USDA Proposes Chip-Enabled EBT Cards to Combat SNAP Skimming Fraud

The Trump administration wants all states to upgrade food assistance cards with microchips to fight skimming theft. SNAP recipients lost an estimated $470M last year.

Trump Administration Moves to Require Chip Cards for Food Stamps After $470M in Theft

The U.S. Department of Agriculture last week released a proposed rule that would require all states to replace magnetic-stripe Electronic Benefits Transfer (EBT) cards with chip-enabled versions, NPR National reports. The move targets card skimming — a method thieves use to extract personal data from payment terminals and drain SNAP recipients' accounts.

A recent ProPublica investigation found that $470 million was stolen electronically from Supplemental Nutrition Assistance Program (SNAP) recipients last year. The figure was calculated using data from Propel, an app that helps recipients track their food benefits. In January, the USDA Office of Inspector General had already projected that SNAP theft could reach $233 million between 2025 and 2026, driven largely by skimming.

Most SNAP cards currently rely on a magnetic stripe for payment — a technology considered especially vulnerable because it does a poor job of securing stored data. Many U.S. banks moved away from that technology more than a decade ago, adding microchips and tap-to-pay capability to their cards. States, however, have been slow to follow. According to the USDA, fewer than one-third have made the switch or are currently in the process of doing so.

"These proposed changes will protect SNAP benefits from thieves and ensure benefits are accessible by approved households," the USDA's Food and Nutrition Administration said in its summary of the proposed rule.

Under the proposal, retailers that accept SNAP benefits would also be required to install payment terminals that support tap-to-pay. The USDA estimates the changes will reduce stolen benefits by at least $1.5 billion over the next decade.

In most states, stolen benefits are not replaced, leaving recipients with difficult choices — skipping meals or borrowing money to cover groceries, according to Propel.

Costs Are a Known Barrier

Chip-enabled cards cost roughly ten times more to produce than magnetic-stripe versions, according to the Government Accountability Office. That expense has been a significant obstacle for states considering the upgrade — a barrier the proposed rule explicitly acknowledges. The USDA said it wants to hear from state agencies about the financial burden the transition would impose.

"As stewards of taxpayer dollars, the Department considers these administrative costs as a necessary investment to deter the loss of Federally-funded SNAP benefits," the rule states.

When asked whether the department would provide funding to help states make the switch, the USDA pointed to past inaction. "For years, States had access to administrative funds to stop this egregious abuse of taxpayer resources. Yet few acted," the department said.

The financial pressure on state SNAP agencies is compounded by new budget constraints tied to President Trump's One Big Beautiful Bill Act, which has prompted spending reviews across federal assistance programs.

Broad Political Support, 60-Day Comment Window

NPR National reported earlier this month that modernizing food assistance cards has drawn support from both Republican and Democratic members of Congress, as well as state officials and federal watchdogs. The USDA confirmed the proposed rule has been in development for nearly four years.

The public has 60 days to submit comments before the USDA publishes a final rule. The department is weighing whether to give states a two-year deadline from that publication date to implement the new technology, and has invited input on whether that timeline is realistic.

The push for stronger EBT card security fits within the Trump administration's broader anti-fraud agenda. Last week, the Justice Department announced that its fraud division had helped uncover nearly $42 million in schemes targeting food benefits — ranging from identity theft to retailers illegally exchanging cash for SNAP credits.

Source: NPR National