the necessary manner. Also, although SVS had built time into the schedule for what-if testing,

they were not prepared for the large number of tests that Booz•Allen requested. Nevertheless, all testing

was completed within the three scheduled days.

One issue arose during the acceptance test relating to the security of the system. Booz•Allen and FNS

requested that certain security tests of the system be performed, especially in light of the fact that many

security-related details of the system did not appear in the Detailed System Design Document. In

particular, Booz•Allen wanted more detailed information on communications protocols, the message

authentication codes (MACs) used in the EBT cards and back-room PCs in multi-lane stores, and

management of security keys. SVS and ODHS believed that it was not necessary to provide such 10

detailed information, especially because the pilot EBT system had experienced few security problems. 

SVS was also concerned that, in order to respond fully to Booz•Allen’s request for security testing and

review, SVS would have to divulge proprietary business information. Rather than providing this
11 The back-room PC is used for data storage and communications with the host computer. It is configured without a monitor

or keyboard.

44 Chapter 3: System Design and Development Abt Associates Inc.

information, SVS proposed that Booz•Allen attempt to directly breech the security of the card and the

back-room PC.11

In the end, Booz•Allen and SVS had extensive discussions about the security key management, MACing,

and encryption techniques used for the PC and other elements of the system, and SVS was not required to

provide code or documents revealing their proprietary data. Some tests were made to evaluate the

robustness of the security measures, and these were determined to be sufficient.

In general, the acceptance test went quite well with only nine problems reported. Problems that occurred

during the test were reported on Acceptance Test Incident (ATI) reports and were assigned a priority of

between 1 and 4 (with 1 being the most serious and 4 being the least serious). Five of the nine problems

were categorized as level 3 (“minor functional deficiency”) and four were categorized as level 4

(“cosmetic deficiency”). All nine problems were corrected during the three days of the test. A week after

the test, Booz•Allen recommended approval of the system to FNS.

Although the test was deemed successful, Booz•Allen representatives said they would have preferred a

five-day test period, both to give more time for what-if testing and because some off-line system

functions require multiple days to completely process. They also would have preferred a two-week

period after the test to review and evaluate system reports. ODHS and Citibank stressed the need for a

timely approval, however, to allow conversion activities to proceed.

FNS formally approved the system on December 17, 1996. This approval was contingent upon SVS’

successful resolution of all ATIs and presentation of proof thereof (regression script and results), as well

as making appropriate changes to resolve report discrepancies identified in the Booz•Allen report on the

acceptance test. These resolutions and changes were accomplished to the satisfaction of Booz•Allen and

FNS.
1 The costs presented here do not include any costs the vendor incurred between the time the initial contract was awarded in

September 1995 (and contested by NPC, resulting in a rebidding of the project) and the time the present contract was

awarded in June 1996.

Abt Associates Inc. Chapter 4: Design and Development Costs 45

Chapter 4

Design and Development Costs

4.1 Introduction

A primary objective of this evaluation is to quantify the administrative costs associated with the

statewide expansion of the off-line EBT system in Ohio and to compare these costs with those of the

pilot demonstration. Ultimately, the evaluation will examine design and development, implementation,

and operating costs of the Direction CardK system. An analysis of the Direction CardK design and

development costs is the subject of this chapter. Implementation and system operating costs will be

examined in the evaluation’s final report.

This evaluation estimates that the costs of the resources used in the design and development of the

statewide Direction CardK system in Ohio were $2.4 million. This estimate includes costs associated

with modifying the pilot off-line EBT system for statewide expansion (i.e., designing a system to meet

the functional requirements of a statewide EBT system); making significant changes to card, terminal,

and host system software; and testing the system. The design and development costs also include costs

associated with planning and developing procedures for EBT system implementation.

The costs presented in this chapter represent the incremental design and development costs for the

expansion from the pilot EBT system in Dayton to the statewide EBT system, as incurred during the

period of July 1996 through April 1997. Much of the system design and development work necessary to 1

establish a functioning off-line EBT system in Ohio was performed as part of the initial pilot project and

is not included in the current analysis. The costs presented here represent the costs of updating and

modifying the pilot system for statewide use, plus the costs of preparations for statewide implementation.

The pilot system was designed, developed, and operated by NPC for FNS. NPC also designed,

developed, and operated the off-line PayWest EBT system in Wyoming. Clearly, because NPC’s

successor, SVS, is on the EBT vendor team, the design and development costs of the expansion to

statewide off-line EBT are less than they would have been if the system had been designed and developed

independent of the existing systems in Ohio and Wyoming.

4.2 Research Design and Data Sources

The primary data sources for the analysis of design and development costs are reports prepared by the

vendor (Citibank, and its subcontractors, SVS and CENTECH) and data provided by ODHS. It is

important to note that the vendors reported their resource costs, that is, costs that they actually incurred,

irrespective of their billing arrangement with ODHS. All labor costs presented in this chapter include
2 The SVS cost report did not include fringe in its labor costs and did not provide overhead costs. We adjusted SVS’ labor

and overhead costs based on fringe and overhead multipliers used by NPC before NPC formed SVS.

46 Chapter 4: Design and Development Costs Abt Associates Inc.

fringe benefits. Overhead costs were identified by the vendors, but not by the state or county

departments of human services.

The vendors reported their resource costs for July 1996 through April 1997. The vendors’ cost reports

followed a standardized format developed by Abt Associates that shows line-item detail for labor

(including fringe), telecommunications, travel, office space and equipment, supplies, miscellaneous,

administrative terminals, retailer supplies, and indirect costs (including overhead and administration).2

From July 1996 through December 1996, the vendors focused on designing, developing, and converting

to the new version of the EBT system, which became operational on January 1, 1997. The period from

January 1997 through April 1997 included both implementation activity and several development-related

tasks required before system expansion could begin in May.

Although this period was defined as the design and development phase, some resources were spent on

implementation and operations activities during the design and development phase. We separated costs

for the period into three functional categories: design and development, implementation, and operations,

and asked each of the three vendor firms to provide information about the allocation of staff time among

the three functional categories. These reports not only provided information on the allocation of the

effort among design and development, implementation, and operations activities, but also provided

information about the level of staff effort on the project during the period.

Data on ODHS costs consist of standard cost reports that show detailed information on costs for

personnel, computers, travel, and miscellaneous. Labor costs were allocated to the EBT project based on

the planned level of staff effort identified in the July 1996 Implementation Advanced Planning Document

(IAPD). In other words, these are budgeted rather than actual costs. Non-labor costs were those

allocated directly to the EBT project by the ODHS accounting department. The state incurred design and

development costs primarily during the period of July 1996 through December 1996, and only costs for

that period are included in this analysis.

The design and development costs incurred by CDHS were limited to the time spent by the six county

staff who served on the County Advisory Board. Costs for CDHS participation on the County Advisory

Board were estimated using information from Montgomery County about the cost of providing a

Montgomery County representative to the board.

The cost estimates in this chapter do not include any expenses incurred by FNS for oversight of the Ohio

EBT project. Unlike the approach used in previous EBT evaluations, the study design explicitly excludes

FNS costs, which are considered to be immaterial to future decisions about the choice of EBT

technology. FNS did, however, conduct oversight activities through the efforts of headquarters staff,

Midwest Regional Office staff, and technical assistance contractors.
Abt Associates Inc. Chapter 4: Design and Development Costs 47

4.3 Overview of Design and Development Costs

Total design and development costs for the Direction CardK system were $2.40 million, as shown in

Exhibit 4-1. The EBT vendor team incurred the overwhelming majority of these costs, $2.26 million. 

The balance of $137,426 was incurred by ODHS, with a minimal level of expenses incurred by county

departments of human services.

As shown in Exhibit 4-2, the design and development process was very labor-intensive, with labor and

associated overhead costs making up the bulk of the costs. Labor costs were $1.81 million, or 75 percent

of the total design and development cost. Design and development-related labor totaled 22.4 personyears.

Exhibit 4-1

Total Design and Development Costs

Vendor ODHS County Total

Labor $1,706,456 $100,727 $2,754 $1,809,937

Telecommunications $39,577 $0 $0 $39,577

Travel/vehicle leases $21,921 $2,166 $0 $24,087

Office space/equipment $294,386 $0 $0 $294,386

Stationery and supplies $64,896 $0 $0 $64,896

Miscellaneous $36,981 $122 $0 $37,103

Computers $0 $34,411 $0 $34,411

Overhead $92,423 $0 $0 $92,423 a

Total costs $2,256,640 $137,426 $2,754 $2,396,820

Total person-years 21.5 0.9 0.04 22.4

a ODHS and CDHS overhead costs are included in the labor line-item.
48 Chapter 4: Design and Development Costs Abt Associates Inc.

Exhibit 4-2

Total Design and Development Costs, by Cost Category

4.4 Vendor Design and Development Costs

Citibank and its subcontractors incurred a total of $2.26 million in resource costs for design and

development, as shown in Exhibit 4-3. Of this, $1.71 million was labor costs. The vendor team’s

resource costs are higher than its billed costs; Citibank billed ODHS a total of $1.24 million for

deliverables related to system design and development.

Exhibit 4-3

Vendor Design and Development Costs

Citibank CENTECH SVS Total

Labor $155,773 $1,173,972 $376,710 $1,706,456

Telecommunications $3,376 $36,201 $0 $39,577

Travel/Vehicle leases $3,189 $17,471 $1,262 $21,921

Office space/Equipment $59,264 $235,122 $0 $294,386

Stationery and supplies $43,299 $21,597 $0 $64,896

Miscellaneous $8,646 $28,026 $309 $36,981

Overhead $39,540 $7,489 $45,394 $92,423

Total costs $313,088 $1,519,878 $423,675 $2,256,640

Total person-years 1.2 13.5 6.8 21.5
Abt Associates Inc. Chapter 4: Design and Development Costs 49

Exhibit 4-4

Vendor Design and Development Costs, by Cost Category

Citibank

As prime contractor for the project, Citibank managed the overall contract, provided overall project

management, and oversaw the work of CENTECH and SVS. Citibank expended $313,088 in design and

development costs. About half of this represents labor costs associated with the two Citibank staff

assigned to the project, the project director, and the assistant project director.

Total design and development-related labor for Citibank was 1.2 person-years. Between July and

November 1996, the Citibank project director spent 90 to 100 percent of his working time on system

design and development activities, and 80 percent of his time from December 1996 through April 1997. 

The assistant project director spent 90 to 95 percent of her work time on design and development in

November and December 1996, and 80 percent of her time from January through April 1997.

Citibank established an office in Columbus to house its EBT project staff. As a result, the main nonlabor costs were office space and equipment, stationery and supplies, and overhead (see Exhibit 4-3).

Century Technologies, Inc.

CENTECH incurred $1.52 million in design and development costs, including $1.17 million in labor

expenses. CENTECH’s labor costs are associated with 18 staff people spending an average of 82

percent of their work time on design and development. The total design and development labor

expenditure represents 13.5 person-years of effort. The primary non-labor costs were for office space

and equipment, supplies, and telecommunications (see Exhibit 4-3). Telecommunications costs included

establishing and equipping a telephone center in preparation for the implementation phase.
50 Chapter 4: Design and Development Costs Abt Associates Inc.

As described in Chapter 3, CENTECH was involved in many tasks during the design and development

phase. In particular, CENTECH was responsible for the following activities: developing procedures for

contacting retailers and executing agreements with them, developing procedures for equipping retailers

with EBT equipment and training them on use of the equipment, and writing the Retailer Training

Manual, the County Training Manual, and the Implementation Plan.

The largest portion of CENTECH’s effort was devoted to developing a system for site surveys and

establishing equipment installation and maintenance systems. These tasks required the development and

documentation of all the technical and procedural steps to support the installation and maintenance of

EBT equipment. In addition, the development of the training modules for retailers and counties

accounted for a large portion of labor resources. Finally, the process of planning for implementation

required job-stream analysis to determine what needed to be accomplished and how quickly. 

CENTECH’s design and development costs—representing two-thirds of the EBT vendor team’s costs—

are relatively high in part because CENTECH was not previously in the business of installing EBT

equipment. Therefore, CENTECH incurred “start-up” costs that a firm with more experience and with

the necessary infrastructure already in place would not have incurred.

Stored Value Systems

SVS was responsible for completing the technical work required to revise the off-line EBT system for

statewide expansion. Key areas of responsibility included:

• drafting the Detailed System Design Document;

• enhancing the security of the system;

• refining card, terminal, and host system software; and

• acceptance test planning, execution, and reporting.

SVS incurred $423,675 in design and development costs, almost all of which was labor costs. SVS’

labor costs are associated with 17 staff people spending an average of 44 percent of their work time on

design and development. The total labor expenditure on design and development was 6.8 person-years.

4.5 Ohio Department of Human Services Design and Development

Costs

ODHS directly incurred a total of $137,426 in design and development costs, excluding costs billed to

the agency by Citibank, as shown in Exhibit 4-5. These costs were incurred on the following design and

development activities: review of and comment on the Detailed System Design Document, the

Acceptance Test Plan, the Acceptance Test Report, the Implementation Plan, the Risk Analysis Report,

and manuals and training materials; development of the Implementation Advanced Planning Document

(IAPD); software development for CRIS-E; meeting with the Ohio Grocers’ Association for recruitment

of retailers; and conducting the acceptance test. The bulk of these costs, $100,727, were direct labor

costs associated with the three ODHS staff people working on the EBT project. The budget called for the

three staff to spend an average of about 60 percent of their time on design and development activities

during a six-month period, for a total labor commitment of 0.9 person-years. The balance of ODHS’

direct costs were for computers, travel, and miscellaneous items.
Abt Associates Inc. Chapter 4: Design and Development Costs 51

Exhibit 4-6

ODHS Design and Development Costs, by Cost Category

Exhibit 4-5

ODHS Design and Development Costs

Total

Labor $100,727

Travel $2,166

Computers $34,411

Miscellaneous $122

Total $137,426

4.6 County Design and Development Costs

Most counties did not incur costs during the design and development phase of the expansion of the offline EBT system in Ohio. The six county departments of human services that participated on the County

Advisory Board, however, incurred expenses related to the participation of county staff on the board. 

The members observed a demonstration of the pilot system in Montgomery County in July 1996 and met

with ODHS and vendors to discuss the planned system design in August 1996. Each of these meetings
3 The estimate is based on six members with a typical salary of $48,000 plus 53 percent fringe, each spending a total of

twelve hours on committee-related activities. (The fringe rate includes pay for all types of leave as well as outlays in

addition to salary.)

4 Glickman et al., The Impacts of the Off-line EBT Demonstration on the Food Stamp Program: Volume I – Impacts on

Administrative Costs, U.S. Department of Agriculture Food and Nutrition Service, April 1994. The original cost of $2.3

million, incurred from 1990 to 1994, has been adjusted for inflation, and FNS’ share ($0.5 million in 1997 dollars) has

been excluded for purposes of comparison. For the pilot project, all parties reported their actual costs, except for unbilled

overtime spent by vendor personnel.

5 Elwood et al., Issues in Planning Off-line EBT for the WIC and Food Stamps Programs: Interim Evaluation of the

Wyoming Smart card Demonstration, Cambridge, MA: Abt Associates Inc., April 1996. The original cost of $1.3 million

has been adjusted for inflation.

52 Chapter 4: Design and Development Costs Abt Associates Inc.

lasted approximately one-half day. The total county costs associated with activities of this committee

are estimated at $2,754. The total labor commitment was approximately 0.04 person-years. 3

4.7 Comparison of Design and Development Costs to the Pilot

As stated previously, this evaluation estimates the design and development costs for the statewide

Direction CardK system to be $2.40 million. This is roughly comparable to the $2.1 million needed by

the state, Montgomery County, and the EBT vendor for the design and development of the off-line EBT

pilot in Montgomery County, although the two estimates are based on different types of cost data and

cover different sets of activities.4

The costs to design and develop the pilot system represent the creation of the off-line system from the

ground up, whereas, to a great degree, Ohio’s statewide system was built upon the pilot system and the

off-line EBT system in Wyoming. In this respect, we would expect the design and development costs of

the statewide expansion to be lower than those for the pilot system. SVS’ costs of $423,675 for the

design and development of the Direction CardK system were, in fact, only a fraction of the almost $1.9

million (in 1997 dollars) incurred by NPC for the design and development of the pilot off-line EBT

system. The statewide design and development costs, however, include the costs to put into place the

systems, procedures, and infrastructure necessary for a multi-year roll-out involving all 88 counties in

Ohio. The pilot system, on the other hand, involved the conversion of less than one full county from

paper food stamps to off-line EBT.

The start-up costs for the Ohio statewide EBT system were quite a bit higher than the $1.4 million in

design and development costs estimated for the off-line PayWest EBT system in Wyoming. Although 5

the Wyoming system also built directly on the Dayton pilot project, most design and development costs

were related to adding the WIC program to the system. The WIC program is fundamentally different

from the FSP or cash-based assistance programs, in that the benefits are issued as a prescription for

specific foods. Like the Dayton pilot, the Wyoming system was originally implemented on a very small

scale and did not require the extensive implementation planning effort required by statewide rollout in

Ohio.

In a sense, the full set of state and vendor resources invested in the design and development of the

Direction CardK system includes a portion of the $2.1 million design and development cost for the
Abt Associates Inc. Chapter 4: Design and Development Costs 53

Dayton pilot, plus a portion of the $1.3 million in design and development costs for the Wyoming

project, as well as the $2.4 million spent by ODHS and the Citibank team. There has been, however, a

great deal of repetition in documentation, testing, implementation and other activities that did not directly

contribute to the current generation of off-line EBT technology. Thus, another state and vendor starting

from scratch would probably spend more than $2.4 million to achieve the same result, but certainly much

less than the combined $5.8 million cost of design and development for the three projects.

At present, the Direction CardK system serves only the FSP, so all of the design and development costs

are attributed to the FSP. With some modification, however, the system has the capability to deliver cash

assistance benefits and, with some further development, WIC benefits as well. As of the fall of 1998,

ODHS was finalizing plans regarding whether and when to add these benefits to the EBT system. If the

Direction CardK system is ultimately used to deliver other assistance as well as FSP benefits, a portion

of the costs of joint system design and development will be attributable to the other assistance programs.
Abt Associates Inc. Chapter 5: System Implementation 55

Chapter 5

System Implementation

5.1 Introduction

On January 1, 1997, the Citibank team converted those food stamp recipients using the PayEase system

in Montgomery County to the Direction CardK system. To accomplish this conversion, the team

installed new POS terminals in retailer locations and issued new EBT cards to recipients. These actions

marked the start of the planned statewide expansion of the Direction CardK system, an expansion that is

expected to take approximately two and one-half years to complete.

Due to the extended period over which the system will be implemented statewide, the evaluation of the

off-line EBT project is splitting its examination of implementation activities into two phases—“early

implementation” and “late implementation.” The early implementation phase includes all expansion

activities through March 1998, a period of 15 months. During this period, ten counties in the

southwestern part of the state began converting recipients to the Direction CardK system. County

administrators in all ten counties were contacted to determine their experiences with the conversion

process. Evaluation staff also interviewed representatives of ODHS and the EBT vendors to gain as

complete a picture of implementation activities as possible.

The key findings with regard to early implementation efforts include:

• Implementation efforts are generally going well. Some unexpected problems have arisen,

but most have been minor.

• The parties involved in implementing off-line EBT have done a good job of communicating

and cooperating with one another. ODHS and the Citibank team have actively sought

feedback from counties, retailers, and recipients, and they have used this information to

improve their implementation strategies. Counties have taken the initiative in reporting

problems and in seeking assistance from ODHS and Citibank.

• County staff report that they prefer the EBT system to the paper coupon system. EBT has

eliminated the liability associated with lost and stolen coupons and opened up new and more

challenging employment opportunities. County staff also say that recipients seem pleased

with the Direction CardK system. Finally, both county staff and a representative of the

Ohio Grocers Association say that retailers appear to prefer the EBT system.

• In completing statewide conversion, ODHS and the Citibank team will face additional

challenges. These will include addressing hardware and software problems that have been

reported during early implementation, and dealing with the higher level of activity required

to convert Cuyahoga County (Cleveland) to off-line EBT.
56 Chapter 5: System Implementation Abt Associates Inc.

5.2 Sequencing of System Implementation

As noted, the Direction CardK system began operations on January 1, 1997, when approximately 7,700

food stamp recipients using the PayEase system were converted to the new system. After a planned

“shakedown” period of operating the new system with this caseload, the first step in expanding the

system was to convert the remaining 7,500 food stamp recipients in Montgomery County to EBT. 

Before this expansion could begin, the Citibank team first had to equip all FSP-authorized retailers in the

county with EBT terminals and train retailer staff in how to use the equipment. Thus, in March 1997,

CENTECH began equipping retailers in Montgomery County outside the area served by the PayEase

pilot. In August, the Montgomery County Department of Human Services began converting food stamp

recipients from food stamp coupon issuance to EBT issuance. These recipients began receiving benefits

through the EBT system in September 1997. All food stamp recipients in Montgomery County were

converted to EBT by January 1, 1998, five months after county expansion began.

With no prior EBT experience, conversion activities in other counties are following a somewhat different

pattern than in Montgomery County. Conversion begins with a group meeting with program-authorized

retailers in a county, followed by signed agreements between Citibank and the retailers, site visits to the

stores, and equipment installation and retailer training. In a parallel set of activities, CENTECH installs

EBT equipment in the county offices and trains county staff in EBT-related functions. County staff then

begin converting recipients to the Direction CardK by issuing them EBT cards and providing EBT

training. Many counties are converting food stamp recipients to EBT when they come to the office for

certification or recertification, although some counties have recipients come to the office specifically for

EBT card issuance and training.

Plans call for food stamp recipients in Ohio to be converted to EBT as 14 groups of counties, or

“clusters,” are sequentially equipped for the new system. Exhibit 5-1 shows the 14 clusters and the order

in which they will be converted to EBT. The ten shaded counties in the lower left of the map are those

included in this chapter’s description of the early implementation phase. Exhibit 5-2 lists all 14 counties

in the first two clusters, with the ten shaded counties shown in italics. As shown in the exhibit,

conversion activities started in six of the nine counties within the first cluster by October 1997. 

Conversion activities then began in the second cluster of counties. The ten counties interviewed for this

report contain approximately 17 percent of the retailers and 18 percent of the food stamp recipients who

will ultimately be converted to the Direction CardK system. They include both small, rural counties

(e.g., Darke and Preble) and large, urban counties (e.g., Montgomery, which includes Dayton, and

Hamilton, which includes Cincinnati, the state’s second largest city).

By May 1998, conversion activities had begun in all counties in the first two clusters. In June, the

Franklin County Department of Human Services, which is in Columbus and is part of the third cluster of

counties, began converting recipients. The following month, one office within Cuyahoga County, which

includes Cleveland and is in the fourth cluster, began recipient conversion. Thus, the pace of system

implementation has picked up in the second half of 1998. The state plans to have all food stamp

recipients converted to the Direction CardK system by July 1999.
Abt Associates Inc. Chapter 5: System Implementation 57

Exhibit 5-1

County Clusters to Be Converted to EBT
58 Chapter 5: System Implementation Abt Associates Inc.

Exhibit 5-2

Counties Converted to Off-line EBTa

County

FSP Caseload

(July 98)

EBT Caseloadb

(July 98)

Month

Conversion

Startedc

Duration of

Conversion

(months)

Cluster 1

Montgomery 14,458 15,033 Aug 97 5

Greene 2,055 2,167 Sept 97 6

Preble 502 529 Sept 97 3

Darke 578 601 Oct 97 7

Miami 1,119 1,202 Oct 97 4

Clark 4,803 5,141 Oct 97 6

Shelby 578 612 Apr 98 3

Champaign 612 485 May 98 3

Mercer 431 308 May 98 5

Cluster 2

Butler 5,067 5,497 Nov 97 7

Hamilton 22,888 18,404 Dec 97 10

Warren 1,122 1,206 Jan 98 5

Clermont 1,900 2,189 Feb 98 5

Clinton 629 712 May 98 2

a Counties interviewed for this report are shown in italics.

b EBT caseload figures have been compiled from vendor documents that report the number of EBT issuances each

month. Because issuances include supplemental issuances as well as regular recurring issuances, the actual EBT

caseload is somewhat less than indicated in the exhibit.

c First month in which EBT training and card issuance began.

5.3 Implementation Plan

Much of the planning required to implement the Direction CardK system was in place before statewide

expansion began. For instance, many of the planning documents prepared during the Dayton pilot were

revised for statewide implementation. In addition, a detailed Implementation Plan was prepared during

the design and development phase. The Implementation Plan outlined major tasks associated with

statewide expansion of off-line EBT and specified the dates on which the tasks were to occur.
Abt Associates Inc. Chapter 5: System Implementation 59

The Implementation Plan called for clusters of counties to be converted to EBT at about the same time. 

Most clusters include a major metropolitan area and several surrounding counties. (Thus, for instance,

Dayton is the major metropolitan area in the first cluster, Cincinnati in the second cluster, Columbus in

the third, and Cleveland in the fourth.) This clustering approach allowed the Citibank team to focus its

conversion efforts in one or two geographic areas at a time. In determining when counties would be

converted to off-line EBT, the Citibank team took two main factors into account. First, the team was

interested in getting as many counties converted as quickly as possible. Second, the team wanted to gain

experience in smaller counties before beginning conversion in the largest counties—Hamilton, which

contains Cincinnati, and Cuyahoga, which contains Cleveland.

The Implementation Plan outlined the main tasks and time frames associated with implementing off-line

EBT in each county. The retailer conversion activities identified in the Implementation Plan included the

following:

• presenting off-line EBT at retailer meetings in each metropolitan area;

• mailing information packets to retailers;

• obtaining signed agreements from retailers;

• establishing retailer accounts on the EBT system;

• wiring stores;

• installing equipment; and

• training retailers.

The county office conversion activities identified in the Implementation Plan included:

• mailing letters to EBT coordinators in each county;

• completing site visits;

• setting up accounts for counties;

• installing equipment; and

• training county staff.

Although the Implementation Plan outlined the main tasks and time frames, it was necessary for the

Citibank team to specify further its plans for working with each county and each retailer. For example,

although the date that each county was to be trained and equipped was projected in the Implementation

Plan, the actual dates were left to the discretion of the counties, within specified ranges. CENTECH took

the lead on the time-consuming task of establishing dates to equip counties and train county staff. This

task was especially time-consuming when county staff changed their minds about when they wanted to be

equipped, where they wanted equipment placed, and when they wanted to be trained.

Additional planning took place early during the implementation phase. This planning included continual

meetings with the Ohio Grocers Association (OGA), Kroger’s (the largest food retail chain in the state of

Ohio), community organizations, and selected counties. It also included revising several existing

planning documents, and revising the tasks and timeframes associated with converting retailers and

county offices.

During the early implementation phase, ODHS and the Citibank team continued to plan and meet with

the OGA. Meetings between Citibank and the OGA were held as needed during early implementation. 
1 For stores redeeming less than $1,000 in FSP benefits each month, one free EBT terminal would be provided. Two lanes

would be equipped for free if the store redeemed between $1,000 and $6,000 in FSP benefits each month. For stores

redeeming more than $6,000 in benefits per month, the percentage of lanes to be equipped would be either 50 percent or

the percent required by EBT regulation, whichever was higher. In the majority of cases, 50 percent of grocers’ lanes are

being equipped. The ODHS estimates that this more liberal method of calculating the number of free terminals will require

that approximately 1,800 more EBT terminals be deployed than originally projected.

60 Chapter 5: System Implementation Abt Associates Inc.

On average, meetings were held once every four to six weeks. Sometimes, however, two or three months

passed between meetings. There was only one main issue on which ODHS and the Citibank team

disagreed strongly with the OGA. The OGA wanted ODHS and the Citibank team to equip 100 percent

of grocers’ lanes with off-line EBT equipment. ODHS and Citibank felt that this was not feasible. A

compromise solution was reached prior to rollout. This compromise solution involved using a formula to

determine how many lanes were to be equipped.1

Although ODHS had been quite involved in the more general planning that took place during the design

and development phase, ODHS was less involved in the detailed planning that took place during the early

implementation phase. ODHS staff, however, assisted the Citibank team in preparing planning

documents, attended planning meetings, and assisted the Citibank team with day-to-day problem-solving

activities.

5.4 Retailer Conversion Activities

Within the Citibank team, CENTECH has responsibility for converting retailers to the Direction CardK

system. As discussed in the next section, CENTECH also handles conversion of CDHS offices. Retailer

conversion activities are usually scheduled prior to county conversion activities because of the time

needed to equip all program-authorized retailers within a county. In small counties early in the

implementation phase, however, retailers and county offices were sometimes prepared for conversion

simultaneously.

As part of its effort to prepare retailers for EBT, the Citibank team prepared an introduction package that

included a letter and a brochure explaining the new Direction CardK system. The Citibank team also

held a series of meetings to inform retailers about off-line EBT. During these meetings, Citibank staff

and ODHS staff gave presentations about the new system and answered retailers’ questions. One

meeting was held in each cluster of counties. At these meetings retailers raised a number of concerns and

questions. In cases where issues raised at retailer meetings were not fully resolved during the meeting,

ODHS and the Citibank team worked with the OGA to resolve the issues successfully.

Once the initial meeting with county retailers had been completed, CENTECH sent an information packet

with a retailer agreement form to all retailers. The agreement form represented the basic contract

between the retailer and Citibank to provide EBT services. Retailers were asked to completely fill out the

agreement, sign it, and return it to CENTECH. With a signed agreement in hand, the Citibank team

would establish an account for the retailer on the EBT host and initiate efforts to equip and train the

retailer.

This approach did not work particularly well, often because retailers either had trouble or were otherwise

delayed in filling out the agreement. Responding to feedback from retailers, the Citibank team decided to
Abt Associates Inc. Chapter 5: System Implementation 61

take a new approach to securing signed retailer agreements. First, as before, CENTECH mailed out the

information packets. This mailing was then followed with a telephone call, during which time

CENTECH staff asked questions about the retailers’ sites and provided retailers with additional

information about off-line EBT. These conversations allowed CENTECH to collect information and

address the concerns of reluctant retailers. At the end of the telephone calls, CENTECH had all the

information it needed to complete the retailer agreements and send them out for signature. Once retailers

began receiving follow-up phone calls and retailer agreements that were filled out in advance, retailers

were much quicker to sign the contracts and send them back to Citibank.

Retailer installation was relatively straightforward once planning and preparation activities were

completed. After retailers returned signed agreements, CENTECH authorized retailers to use the

Direction CardK system. SVS then established an EBT account on the host system for each retailer, and

CENTECH shipped equipment to retailers via UPS. Shortly after the equipment arrived at a particular

store, a CENTECH installation crew would install the equipment. Finally, CENTECH set up a training

appointment with each retailer. The trainers helped retailer staff learn how to use EBT equipment

properly and provided a manual with operating instructions.

5.5 County Conversion Activities

It took more work to prepare counties in Ohio for off-line EBT than Citibank expected. In other states,

Citibank was able to send EBT information packets to a central office, but because Ohio is a countyadministered state, the Citibank team had to deal with each county individually. This required that

CENTECH make many phone calls to the individual EBT coordinators in each county to plan the details

of preparation for off-line EBT.

As part of its effort to prepare counties for conversion to off-line EBT, ODHS and Citibank developed

and distributed an introduction packet that introduced counties to off-line EBT. This packet contained a

letter and a short informational brochure. After sending letters, CENTECH staff contacted counties by

phone. During these phone calls CENTECH asked a number of questions, and also answered some of

the counties’ questions about off-line EBT. During this phone call CENTECH staff also set a date for a

site visit to each county.

The site visit involved a one-hour presentation, a video describing the Direction CardK system, and a

demonstration of off-line EBT equipment. CENTECH staff also examined counties’ physical facilities

during site visits. This allowed CENTECH and the counties to jointly determine where off-line EBT

equipment would be placed. In some cases, CENTECH staff discovered that little work was required to

install off-line EBT equipment; in other cases, it was necessary to cut through floors to access the needed

electrical and phone lines. CENTECH staff worked closely with county staff, and helped county staff

think through when and where off-line EBT equipment should be placed. Factors such as traffic flow and

space requirements were taken into account in determining the location of equipment.

After site visits, the Citibank team ordered the equipment needed to convert counties to off-line EBT. 

This equipment included computers, modems, and POS terminals. Counties were provided with standalone computers for off-line EBT. These computers allow the counties to communicate with both SVS’

system host computer and ODHS’ main processing computer through use of modems and terminal

emulation adapter cards. A few counties were also provided with Customer Service Terminals (CSTs). 
62 Chapter 5: System Implementation Abt Associates Inc.

These terminals allowed counties to obtain authorization codes from SVS’ main off-line EBT processing

computer. The authorization codes were required for some EBT card issuance and replacement

functions.

Although ODHS and the Citibank team provided substantial guidance and assistance, CDHS staff were

also responsible for preparing for conversion to EBT. Each county prepared for off-line EBT in a

different way. For example, making appropriate staffing changes was one of the more important

activities associated with county preparation for off-line EBT. Guidance regarding staffing changes was

provided by ODHS and the Citibank team in the form of suggested staff positions for off-line EBT. 

These staff suggestions were developed well before implementation and included the following positions:

• Fiscal Control Officer—responsible for card issuance and terminal-based transactions that

update Direction Cards and the EBT computer.

• Assistance Control Officer—responsible for assisting clients in addressing issues by

diagnosing problems presented by recipients, preparing appropriate approval forms, and

contacting SVS when necessary.

• Card Inventory Manager—responsible for managing the card inventory.

• Trainer—responsible for training clients.

• Supervisor—responsible for overseeing the work of the Assistance Control Officer, Fiscal

Control Officer, Card Inventory Manager, and Trainer.

The system design called for these positions to be staffed by different people. In other words, the Card

Inventory Manager was not supposed to also serve as an Fiscal Control Officer or Assistance Control

Officer. In practice, however, CDHS staffing patterns varied considerably. In small offices, individual

staff members often filled multiple roles. For example, a single staff member might serve as Assistance

Control Officer, Fiscal Control Officer, and part-time trainer. In small county offices there were not

enough staff to separate roles according to the state’s guidance. Also, in smaller counties it was

important for each staff member to be capable of playing multiple roles. Otherwise, there might be no

one available to cover for an absent staff member. In order to learn all the roles, staff performed multiple

duties on a regular basis.

Prior to EBT implementation, counties used a variety of benefit issuance systems. As a result, CDHS

offices varied considerably in their pre-EBT staffing patterns. Some counties had used mail issuance

exclusively, and some used a vendor to mail benefits and thus did not have an in-house issuance staff. 

CDHS offices that lacked FSP issuance staff drew on staff from other departments to fill the staff

positions required to implement off-line EBT. The staff from other departments required additional

training, because they first had to learn about the FSP before learning about food stamp distribution

under the Direction CardK system. Counties with a sufficient number of existing food stamp issuance

staff had an easier transition to the EBT environment.

Installation of equipment in county offices typically occurred after the majority of retailers had already

been installed. Although there were fewer county offices than retailers, installing equipment in each
Abt Associates Inc. Chapter 5: System Implementation 63

county office took much more effort and time than installing an individual retailer. Some counties were

especially difficult to equip because they had old facilities. For example, in some cases the conduits

needed for computer cables and wires were inadequate, requiring CENTECH staff to install new conduits

to support the wiring required for EBT equipment.

CENTECH installed equipment at a time chosen by the county. Training for counties typically involved

a video, a presentation by a CENTECH staff member, and a question-and-answer session. The Director

of Management of Information Systems (MIS) for ODHS attended the initial meetings between

CENTECH and the counties. The director answered questions about the interface between the EBT and

CRIS-E systems, helped counties make appropriate decisions regarding placement of equipment, and

helped to ensure that the counties felt comfortable with the implementation process.

After CENTECH’s training, CDHS staff conducted self-training using a training mode available on the

EBT equipment. Counties also contacted CENTECH with follow-up questions after the initial training. 

Some counties contacted CENTECH once or twice following their initial training, whereas other counties

contacted CENTECH dozens of times with various follow-up questions. CENTECH staff used this

feedback to help focus training efforts in counties subsequently converted to EBT, although the training

materials themselves were not revised.

CENTECH initially conducted training the day after equipment was installed, typically four to six weeks

before recipient conversion. Starting in early 1998, however, CENTECH encouraged counties to

schedule staff training closer to counties’ recipient conversion start dates. CENTECH took this action

based on feedback from the initial set of counties it trained. This initial set of counties indicated that the

training they received was good, but that they had forgotten much of what they learned in training by the

time they began recipient conversion.

Several unexpected issues arose during conversion to off-line EBT. One example was disagreement over

the extent to which caseworkers were to be involved in off-line EBT. ODHS policy was that eligibility

workers not be involved in conversion. In some instances, however, caseworkers provided clients with

information regarding off-line EBT, or attempted to make EBT-related decisions such as when a client

would be converted to the EBT system. These disagreements were generally resolved quickly, with

caseworkers remaining uninvolved in off-line EBT.

Another issue that had to be addressed under off-line EBT was the issue of new computer system

“profiles.” Under the CRIS-E system, each staff member has a profile in the computer system. The

profiles determine which staff can view and change various data files. Under the coupon issuance

system, all issuance staff had the same profile. Under the EBT system, the various staff involved in the

distribution of food stamps have distinct profiles consistent with their roles in the issuance process. For

example, fiscal control officers, who are responsible for issuing cards, have different profiles, and access

to different system features, than assistance control officers. Similarly, assistance control officers, who

troubleshoot and adjust the status of cards, have different profiles than trainers. This separation of roles

and access to system features protects the security of the system. After equipment was installed in a

CDHS office, ODHS established new profiles for the CDHS staff. As discussed previously, smaller

counties initially had difficulty making their staffing patterns fit with ODHS’ system profiles. This issue

was addressed quickly by changing the profiles to match each county’s staffing patterns.
64 Chapter 5: System Implementation Abt Associates Inc.

5.6 Recipient Conversion Activities

After CENTECH installed EBT equipment in retailers’ and counties’ facilities, counties began the timeconsuming process of converting recipients to the Direction CardK system. County staff scheduled

appointments, trained recipients to use the new system, completed the processing required to initiate

recipient accounts on the EBT system, and confronted numerous small problems. Exhibit 5-3 shows the

pattern of recipient conversion in the ten counties examined in this report. The shaded cells show the

months in which existing FSP cases were converted to the Direction CardK system.

Exhibit 5-4 shows the total number of active EBT cases statewide each month, including counties not

shown in Exhibit 5-3. The large jump in new cases beginning in March 1998 coincides with the

conversion of recipients in Hamilton County, where roughly 3,000 to 5,000 recipients were converted to

EBT each month.

Exhibit 5-3

Number of Active EBT Cases, by Month and County

Cluster 1 Cluster 2

Month gomery Greene Preble Darke Miami Clark Butler Hamilton Warren Clermont

MontAug 97 7,460

Sept 97 8,337

Oct 97 10,696 151 41 4 4 6

Nov 97 13,405 422 198 122 216 33 1

Dec 97 14,954 1,350 559 186 551 738 24 1 0

Jan 98 15,631 1,746 552 221 1,066 1,569 725 164 0

Feb 98 15,216 2,071 542 289 1,189 3,082 1,990 402 16

Mar 98 15,471 2,310 570 366 1,272 4,562 3,227 3,327 352 26

Apr 98 15,163 2,288 545 452 1,235 5,331 3,526 7,131 809 364

May 98 15,180 2,275 526 597 1,179 5,230 4,417 10,757 1,041 692

June 98 15,355 2,252 538 624 1,229 5,249 5,517 13,648 1,259 1,126

July 98 15,033 2,167 529 601 1,202 5,141 5,497 18,404 1,206 2,189

Shaded months indicate when existing caseload was being converted to the Direction CardK system. In the few situations in

which only a limited number of cases in a county were receiving benefits via EBT, these households had transferred into the

county after receiving their card and training elsewhere.

EBT caseload figures have been compiled from vendor documents that report the number of EBT issuances each month. 

Because issuances include supplemental issuances as well as regular recurring issuances, the actual EBT caseload is somewhat

less than indicated in the exhibit.
Abt Associates Inc. Chapter 5: System Implementation 65

Exhibit 5-4

Number of Active EBT Cases Statewide

Month EBT Caseload Month Caseload Converted a

Increase from Prior Percent of FSP

Aug 97 7,460 2.1%

Sept 97 8,337 877 2.3

Oct 97 10,902 2,565 3.1

Nov 97 14,397 3,495 4.2

Dec 97 18,363 3,966 5.3

Jan 98 21,675 3,312 6.4

Feb 98 24,798 3,123 7.4

Mar 98 31,483 6,685 9.4

Apr 98 36,847 5,364 11.4

May 98 41,947 5,100 13.0

June 98 48,355 6,408 15.0

July 98 57,404 9,049 18.2

a EBT caseload figures have been compiled from vendor documents that report the number of EBT issuances each month. 

Because issuances include supplemental issuances as well as regular recurring issuances, the actual EBT caseload is

somewhat less than indicated in the exhibit.

One of the most significant problems counties faced in converting recipients to the new system was

absenteeism. Most counties reported that only one-quarter to one-half of recipients showed up for their

initial appointments to be converted to EBT. Some counties sought to address this issue by switching all

recipients to the Direction CardK system on the day they were scheduled for conversion, forcing

recipients to come into the county office for training in order to access their benefits. Other counties were

more patient, allowing recipients to remain on the paper system until the end of the conversion period. 

Then, near the end of conversion, recipients were informed that they would have to convert to off-line

EBT in order to continue receiving FSP benefits.

In a few cases, recipients refused to convert to the new system. Most often, these recipients received only

a small amount of food stamp benefits and had difficulty commuting to the county office for their

conversion appointment. In these cases, recipients’ benefits were discontinued.

Recipient training involved a standard 10-minute video provided by ODHS and the Citibank Team, a 5-

to 15-minute presentation by county office staff, a question-and-answer session, and some form of

practice to ensure that recipients understood how to use their smart cards. The presentations given by

county staff generally repeated important information given in the video and explained selected steps in
66 Chapter 5: System Implementation Abt Associates Inc.

greater detail. For example, most counties used part of the presentation to review instructions for

selecting the three stores at which recipients could collect their benefits each month. Counties also

generally encouraged recipients to ask questions about the new system and scheduled a considerable

amount of time for such questions.

Most counties established a procedure to verify that recipients understood how to use the Direction

CardK properly. Typically, after the video, presentation, and questions, but before recipients received

their actual cards, recipients used a practice card to complete a transaction. If the recipient did not

successfully complete the transaction, CDHS staff would provide additional assistance.

After recipients completed the training session, they met with FCO staff, who verified demographic

information and obtained the names of three stores that the recipients planned to use most frequently. 

The FCO staff then entered these three stores into the computer system and reminded the recipients that

they would be able to collect their benefits only at these three stores or the CDHS office. Finally, the

EBT cards were issued to recipients. The recipients were able to leave the office with the cards, but the

benefits were not available until 24 to 48 hours later.

Predictably, as recipients began to use their EBT cards, they encountered a variety of difficulties. 

Recipients were instructed to seek help in resolving card-related problems by contacting the SVS

customer service center or their local CDHS office. Recipients were given a toll-free telephone number

they could use to reach SVS customer service to report problems 24 hours a day. They were also

encouraged to contact the ACO staff at their county office with questions. Both customer service and the

ACO staff helped recipients to determine the nature of the problem and identify appropriate solutions.

The most common problems that occurred during the early post-conversion period were:

• lost, stolen, or damaged cards;

• forgotten PINs; and

• problems with the issuance amount.

Lost, stolen, or damaged cards were the most prevalent problems, requiring county offices to replace

cards for 3 to 4 percent of the caseload each month. Forgotten PINs were less common. Most of the

problems relating to the amount of benefits loaded on the card resulted from a mistake or a

misunderstanding about the amount of benefits authorized. In Montgomery County, only about one case

a month involved a discrepancy between the amount authorized and the amount issued to the Direction

Card.

It was sometimes possible for ACO staff to resolve recipients’ problems quickly and easily. In other

cases, they needed to contact SVS customer service for assistance or approval. For instance, when cards

are lost, stolen, or damaged, ACO staff are required to report the incident to SVS. If the recipient

contacted SVS, SVS staff would try to address the problem, but would refer the recipient to the county

office if additional information about the client was required to resolve the problem.
Abt Associates Inc. Chapter 5: System Implementation 67

5.7 Implementation Problems

In general, early implementation activities have proceeded smoothly. Equipment installation has been

difficult in some stores and CDHS offices (usually those located in older buildings), but this is to be

expected. Furthermore, with experience, the Citibank team has improved its ability to efficiently

schedule the various implementation tasks at retail stores and county offices. As described below, there

have also been some software and hardware problems.

Software Problems

Early in 1998, a programming problem affecting when benefits are available to recipients was identified. 

Although the problem affected a relatively small number of recipients, it caused significant hardship for

them and created additional work for county staff. The problem, which was corrected by September

1998, stemmed from the system’s assignment of sequential numbers to issuances. To prevent the

downloading and subsequent collection of an unauthorized issuance to a recipient’s selected issuance

sites, the system assigns a sequential host reference counter (HRC) to each issuance or value-adding

transaction (e.g., a store refund). These issuances and value-adding transactions must be collected by the

recipient in sequential order.

Generally, regular issuance benefit files are transferred from the state’s CRIS-E system to the EBT

system seven days before the first of the month. Each issuance was given a sequential counter

immediately prior to the software fix, and benefits had to be collected at issuance points before the end of

the month. This led to two types of problems:

Case 1

In Case 1, John Doe’s normal March benefit issuance was given a sequential counter number of 12. 

Because John did not collect these benefits during March, they became unavailable and he was not able to

collect them at a later date. John was then issued his April food stamp benefits, which were given a

sequential counter number of 13. Because John did not collect the benefits numbered 12, he was unable

to collect number 13 without a manual intervention from the EBT service provider.

Case 2

In certain cases, a client may be issued supplemental benefits for the current month, but after the next

month’s file transfer has been made. The supplemental issuance is batched overnight for immediate

availability and is given the next sequential counter. This creates a problem if the supplemental benefits

are issued at the end of the month, after the regular benefit files have been transferred to the EBT service

provider. In Case 2, John Doe’s regular benefit file for March was transferred to the EBT service

provider on February 20 and given a counter number of 12. On February 22, John was deemed eligible

for supplemental benefits, intended to be available during February. The supplemental file was batched

overnight to the EBT service provider and given a counter number of 13.

Because benefits cannot be collected out of sequential order, in this case February’s supplemental

benefits could not be collected until the March benefits were collected; hence, John Doe had to wait until

his next month’s issuance date, and had to collect the next month’s benefits, before he could collect

benefits intended to supplement the current month’s food stamp issuance. As in the previous case, until
68 Chapter 5: System Implementation Abt Associates Inc.

programming changes were implemented, a manual intervention had to be performed in order to by-pass

the sequential numbering system.

In August 1998, SVS implemented a software change to eliminate the “HRC” problem. Instead of

assigning the HRC when issuances are received from CRIS-E, the Direction CardK system now assigns

HRCs just prior to downloading the issuance amount to the recipient’s designated collection points. This

change bypasses the second problem described above, that of supplemental issuances, but not the first. If

recipients fail to collect their benefits one month, they still need to go to the county office to gain access

to benefits issued for the following month.

Hardware Problems

Eight of the ten counties studied reported little or no trouble with the hardware provided by the Citibank

team. The other two counties, however, reported that their off-line EBT computer terminals frequently

did not work properly. One of these counties, for example, reported that its EBT system crashed at least

half a dozen times between January and April 1998. Each time the system crashed, it caused the county

significant problems. County office staff would have to turn away recipients who had come in for

training and initial card issuance. This was especially burdensome for elderly recipients and recipients

who had taken time off from work to attend their appointments.

In response to the hardware problems that these counties reported, CENTECH provided advice regarding

proper use of the EBT equipment and replaced the equipment, as necessary. As of April 1998, one of the

counties was on its second set of equipment, and another county was on its third set of equipment. 

Neither of these counties was confident that the replacement equipment would continue to work properly. 

Staff at the two CDHS offices experiencing hardware problems blamed the trouble on the poor quality of

the equipment. The Citibank team was concerned that the counties were not using the equipment

properly, but remains committed to working with all counties to ensure a smooth transition to EBT.

The Citibank team reports that the tasks associated with implementing off-line EBT in the 78 counties

not covered in this chapter should not be substantially more challenging than the tasks undertaken in

converting the ten counties studied. The process will remain the same, with CENTECH working with

retailers and county offices on a county-by-county basis. Although a significantly greater volume of

recipients will be converted each month during the summer and fall of 1998, compared to the number

converted so far, most of the effort will be handled by CHDS staff in the counties being converted. 

Indeed, the remaining counties may pose fewer challenges because ODHS and Citibank have successfully

identified and addressed many issues that arose during the conversion of the first ten counties.
Abt Associates Inc. Chapter 6: Current System Operations 69

Chapter 6

Current System Operations

6.1 Introduction

This chapter examines the Ohio Direction CardK program during June 1998, when the system was in the

second year of a three-year statewide rollout. It is presented as a “snapshot” of then-current conditions, a

look at what may be expected during future statewide implementation activities, and a basis for later

comparison to the fully implemented system.

The Direction CardK system began its statewide rollout in January 1997. Between that date and the end

of June 1998, approximately $76,045,000 in food stamp benefits were issued electronically in nearly

537,000 transactions, averaging $142 per issuance transaction. By June 1998, about 15 percent of the

state’s FSP caseload had been converted to EBT. Most of the 48,355 food stamp cases on EBT were

distributed among the 19 counties shown in Exhibit 6-1.

Exhibit 6-1

EBT Food Stamp Cases, by County

County EBT Cases County EBT Cases

Butler 5,517 Licking 205

Champaign 180 Madison 26

Clark 5,249 Mercer 161

Clermont 1,126 Miami 1,229

Clinton 60 Montgomery 15,355

Darke 624 Pickaway 214

Delaware 20 Preble 538

Fairfield 106 Shelby 581

Greene 2,252 Warren 1,259

Hamilton 13,648 Other 5

The five cases marked “other” were located in four counties where

retailer conversion activities were nearly complete, but recipient

conversion had not started. According to state officials, these five

clients had recently moved from counties already converted to EBT
1 Per system report, “Issuance Redeemed: Monthly Summary.” Average issuance amounts have declined by nearly $30 per

month since January 1997. System reports do not show the distribution of issuance amounts, so only the average issuance

amount can be calculated.

2 Exhibit 6-2 provides data for May 1998 because the system report for June contains no information on benefit collections

beyond two days after issuance.

3 These percentage figures exclude benefits collected in Montgomery County, for which data are unavailable.

70 Chapter 6: Current System Operations Abt Associates Inc.

The following sections examine levels of system activity for benefit issuance and collection, purchases,

retailer settlement, card issuance, and help desk assistance. The information provided in each section is

based on reports the system generates each month. The evaluation has discovered that some information

provided by the reports is inaccurate, or at least inconsistent from one report to another. Neither ODHS

nor the counties seem to be using these particular reports for system monitoring, so there appears to be

no danger that the inconsistencies are causing problems for system operations and oversight. 

Nevertheless, problems with the reports do make it more difficult for the evaluation to assess system

operations.

6.2 Benefit Issuance and Collection Activities

In June 1998, benefits totaling $6,881,143 were issued in 55,016 transactions, averaging $125.07 of

food stamp benefits per issuance transaction. The regular monthly issuance of food stamp benefits is 1

staggered over the first five to fifteen days of the month, depending on county choice. In certain

circumstances, and at any time during the month, supplemental benefits may be issued in separate

issuance transactions.

Once benefits are issued, it is the client’s responsibility to collect benefits by having them loaded onto the

card. Benefits may be collected at a CDHS office or at one of three retailer sites selected in advance by

the recipient. As displayed in Exhibit 6-2, benefit collection activity is heaviest when benefits are first

issued, although recipients continue to collect their benefits throughout the month. Note that the average 2

issuance amount decreases as the collection period lengthens, suggesting that recipients with larger food

stamp issuances collect their benefits closer to the issuance date than those with fewer benefits. This

experience is consistent with collection patterns in previous months.

Most recipients collect their FSP benefits at one of the three stores they select when they receive their

Direction CardK. As shown in Exhibit 6-3, however, 7.8 percent of all benefit collection transactions in

June 1998 occurred at CDHS offices, and these transactions represented about 8.4 percent of all benefits

collected. The exhibit shows substantial county-by-county variation in the percent of benefits collected 3

at the county office (from 3.6 percent to 58.3 percent). The cause of this variation is not yet clear,

although it may be affected in part by the extent to which a county has completely converted to EBT. 

(That is, newly converted cases may be more likely to collect their first month’s benefits at the county

office.) System reports will be examined again after rollout is complete to see whether this variation

persists.
4 Purchase reversals are performed due to reasons such as the correction of cashier errors on the original automated purchase

transaction.

5 System reports do not show the distribution of purchase amounts, so only the average purchase amount can be computed. 

The same is true for number of purchase transactions during the month.

Abt Associates Inc. Chapter 6: Current System Operations 71

6.3 Benefit Use

Purchase transactions are computed by adding automated and manual purchase transactions and

subtracting purchase reversal transactions. There were 283,213 purchase transactions statewide during 4

June 1998, with a total value of $6.3 million. The average purchase transaction value during June was

$22.34, and each case averaged 5.9 purchase transactions per month. The value of the average purchase 5

transaction has not changed significantly from April 1997 through June 1998, as indicated by Exhibit 

6-4.

Exhibit 6-2

Benefit Issuance and Collection – May 1998a

Collection Period Transactions of Benefits Collected Amount

Number of Total Value Issued Benefits Benefit

Percentage of Average

Total issued this period 48,403 $5,998,991 n.a. $123.94

Collected on issuance date 17,003 2,844,085 47.4% 167.27

Collected within 1-2 days 11,364 1,539,642 25.7 135.48

Collected within 3-5 days 7,010 732,172 12.2 104.45

Collected within 6-10 days 4,206 337,974 5.6 80.36

Collected within 11-20 days 2,644 148,077 2.5 56.00

Collected within 21-30 days 648 21,806 0.4 33.65

Issued this period, not collected 5,818 382,158 6.4 65.69

Issued prior period(s), not collected 3,263 0 n.a. n.a. b

Issued prior period(s), collected 2,052 237,473 n.a. 20.52

Expired this period (returned to state) 2,654 146,587 n.a. 55.23

a The numbers contained in this table are from the system report, “Issuance Redeemed: Monthly Summary.” It should be

noted that the report does not balance—the difference between benefits issued and collected (adjusted for prior period

activity) does not equal benefits issued but not collected.

b This is the figure included in the system report, but either it or the corresponding number of issuances must be incorrect

inasmuch as it leads to a calculated average benefit amount of zero.

n.a. = not applicable
72 Chapter 6: Current System Operations Abt Associates Inc. Exhibit 6-3 Issuance Collection Activities at County and Retailer Locations – June 1998 Total Collection Transactions Collection Transactions at County Offices County Number Value Average Value Number Percent of Total Value Percent of Value Average Value Butler 5,298 $671,223 $126.69 434 8.2% $53,467 8.0% $123.20 Champaign 160 14,067 87.92 53 33.1 5,584 39.7 105.36 Clark 5,292 726,189 137.22 361 6.8 51,321 7.1 142.16 Clermont 1,046 184,170 176.07 128 12.2 23,406 12.7 182.86 Clinton 30 5,563 185.43 11 36.7 1,576 28.3 143.27 Darke 675 83,190 123.24 175 25.9 24,538 29.5 140.22 Fairfield 82 9,976 121.66 14 17.1 2,057 20.6 146.93 Greene 2,362 310,459 131.44 196 8.3 27,818 9.0 141.93 Hamilton 13,735 1,572,650 114.50 487 3.5 56,212 3.6 115.43 Licking 182 31,800 174.73 69 37.9 11,923 37.5 172.80 Mercer 158 20,685 130.92 84 53.2 12,055 58.3 143.51 Miami 1,338 149,030 111.38 146 10.9 15,682 10.5 107.41 Montgomery (part of pilot) 14,024 2,002,239 142.77 n.a. n.a. n.a. n.a. n.a. Pickaway 213 26,162 122.83 42 19.7 4,464 17.1 106.29 Preble 543 68,256 125.70 125 23.0 17,783 26.1 142.26 Shelby 557 68,756 123.44 105 18.9 13,345 19.4 127.10 Warren 1,520 174,824 115.02 164 10.8 22,760 13.0 138.78 Total 47,215 $6,119,239 $129.60 2,594 7.8% $343,991 a8.4%a $132.61 a Excludes Montgomery County due to unavailability of data. n.a. = not available
April May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June

10

15

20

25

30

a1kf

6 This number was obtained from system report, “Authorized Retailers: Activated.” Prior to January 1998, this report and

two others (“Authorized Retailers: Deactivated” and “Authorized Retailers: Alphabetical”) provided inconsistent

information regarding the number of active retailers. Although the three reports now provide similar statewide totals for

active retailers, they continue to provide inconsistent data at the county level.

7 Per system report, “Retailer Settlement Transactions.”

Abt Associates Inc. Chapter 6: Current System Operations 73

Exhibit 6-4

Average Value of Purchase Transactions, April 1997 – June 1998

1997 1998

6.4 Settlement

Retailers must settle with the EBT host system in order to receive funds for purchases transacted with the

Direction CardK. According to the operating manual provided to retailers during training, each retailer

must settle at least once each day (presuming they processed EBT transactions that day). If they do not

settle on time, their EBT terminals will lock and prevent further EBT transactions until settlement occurs.

At the end of June 1998, 3,153 retailers were enrolled in the Direction CardK system. These retailers 6

performed 32,356 settlement transactions during June, for an average of 10.3 settlement transactions per

retailer. With so few settlement transactions, it appears that many retailers on the system are

experiencing infrequent Direction CardK business. This, however, may be an artifact of the process of

system implementation. With many stores being equipped for EBT before food stamp recipients in the

county receive their EBT cards, there may have been many days when these stores did not process any

EBT transactions.

Retailer settlements during June 1998 totaled $5.8 million; this amount yields average settlement values 7

of $177.72 per settlement transaction and $1,823.73 per retailer for the month. As shown in Exhibit 6-5,
April May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June

0

200

400

600

800

8 The state’s manager for the Direction CardK system has noted that he frequently gets calls from retailers saying the system

is not working. Frequently, upon investigation, it turns out that the retailer has forgotten to initiate a settlement transaction. 

If settlement is not performed at least once a day, the store’s EBT terminals will lock up until a settlement transaction is

initiated by the store manager.

74 Chapter 6: Current System Operations Abt Associates Inc.

Exhibit 6-5

Average Value of Retailer Settlement Transactions, April 1997 – June 1998

1997 1998

the average value of settlement transactions has fallen substantially since the statewide rollout began. 

This is probably due to a combination of two or three factors. First, as noted earlier, average EBT

business on a per-retailer basis has fallen due to the lag between retailer signup and recipient conversion. 

Second, with the addition of more rural counties like Preble and Darke, the characteristics of participating

stores are probably changing, with more small stores being added to the system. Third, stores may be

settling more often as they gain experience with the system.8

6.5 Card Deployment

Ohio Direction CardsK are issued either when new households are determined eligible for food stamp

benefits or when existing cases not currently in the Direction CardK program are converted to the EBT

system. Additionally, new cards are issued as replacements for existing cards found to be defective or

reported as lost or stolen.

July 1997 was the first month in which the Direction CardK was issued in a significant quantity. By the

end of June 1998, 71,872 Direction CardsK had been issued. Of these, 1,457 cards have failed due to

card failure, and 20 cards have failed due to user abuse, a total of 2.06 percent of all Direction CardsK

issued. By comparison, 17 percent of the 29,486 PayEase cards issued by the pilot program had failed as
9 Of the 29,486 PayEase cards issued since March 1992, 3,973 (13.54 percent) failed due to chip failures and another 1,170

(3.47 percent) failed due to uncorrectable problems, including physical damage due to user abuse.

Abt Associates Inc. Chapter 6: Current System Operations 75

of July 1997. Although the percentage of Direction CardK failures is significantly less than the failures 9

reported with the previous PayEase Card, it must be noted that at the time of the June 1998 report,

Direction CardsK issued to recipients had been in use for 12 months or less. A better comparison of

card reliability will be available as the Direction CardsK age.

County offices issued 11,969 new Direction CardsK during June 1998. The reasons for new card

issuances are identified in Exhibit 6-6.

Exhibit 6-6

Card Deployment – June 1998

Reason for Card Issuance Issued Issued/Replaced

Number of Cards Percent of Cards

Total number of cards issued 11,969 100.0%

New card setups 10,159 84.9

Card replacements 1,810 15.1

Card replacements:a

Card chip failure 274 16.5%

Out of balance: not correctable 3 0.2

Lost and stolen 1,377 83.3

a The number of cards replaced does not equal the number of cards reported damaged,

lost, or stolen. This information has been derived from the system report “EBT

Smart Card Analysis.” The report is in the process of being corrected by the EBT

service provider.

6.6 Customer Service

SVS maintains a specialized EBT Customer Service Center for the Direction CardK system at its

telephone center in El Paso, Texas. Customer service is available 24 hours a day, seven days a week. 

Toll free numbers connecting to the support center are provided to Direction CardK recipients, retailers,

and county staff.

When food stamp recipients call Customer Service, they are connected to an automatic response unit

(ARU). If they are calling from a rotary phone, the call is switched to one of the customer service

representatives at the center. Callers with touch-tone phone service are given three menu options: obtain

card balance or other benefit information; report a card as lost, stolen, or damaged; or connect to a

customer service representative. In addition to balance inquiries and reports of lost, stolen or damaged
10 The SVS customer service representatives forward any reports of equipment problems or supply needs to CENTECH for

response.

76 Chapter 6: Current System Operations Abt Associates Inc.

Exhibit 6-7

Number of Recipient Calls Received, October 1997 – June 1998

1997 1998

cards, food stamp recipients can use Customer Service to change benefit collection sites, request

transaction statements, or request emergency food bank services.

The ARU menu for retailers focuses on authorizations for manual transactions and requests for

information about the last settlement processed by the system. By connecting to a customer service

representative, retailers can also report equipment problems, order EBT supplies, and request 10

documentation of prior EBT transactions. Country staff can call Customer Service to request assistance

with any of the Direction CardK functions for which they are responsible.

As would be expected, Customer Service has received an increasing number of calls each month as the

Direction CardK system has been expanding. Exhibits 6-7 and 6-8 show the increase in recipient and

retailer calls, respectively, between October 1997 and June 1998. This increase in calls was leading to

reduced service levels prior to April 1998. In response, SVS began adding temporary customer service

representatives during the first few days of the month in January 1998. These additional representatives

helped alleviate the long queue times encountered during the regular monthly issuance cycle, the busiest

time of each month for calls for assistance.

SVS also upgraded its ARU in April 1998, with marked results. For instance, prior to April average

recipient queue times waiting for a representative varied from 7 to 48 seconds. In addition, about 8.0

percent of recipients were hanging up before the call was answered. After the upgrade, average queue

times dropped to between 1 and 20 seconds, and only 1.8 percent of recipients hung up before reaching
11 Prior to April 1998, the number of monthly calls from recipients varied between 35 and 50 percent of the number of active

EBT cases each month. Since then, the number of calls has varied between 70 and 80 percent of active EBT cases each

month. Similarly, the number of monthly calls received per retailer jumped in April 1998, from an average of 0.9 in the

previous six months to 2.53 in the following three months. 

Abt Associates Inc. Chapter 6: Current System Operations 77

Exhibit 6-8

Number of Retailer Calls Received, October 1997 – June 1998

the ARU or a customer service representative. On the retailer side, 4.8 percent of retailer calls to

customer service prior to April 1998 were abandoned. Thereafter, the percentage of abandoned calls

from retailers dropped to 1.5 percent.

These service improvements are especially notable because they occurred when the number of incoming

calls increased dramatically. Although the large increase in calls in April 1998 coincides with system

rollout in Hamilton County (Cincinnati), this rollout cannot explain the full increase in calls because

usage increased on a per-recipient and per-retailer basis. It seems likely that improvements in customer 11

service encouraged greater use of the service.

In addition to these early problems in reaching customer service representatives, county staff have

complained about high turnover and lack of detailed system knowledge among the customer service

representatives. To address these concerns, SVS has created and trained a dedicated group of

representatives to respond solely to retailer and county requests for assistance, which tend to be more

complicated than recipient calls for assistance.

Customer service tracks the reasons calls are made by recipients; Exhibit 6-9 lists the reasons calls were

made in June 1998. Balance inquiries represent, by far, the most common reason for calls to customer
78 Chapter 6: Current System Operations Abt Associates Inc.

service, a situation found in on-line EBT systems as well. Officials believe that most of the calls are

made by recipients checking to see whether their monthly benefits are yet available for use.

Exhibit 6-9

Recipient Calls – June 1998a

Major Reasons for Recipient Calls Number of Calls

Balance inquiry 14,760

Report lost card 543

Change issuance site 481

Report damaged card 193

Card unlock 141

Report stolen card 117

Transaction inquiry 20

Verify issuance sites 12

Coupon conversion 11

a Data derived from system report, “Operator Call Analysis.”

6.7 Conclusion

Although discrepancies exist in the monthly reports generated by the Direction CardK system, the

system itself appears to be operating fairly smoothly 18 months into its statewide implementation. A

problem with the sequencing of issuance transactions has been addressed, and the system is currently

handling all the transaction processing requirements for over 48,000 food stamp households. In June

1998, $6.8 million in FSP benefits were issued, with $6.3 million being redeemed that same month in

approximately 3,200 food retail outlets.

The implementation process also appears to be proceeding without major difficulties. Some counties

have reported problems with their EBT terminals and equipment, and most of the counties interviewed

for this report said that many recipients fail to show up for their originally scheduled EBT training. 

Nevertheless, recipient conversion to EBT is proceeding as the Citibank team moves from county to

county, equipping and training retailers and county office staff on EBT procedures. Current plans call for

all retailers and counties to be equipped for EBT by approximately July 1999. If this schedule is met,

then nearly all the food stamp recipients in the state should be converted to EBT by the end of 1999.
Abt Associates Inc. Glossary 79

Appendix A

Glossary

ACO Assistance Control Office, unit within county DHS office responsible for EBT

training and helping recipients with card balance problems.

Booz•Allen Booz•Allen & Hamilton, a contractor providing support to FNS for the technical

evaluation of the Direction CardK system.

card block A card block effectively disables a lost or stolen Direction CardK, preventing its use

in any EBT transactions.

card reader The smart card reader is contained in the EBT terminal. The card reader reads

information from and writes transactions to the customer’s benefit card.

CDHS County Department of Human Services, which administers the food stamp and EBT

programs.

CENTECH Century Technologies, Inc., subcontractor responsible for equipping and servicing

retailers and county offices.

Citibank EBT Business unit of Citibank, N.A., which itself is a wholly-owned subsidiary of Citicorp.

Services

COPA Category of Public Assistance. A COPA designator is associated with each EBT

transaction.

CRIS-E Client Registration Information System-Enhanced, the computer system used by the

Ohio Department of Human Services to determine client eligibility for the FSP and

monthly allotment amounts.

CSI Citicorp Services, Inc., the prime contractor for the EBT program for the State of

Ohio. CSI is a New York-based wholly owned subsidiary of Citicorp.

DHS Department of Human Services

Direction CardK Registered service mark, which denotes the State of Ohio’s EBT smart card system.

EBT Electronic Benefits Transfer

FCO Fiscal Control Office, unit within county DHS office that handles EBT functions

related to card issuance, card replacement, PIN change, unlocking EBT cards, issuance

site selection for FSP benefits, and coupon conversion.
80 Glossary Abt Associates Inc.

FNS Food and Nutrition Service, agency within U.S. Department of Agriculture that

administers the Food Stamp Program.

FSP Food Stamp Program

kbps Kilobytes per second, a measure of the speed by which data are transmitted over a

communications system.

MAC Message Authentication Code, security code added to communications message. The

value of the code is based on information contained in the message.

NPC National City Processing Corporation, parent company of Stored Value Systems

(SVS) and prime contractor for the Montgomery County EBT pilot.

ODHS Ohio Department of Human Services

PAN Primary Account Number, unique number assigned to the Direction CardK.

PayEase Name of the pilot, off-line EBT system implemented in Dayton, Ohio.

PayFlex Name of smart card, manufactured by Schlumberger, Inc., used in Direction CardK

system.

PIN Personal Identification Number

POS Point of Sale.

REDE Retailer EBT Data Exchange, a computer system that enables FNS to communicate

the authorization status of retailers to EBT vendors.

staged issuance Term used to describe the process of sending benefits to the EBT point of sale

terminal at an issuance site.

SVS Stored Value Systems, a subsidiary of National City Processing Corporation and a

subcontractor to Citicorp Services, Inc. SVS processes EBT transactions and

provides customer service for the State of Ohio’s Direction CardK system.