Agriculture Department Proposes New Card Security Rules
By Legis1 Editorial
· Edited by Zarrin Ahmed
Thursday, October 29, 2026 · 2 min read
Why It Matters
Households that receive federal food assistance would face new SNAP EBT security requirements under a US Department of Agriculture (USDA) proposal to replace magnetic-stripe benefit cards with chip-and-tap technology.
The rule would impact approximately 42 million Supplemental Nutrition Assistance Program (SNAP) recipients, according to USDA estimates, and require all 53 state SNAP agencies and authorized retailers to complete the transition within two years of a final rule's publication. NPR, citing a USDA estimate, reported that the changes could reduce stolen benefits by at least $1.5 billion over 10 years.
This proposal implements a directive from the Consolidated Appropriations Act, 2023 (Public Law 117-328), requiring state agencies to take measures against card skimming, cloning, and similar fraud.
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The National Grocers Association supported the chip-card requirement, with its government affairs head noting that states adopting chip cards had seen a significant drop in skimming fraud. NACS, the convenience-store trade group, also backed the proposal, stating that chip technology would modernize security and make benefits easier to use.
The Broader Context
Currently, 7 C.F.R. § 274.1 allows states to issue benefits through either an online EBT system or an offline system storing balances on the card. The proposed text would replace this classification with "Reserved" and add a sentence stating that "issuance systems shall not rely on EBT cards which conduct transactions solely with magnetic stripes."
The current regulations require states to make up to two calendar months of transaction history available on request; the proposal would extend this to 12 months and add a new paragraph requiring states to offer card freezing, blocking of out-of-state and card-not-present transactions, transaction amount limits, and activity alerts.
As of August 2026, only seven of the 53 state agencies had issued chip cards. States not yet upgraded must still support a magnetic-stripe fallback during the transition, but the rule would require a chip or NFC transaction to be attempted first, with magnetic-stripe use permitted only after a chip or NFC attempt fails. All new cards would also carry a three-digit security code printed on the back, issued inactive and activated by the household before use.
The proposal would also end a manual-voucher exemption in place since 2014 and require retailers using manual vouchers to transition to mobile point-of-sale devices.
USDA estimates one-time implementation costs across state agencies, the federal government, households, and businesses at roughly $283 million in fiscal years 2028 and 2029, with ongoing costs of approximately $152 million over fiscal years 2028 through 2037. As of Q2 2025, 753,929 claims for replacement of stolen SNAP benefits had been approved, totaling $360,441,561.
Written comments are due by December 22 and can be submitted at regulations.gov (docket FNS-2025-0137). No compliance date takes effect until a final rule is published.
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