WIC EBT: Online v. Offline

As usual when technology brings advantages to existing processes, there are competing ideas on the best way to implement this technology. In some cases, one direction eventually supersedes the other, think VHS vs. Beta. In other cases, multiple options co-exist, think Microsoft vs. Apple.



Today there are advantages to implementing electronic benefits over paper vouchers for WIC. And there is debate in the WIC community over card technologies: Offline vs. Online. Offline utilizes a smart card, a plastic card with an embedded microchip. These cards store all the information for the participant to obtain benefits and redeem at retailers with POS devices capable of reading the chip.



On the other hand, online utilizes a magnetic stripe card similar to a traditional credit or debit card. These cards access an online database where the participant’s benefits are redeemed through either the retailers existing cash register system or a dedicated terminal.



Both Online and Offline implementations are in operation today. WIC agencies have the opportunity to assess both technologies to decide which is best for their environment. Below are 7 considerations to take into account when evaluating online v. offline technology:

1. 
   The use of online or offline technology within a State for WIC EBT should be a rational business decision by the State that takes into account the State’s requirements, technology direction, stakeholder input, and a cost/benefit analysis.


2. FNS does not endorse or require a State to use either online or offline technology. Specifically, FNS has chosen to stay technology neutral and let states decide which technology to use. FNS’ only requirement is that once fully implemented, WIC EBT must by payable through the State’s administrative (NSA) grant (e.g., self-sustaining), and not require additional FNS funding for operations.


3. Michigan WIC EBT project is no longer a pilot, but is statewide; and has been shown to be cost-effective and sustainable. Consequently there are both online and offline projects that have demonstrated cost-effectiveness and sustainability.


4. Standards have been developed under the auspices of Accredited Standards Committee X9 for both online and offline WIC EBT. All of the existing WIC EBT projects are following these standards.


5. Interoperability, meaning that a WIC EBT card issued by one State can be used at a retailer in another State, does not exist for the WIC program. This is because States contract directly with retailers to provide WIC benefits, which is unlike the SNAP (Food Stamp) program where FNS authorizes retailers to accept SNAP benefits.


6. There are substantial costs in implementing either an online or offline WIC EBT project. The Texas WIC EBT project subsidized software development to support WIC EBT for a number of the retailer front-ends, and paid per lane subsidy for smart card readers for WIC authorized retailers integrating WIC EBT into their existing front-ends. Because of the efforts of Texas WIC, the major POS manufacturers now support offline WIC EBT. The same scenario is being played out for online WIC EBT, where Michigan and Kentucky are providing the leadership and direction in supporting the building of a POS infrastructure for online transactions. Future states implementing WIC EBT will be able to leverage the work done by these pioneer states.


7. However most retailers chose to utilize a third party processor (TPP) to acquire and route all of their electronic transactions (e.g., credit, debit, SNAP). There is a benefit to these retailers to utilize a TPP and only deal with one settlement and one reconciliation file. It is thought that retailers will chose to route WIC EBT transaction the same as they do SNAP transactions. But this is a business decision, not a requirement. Retailers can chose to route directly to the EBT processor and not pay any fees.
   

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For a further presentation of online and offline WIC EBT issues, be sure to attend Breakout Session 3: Under the Hood-a Side-by-Side Comparison of WIC EBT Programs Currently Operating, November 9, 3:45 p.m. at the EBT The Next Generation conference in New Orleans. For more information or to register, click here.

What Retailers Expect Out of WIC EBT

One of the key stakeholder groups in EBT is food retailers. Food retailers have been involved in EBT planning since before the first pilot in Reading, when they acceded to the use of debit card technology for disbursing food stamps because the online authorization process relieved them of any liability for misissuance.

Ten years or so ago, retailers were engaged in efforts to define transaction message sets and UPC databases for WIC EBT. That work helped aggregate information from several disparate WIC EBT pilots, and start us down the path of a common framework for WIC EBT, very similar to what we have today for SNAP EBT.

Today the retail community is actively and positively involved in helping shape the business rules for WIC EBT. The Food Marketing Institute, the trade association representing supermarkets and other food industry companies, provides an enormous amount of information on SNAP and WIC EBT on its website. This information, publicly available, helps inform the discussion about EBT.

But the issue remains: What do retailers really expect from WIC EBT? In trying to answer that question (only a retailer can answer it for sure), I go back to a discussion I had more than 15 years ago with Jim Rogers, president and CEO of what is now the Food Industry Alliance of New York State.

Retailers are wary of the supermarket becoming "the dumping ground of society's ills," he said. If our playgrounds and parks are littered with broken bottles, pass a bottle bill and make the retailers collect all of the old sticky bottles. Little Johnny can't add two plus two? No problem. Pass a unit pricing law and make retailers change the way they price merchandise because the schools didn't do their job. Can't eat fish because of high mercury content? Pass a battery bill and place the burden of compliance on the retailer.

Jim's point was that retailers are the ones who end up doing the heavy lifting on programs like bottle bills, SNAP and WIC. And retailers want a legitimate say in how those programs operate--before the UPS guy drops off a bunch of terminals.

Any EBT program worth its salt involves retailers from end-to-end in the program. This goes beyond a cursory meeting as the project is getting ready to launch. It involves sitting down with retailers before the RFP goes out, seeking retail input during system design and taking retailer concerns into consideration for system operations. It might even involve having retailers help evaluate the retail management solutions in vendor EBT proposals. Programs that involve retailers from the beginning tend to have the fewest problems.

There are many stakeholder groups whose concerns must be addressed in an EBT project. They include, without limitation, consumers, retailers, federal staff, the state agency, and the EBT processor, its vendors and subcontractors. All should be involved in the development of the project. But the difference between retailers and their customers on one hand, and the rest of us, on the other, is best explained by the old "ham and eggs" theory. When it comes to making a plate of ham and eggs, there's no doubt that the chicken is involved. But it's the pig that's really committed.

So it is with EBT. We're all involved, but it's the retailer's store, his customer, and ultimately his livelihood that makes him really committed to the project.

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For a deeper discussion of what retailers expect out of WIC EBT catch "Retailer Expectations with WIC," Monday, 2:15-3:30 pm at EBT The Next Generation. This session features Jennifer Smith, senior manager for regulatory compliance for Wal-Mart Stores, Inc.

To register or for more information, click here.