Trump Administration Proposes Mandatory Chip Upgrades for Food Assistance Cards to Fight Fraud

In a major step to combat a form of fraud that has robbed food stamp recipients of millions of dollars, the Trump administration is proposing a requirement for states to bolster the security features on their food assistance cards.

In recent years, the Supplemental Nutrition Assistance Program, or SNAP, has been the repeated target of card skimming, when thieves extract personal information from payment terminals and drain money from accounts.

Most SNAP cards rely on a magnetic stripe for swipe payment, which tends to be vulnerable to skimming because it does a poor job of securing the data stored on cards.

Many banks in the US took action against this issue over a decade ago by upgrading their cards to include microchips and tap-to-pay, which are considered more secure. But states have lagged in making such a transition for Electronic Benefits Transfer (EBT) cards, which SNAP recipients use to access food aid. Currently, fewer than a third of states have made the switch or are in the process of doing so, according to the US Department of Agriculture (USDA).

Under the proposed rule released by the USDA last week, all states would have to adopt chip-enabled EBT cards. Retailers that accept SNAP benefits would also have to have payment terminals that support tap-pay. The USDA's Food and Nutrition Administration, which administers SNAP, attributed card skimming as a reason behind the proposal.

In its summary of the rule, the Food and Nutrition Administration said these proposed changes will protect SNAP benefits from thieves and ensure benefits are accessible by approved households.

Back in January, the USDA Office of Inspector General projected that SNAP theft could climb to $233 million between 2025 and 2026, largely as a result of skimming. A recent ProPublica investigation found that last year, $470 million was stolen electronically from SNAP recipients. The total was calculated using data from Propel, an app that helps SNAP recipients check their food benefits.

According to Propel, in most states stolen benefits are not replaced, leaving recipients to make difficult choices, such as skipping meals or borrowing money in order to pay for groceries.

Earlier this month, NPR reported that food assistance card modernisation had widespread support from state officials and federal watchdogs, as well as Republicans and Democrats in Congress. But money has been a major barrier for states to make the switch. According to the Government Accountability Office, chip-enabled cards are about 10 times more expensive to produce than their magnetic stripe counterparts.

The federal push comes as state SNAP agencies face new budget pressures triggered by President Trump's One Big Beautiful Bill Act. The proposed regulation recognised the financial barrier, adding that the USDA is interested in hearing from state agencies about the cost burden. As stewards of taxpayer dollars, the department considers these administrative costs a necessary investment to deter the loss of federally funded SNAP benefits, the proposed rule said.

The public has 60 days to submit comments on the proposal before the USDA publishes a final rule. The department is considering giving states a two-year deadline from that publication date to implement the rule, but it also welcomed input on whether that is enough time. When asked if the department would consider providing funding to help states upgrade their card technology, the USDA said that for years states had access to administrative funds to stop this egregious abuse of taxpayer resources, yet few acted.

The USDA added that the proposed rule has been in the works for nearly four years. It estimates that the changes will reduce stolen benefits by at least $1.5 billion over the next decade.

SNAP has been one of the focus areas in the Trump administration's war on fraud. Last week, the Justice Department announced that its fraud division helped uncover nearly $42 million in schemes targeting food benefits. The investigations ranged from identity theft to retailers illegally exchanging cash for food benefits.