JP Morgan Chase is now a leader in the government payment card services business. Their website claim's what they can provide a state, county, or municipal agency. Many states have a contract with Chase and other big banks to provide child support debit cards, unemployment debit cards, as well as food stamp debit cards at no cost to the states. Click here for a list of banks behind the debit cards.
State's argue that they save on paper checks and postage, while streamlining their system. Some forty states have discontinued paying unemployment compensation by paper check, and are using pre-paid cards or debit cards. The National Consumer Law Center (NCLC) cites that pre-paid cards may be cheaper but they come with many fees, and that they don't really help those with bank accounts. The center reports that fees can nickel and dime people who can least afford the typical unemployment check of $294. The National Consumer Law Center has recently released a 72 page report entitled, Unemployment Compensation Pre-Paid Cards: States can deal workers a winning hand by discarding junk fees.
The Nebraska Health and Human Services website summarizes their food stamp program. It seems straight forward. The Department of Health and Human Services (DHHS) determines if you are eligible for the food stamp program and what your benefits are. They pass the information to JP Morgan Chase in which an account is set up for the household. Then DHHS mails a pre-paid card to the client. The client uses the pre-paid card at a point of sale device where it is swiped at the check out counter, and the amount is deducted from the client's account. At the bottom of the Nebraska Health and Human Services web page is an interesting insight. It reads, "each day JP Morgan totals all food stamp purchases and deposits funds into the bank accounts of the food retailers."
According to a Huffington Post article, institutions such as Wells Fargo, Bank of America, Cardtronics, and Affiliated Computer Services (ACS) received more than $17 million in fees from EBT's from California's poor in 2010. The cards can charge fees up to $4 per transaction. It is estimated that the first 8 months of 2011 that ACS received more than $800,000 in fees, and banks in general received $12.9 million for transaction charges.
According the Texas Health and Human Services most recent average data ending January 2013, more than 3 million people are enrolled in the supplemental nutrition assistance program (SNAP). The majority of those are between the ages of 5 and 59.
The United States Department of Agriculture has released it's two year data ending December 2012 on participation rates among the states. It is estimated that 46 million people per month currently participate in SNAP.
