Preventing fraud in EBT payments
How EMV chips safeguard cardholder data
The migration from magnetic stripe to Europay, Mastercard and Visa (EMV) chip technology in the Electronic Benefits Transfer (EBT) system represents a pivotal shift in fraud prevention and security. Current EBT cards, which rely solely on magnetic stripe technology, are highly susceptible to skimming — a rampant issue where card data is stolen and replicated.
The transition to EMV chips will significantly curtail this type of fraud, as EMV technology encrypts transaction data uniquely for each use, making duplication nearly impossible. In fact, industries that transitioned to EMV have seen skimming-related fraud fall by more than 76%, according to a report from Visa. While adopting EMV chips promises major enhancements in safeguarding cardholder data, the transition poses challenges for stakeholders across the EBT ecosystem.
Technical infrastructure upgrades
Transitioning to EMV technology requires significant updates to POS systems. Retailers must ensure terminals can process EMV chip transactions and incorporate the unique EBT Application Identifier (AID), which routes transactions correctly. Systems must also support fallback functionality, allowing magnetic stripe use when chip readers are unavailable, reducing service disruptions. This transition involves hardware upgrades, software development, and maintenance. Without alignment between states, payment processors, and POS providers, disruptions in benefit access are possible. Federal grants and state budgets are essential to fund these efforts.
How Conduent supports the EMV transition
At Conduent, we understand the complexities and challenges of transitioning government benefit programs to EMV chip technology. With over a decade of experience, we’ve securely managed $20 billion across more than 7 million EMV-capable cards. As pioneers in this space, we led the first child support program transitions in Tennessee and Virginia, setting a benchmark for secure and efficient benefit delivery.
To support our clients, we develop tailored EMV migration roadmaps that align with program needs and fraud prevention strategies. We leverage monthly fraud loss tracking and cost-benefit analyses to help state agencies determine the optimal time for conversion. Recognizing the high cost of EMV implementation, our approach ensures resources are allocated where they make the most impact, based on counterfeit fraud levels and program requirements.
Our fraud prevention tools are equally advanced. By utilizing real-time analytics and algorithms, we monitor transaction behaviors and uncover suspicious patterns efficiently. We provide streamlined dashboards that give fraud teams actionable insights, enabling rapid response to potential threats. This robust system secures both EMV and magnetic stripe transactions while adapting to the evolving tactics of fraudsters.
Conduent is committed to helping state agencies navigate EMV transitions seamlessly, balancing the complexities of technical upgrades, cost considerations and fraud mitigation. Together, we ensure secure, uninterrupted benefit delivery for millions of families.
Fraud mitigation strategies
EMV chips drastically reduce skimming and cloned card fraud, but fraudsters adapt. As skimming declines, card-not-present (CNP) fraud in online purchases is expected to increase. Enhanced fraud detection tools, real-time transaction monitoring, and dynamic verification processes are necessary to counter new threats. Maintaining PIN security remains critical, as all EBT transactions—via chip or magnetic stripe—require PIN authentication to protect cardholders.
State and retailer coordination
The transition’s success depends on collaboration between states, retailers, processors, and federal partners like the USDA. Retailers must update POS systems and train staff to handle EMV transactions, while states oversee card issuance and ensure alignment with compliance timelines. Clear communication and coordination are vital to prevent service disruptions, particularly for vulnerable populations relying on benefits.
The EBT transition to EMV technology enhances security but requires coordinated efforts to upgrade systems, mitigate fraud risks, and align stakeholders. By addressing these challenges, the industry can protect benefits and ensure uninterrupted service for families.
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