A recent study revealed that more than 10 percent of the households in the United States of America doesn’t have a valid deposit account. These households are also known as “unbanked”. As a result, they will not be able to engage in any electronic fund transfers or deposits. And, this scenario is extremely high amongst households that have minimal income. How do these households receive deposits? Is there a means? Certainly yes! This is where the electronic benefits transfer (EBT) becomes useful.
Electronic Benefits Transfer targets families and individuals without a deposit bank account. These families can receive cash that is transferred through electronic means. This could be any machine like the retail point of sale terminals or the automated teller machines. The EBT is envisioned by the state and federal governments. The primary benefit of this mode of money transfer would be convenience.
Fun fact: A estimate that was performed in the year 2019 revealed that electronic benefits transfer has made an annual savings of nearly 190 million USD. And, this figure is only going to increase in the upcoming years.
Using electronic benefits transfer
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With the help of electronic benefits transfer, the consumer will be able to make use of their EBT card at any food outlet, or essential store. The outlet or store needs to be authorized by the local authorities. For example, in the united states, the outlet has to be licensed by the USDA’s SNAP scheme. Of course, many cash rewards and benefits can be witnessed by the recipient. If required, they can even avail cashback offers at participating in automated teller machines.
In order to make EBT a working solution, agencies are expected to collaborate with contractors. Thus, the agency has to get hold of their very own EBT system. This system will be different from the traditional point of sale devices.
How does the tax system work on EBT?
A lot of experts are curious to know how the taxation rules will change to accommodate the electronic benefits transfer. Rules state that it is absolutely illegal for taxes to be charged on any deal that involves the EBT. In fact, card processing charges, surcharges, and sales tax should not be incurred from the SNAP account. This is because the EBT falls directly under benefit programs. And, it is meant to ensure the welfare of the recipient.
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When is EBT useful?
Technically, the electronic benefits transfer will be extremely useful during pandemics, catastrophic climates, and war.