USDA proposes chip-and-tap SNAP cards; retailers, farmers markets and states face two-year switch after a final rule

SNAP still runs on the payment card of the 1990s. Every state has issued benefits exclusively through electronic benefit transfer (EBT) cards since 2004, and nearly all of those cards still rely on a magnetic stripe secured by a PIN, the technology credit and debit cards began leaving behind in 2015^[1]. On Oct. 23, USDA’s Food and Nutrition Administration proposed ending that, with a rule that would require states to issue chip cards that can also be tapped, and require every SNAP-authorized retailer to accept them^[1].

For producers, the rule reaches the checkout lanes where SNAP dollars buy their milk, meat and produce, and it reaches farmers markets and farm stands more directly: it would update the terminal standards they use and largely close the paper-voucher route some sellers still rely on^[1]. Comments are due Dec. 22^[1].

What the proposed EBT card rule requires

The proposal, signed by Deputy Secretary Stephen A. Vaden and filed under docket FNS-2025-0137, has several parts^[1].

Chip and tap cards. States would have to issue SNAP benefits on chip cards with near-field communication (NFC), the “tap-to-pay” protocol, within two years after a final rule is published^[1]. The cards would keep a magnetic stripe as a fallback for now, though USDA is asking for comment on removing the stripe eventually, citing Mastercard’s 2023 statement that “by 2033, no Mastercard cards will have magnetic stripes”^[1]. Card numbers would move to the back of the card, and new cards would carry expiration dates^[1].

A new chip identifier at the register. SNAP chip cards would carry a new application identifier, A0000000044542, and a new service code, 220^[1]. The proposed operating standards state plainly that “all POS terminals must be updated with the new EBT chip AID” before they can run SNAP chip transactions^[1]. A terminal that has not been updated would have to run a fallback: the card is tapped or inserted first, the chip read fails, and the clerk is prompted to swipe^[1]. The standards tell retailers to train every checkout employee on that sequence^[1].

Written operating standards. USDA would adopt SNAP EBT Operating Standards as an appendix to 7 CFR Part 274 and revise them on an ongoing basis, rather than writing every technical change through rulemaking^[1]. States would have 180 days to bring their systems up to each new version of the X9.58 industry message specification^[1].

Household account controls. States would have to offer self-service blocks on out-of-state and online transactions, a full account freeze, text or email alerts and a user-set transaction cap^[1]. Common PINs such as sequential digits, repeated digits or numbers starting with 19 or 20 would be disallowed^[1]. Transaction history available to households would grow from two months to 12, updated immediately after each purchase^[1]. Balance inquiries by phone would require verification^[1].

Manual vouchers. Paper vouchers would be allowed mainly during EBT system outages and disasters, codifying a 2014 Farm Bill limit^[1].

Why USDA is acting now on SNAP benefit theft

The legal push came in the Consolidated Appropriations Act, 2023, signed Dec. 29, 2022. Section 501 of its nutrition title directed the Secretary to issue guidance on measures that are “consistent with industry standards” for stopping card skimming and cloning, and to “promulgate regulations through notice-and-comment rulemaking” requiring states to adopt them^[2]. The same law told the Secretary to consider “the feasibility of cost, availability, and implementation for States” and to work with retail food stores on “equipment enhancements”^[2]. It also funded replacement of stolen benefits, limited to theft between Oct. 1, 2022, and Sept. 30, 2024, and capped at two months of a household’s allotment^[2].

USDA says that replacement authority expired Dec. 20, 2024^[1]. Through the second quarter of fiscal 2025, states approved 753,929 replacement claims worth $360,441,561^[1]. The department cautions that the count reflects only claims households filed and “may not capture the full scope of benefit theft”^[1]. With the replacement program over, states are no longer required to report EBT fraud figures^[1].

The rule argues that criminals moved to EBT cards once bank cards went to chips. It cites Mastercard data showing a 54 percent drop in counterfeit fraud costs at U.S. retailers that completed chip adoption between April 2015 and April 2016^[1]. As of August 2026, seven states had issued EBT chip cards, with more in progress^[1]. About 42 million people received SNAP in an average month of fiscal 2025^[1].

In the field: farmers markets, farm stands and rural grocers

Direct-marketing farmers and farmers markets sit in a special category. Under the 2014 Farm Bill, most SNAP retailers must pay for their own EBT equipment, but farmers markets, direct-marketing farmers, military commissaries and nonprofit food cooperatives were exempted^[1]. The proposal would write that into regulation, with states providing no-cost, EBT-only terminals to the exempt groups^[1]. States could charge those sellers for replacing lost or damaged equipment and for supplies the state did not provide^[1].

What the proposal does not spell out is how those state-supplied terminals would be brought up to the new chip identifier, or who pays. Its rule that every terminal must carry the new AID makes no exception for them^[1].

Paper vouchers are the second pressure point. USDA’s own numbers show how small the practice is: in October 2023, 0.0057 percent of SNAP transactions used manual vouchers, and nearly 42 percent of those were in North Dakota and Alaska^[1]. The department says the change would mainly affect delivery-route retailers and stores in remote areas, which it expects to move to mobile POS devices or phone and tablet apps^[1]. It will consider exceptions for areas with no internet service, for Tribal areas and for retailers eligible for free state-provided equipment^[1]. The draft operating standards list that last group as “direct-marketing farmers and farmers’ markets”^[1]. USDA is asking whether those exceptions are needed^[1].

For rural grocers and convenience stores, the standards note that most retailers already accept NFC-enabled credit and debit cards but their devices do not yet support the SNAP identifier, and they direct POS providers, acquirers and third-party processors to help retailers update their devices^[1]. USDA certified that the rule would have a significant impact on a substantial number of small entities^[1].

Who pays for the SNAP chip card switch

USDA estimates one-time costs of roughly $283 million across states, the federal government, households and businesses in fiscal 2028 and 2029^[1]. Ongoing costs would start at $12 million in fiscal 2030 and total about $152 million over fiscal 2028-2037^[1]. The Office of Management and Budget reviewed the rule as economically significant, and it is designated a major rule under the Congressional Review Act^[1].

The department acknowledges the switch “will come at a financial cost to the State agencies administering SNAP” but calls it “a necessary investment to deter the loss of Federally-funded SNAP benefits”^[1]. It also asks states specifically how chip cards would affect over-the-counter card issuance, noting existing problems with the timely delivery of benefits^[1].

Household burdens are part of the count. USDA expects every household to activate a new card. It counts 5.6 percent of the SNAP caseload as experiencing homelessness and estimates that about half of those households, roughly 629,822, may need to travel to a local office for a chip card^[1]. It also flags a domestic-violence risk in more detailed transaction histories, which could reveal where a household member who has fled is shopping, and it is weighing a requirement that states mask locations on request^[1].

On the Hill: grocers back it and point to a broader bill

The National Grocers Association welcomed the proposal the day it published. “Too many families learn their benefits were stolen at the checkout, when trying to buy food for their families, after multinational criminal organizations skimmed their EBT cards,” said Stephanie Johnson, the group’s senior vice president and head of government affairs^[3]. “States that adopted SNAP EBT chip cards have seen a significant drop in skimming fraud,” she said^[3].

Johnson called the rule “a strong first step” that “meets many of the goals of the bipartisan, bicameral Enhanced Cybersecurity for SNAP Act,” legislation the association still supports because it “includes extended measures” beyond the rule^[3].

USDA held 16 listening sessions in 2023 with EBT processors, retailers, anti-hunger advocates, equipment makers and state agencies, and an updated EBT standard developed through the Accredited Standards Committee X9 forum was ratified and published by the American National Standards Institute in August 2024^[1]. The proposal does not summarize what states or anti-hunger groups said in those sessions; their formal positions, and any request for more than two years, will come through the docket.

What to watch

Comments close Dec. 22^[1]. USDA is asking specific questions: whether two years is enough, how much the magnetic-stripe fallback costs processors and retailers, whether blocking out-of-state transactions by default would trap households that shop across state lines, and whether farmers markets, Tribal areas and off-grid retailers need voucher exceptions^[1]. None of those answers, and no compliance date, will exist until USDA publishes a final rule.