In an effort to modernize EBT and reduce fraud, multiple States are planning to migrate their EBT cards from magnetic stripe to EMV chip cards. States, starting with California and Oklahoma, are planning to issue chip cards beginning as soon as this Summer (2024). A magnetic stripe will remain on the new EBT chip cards.
Merchants, acquirers, and financial institutions should ensure that all EBT cards continue to work during the transition period. It is important that POS systems are tested to ensure uninterrupted processing of SNAP with EBT chip cards.
Depending on State preferences, EBT chip cards will be contact-only (insert) or dual-interface (insert or tap). EBT chip cards will use a new Application Identifier (AID), A0000000044542 (Application Name: EBT), and will have a 220 service code encoded in the magnetic stripe.
The AID (Application Identifier) is an identifier in the chip that defines the application within the chip. For EBT, the AID is A0000000044542. The Service Code is a data element within the card magnetic stripe or in the chip that defines the processing characteristics of the card. The service code for EBT magnetic stripe card is currently 120, with the "1" stating that this is a magnetic stripe card, the"2" means it requires online approval by the issuer and the "0" means that a PIN is required. For chip cards, the service code is "220", with the first "2" stating this is a chip card.
The purpose of the EBT chip testing exercise is to confirm that the POS terminal can fallback to magnetic stripe because either 1) the terminal is not able to process chip cards, or 2) the terminal has not yet been upgraded to recognize the EBT AID (Application Identifier), so does not know how to process the chip card.
A POS terminal update is required to recognize the EBT AID and process EBT chip card transactions. POS service providers will have different release dates for when the POS terminals they support can process EBT chip card transactions. Consequently, the rollout of POS support for EBT chip card transactions will occur over a period of time.
It should not be an issue for non-chip enabled POS terminals if they are currently processing EBT transactions. The magnetic stripe does not have any logic in it but is simply a formatted data string. Assuming the magnetic stripe is formatted correctly on the physical chip card, the POS terminal will have no problem processing the mag stripe.
Technical/EMV fallback will occur if for some reason the POS terminal cannot read the chip (either the chip is bad or the reader is bad). The terminal will try three times before saying it cannot read the chip and instructing the cardholder to swipe the card instead.
ECL fallback is related to the POS terminal reading the chip but not having the correct application installed to process the information on the chip. ECL fallback will only require one unsuccessful chip attempt before prompting for a magnetic stripe/swiped transaction.
