SNAP benefit cards would move to chip and tap under a USDA proposal

If you run a store that takes SNAP, the card at your till is almost certainly a magnetic stripe card: only seven states had issued chip cards by August. Stolen benefits are the reason that is about to change. On 23 October 2026, the Department of Agriculture's Food and Nutrition Administration published a proposed rule that would change it.

The proposal amends 7 CFR Parts 271, 274 and 278. Written comments "must be received on or before December 22, 2026."

Why now

Congress asked for this. Section 501(a) of Title IV, Division HH of the Consolidated Appropriations Act, 2023 (Public Law 117-328) "requires that the Secretary promulgate regulations through notice-and-comment rulemaking" on card security.

The notice puts numbers on the theft. As of the second quarter of federal fiscal year 2025, "753,929 claims for replacement of stolen SNAP benefits have been approved," with "a total replacement value of $360,441,561." Around 42 million people received SNAP in an average month in fiscal year 2025, so a lot of households sit behind those claims. Chip cards are starting to appear, but slowly: "As of August 2026, seven States have issued EBT chip cards to participants with additional States in progress."

What the proposal would require

The biggest change is the card itself. State SNAP agencies would have to upgrade to EBT cards that use chip and NFC (tap) technology, and the department proposes "a two-year timeframe after the date of publication of a final rule" to get there. Households would have to activate the new cards when they arrive.

PINs get tighter too. States would have to prohibit common PINs; the notice says "there is often significant vulnerability to 'soft' PINs that may be easily guessed."

Households would get more control over their own accounts. The notice lists options such as "benefit account freezing or blocking of purchases of specific types or in specific locations," including "an account block on out-of-State transactions" and "an account block on card-not-present (online) transactions." Transaction history would grow as well, to "12 months of transaction history instead of the current requirement of 2 months."

For online purchases, the proposal relies "primarily" on "the use of a CSC and expiration date," the security code and expiry printed on the card. Processors would also be expected to use multifactor authentication on their own internal systems.

What it asks of retailers and processors

Retailers carry a fair share of this. Stores would need equipment that reads chip and contactless cards. All "non-exempt retailers" would "be financially responsible for any EBT equipment, supplies, and related services." Manual vouchers, the paper fallback, would be "authorized only when there is a significant EBT connectivity problem."

One line works in retailers' favor. A new section would clarify that "interchange fees shall not apply to any EBT transaction," including where a store uses commercial equipment from an independent third-party processor.

EBT host processors and third-party processors would have to monitor terminals and verify that retailers are authorized. States would have 180 days to comply with a new version of the X9.58 or ISO 8583 specifications, measured from when the update is published.

The department estimates one-time costs of "roughly $283 million combined in FY 2028-2029" across governments, households and businesses, with ongoing costs starting in fiscal year 2030 and roughly $152 million in total over fiscal years 2028 through 2037.

What it doesn't cover

The notice does not name banks as covered parties. It also stops at SNAP: separately issued cards for other programs, such as Summer EBT or TANF, are outside it, although those benefits are covered when they sit on the same card as SNAP.

What it could mean

We think the people who should read this first are retailers, especially small grocers and convenience stores. A terminal that already takes chip and tap for debit cards may need little more than configuration, but a store running older EBT-only equipment is looking at a purchase, and the proposal is clear that the store pays for it. Two years sounds generous until you count the states, processors and card printers that all have to move in the same window.

For banks and credit unions, the direct reach is small. Our guess is the indirect effects matter more. Merchant clients will ask about terminal upgrades, and the out-of-state and online blocks are a useful model for anyone setting card controls on their own debit products. If skimming crews lose easy SNAP targets, it seems likely some of that effort moves to whatever magnetic stripe cards are still in circulation, so a debit portfolio that still relies on stripe fallback is worth a look.

If your organization takes SNAP, check which of your locations have chip-capable EBT equipment today, and consider commenting on the two-year timeline before 22 December.