Once eligibility and level of benefits have been determined, an account is established in the participant's name, and food stamp benefits are deposited electronically in the account each month. Recipients are offered the opportunity to change the PIN number at any time, and are offered ongoing training if they have any problems accessing the system. Then, electronically, the processor verifies the PIN and the account balance, and sends an authorization or denial back to the retailer. The recipient's account is then debited for the amount of the purchase, and the retailer's account is credited. No money and no food stamps change hands.
Payment is made to the retailer through a settlement process at the end of the business day.
In these systems, the transaction is authorized between the chip in the card and the POS device. The PIN is verified by the chip and the chip is debited for the purchase amount. There is no on-line communication with a host computer during the transaction. At the end of the business day, the POS electronically contacts the host to perform settlement and update the database information. EFT became familiar to most people in the early 1980's when banks began using automatic teller machines.