Legislation should be proposed to facilitate nationwide implementation of EBT. OMB should direct the Electronic Benefit Transfer Task Force to perform the following policy and legislatively oriented tasks. The team should draft a report of its activities by July 1994. ---Review existing legislation and regulations for each program that may affect nationwide implementation of EBT and draft appropriate changes. For example, one key issue concerns the applicability of Regulation E to EBT. Examine the comments submitted in response to the Regulation E proposal making it applicable to EBT, and determine a governmentwide position on recipient liability in EBT processing. ---Adopt a uniform EBT services pricing structure and attendant funding agreements. Identify standard categories and construct an EBT processing pricing structure to include capture and financial settlement of transactions by and among processing centers and networks, including industry and federal and state operations. Within the pricing structure, address cross-program cost effectiveness. This should maximize the benefits of economies of scale, leverage the commercial direct debit infrastructure, and ensure that cost-effective criteria are used to facilitate and expedite the migration to EBT. ---Define a settlement process that is the financial reconciliation of all debit and credit transactions on a daily basis. High-volume/same-day settlement processing is required to support EBT. This processing closely aligns with and can leverage the financial services industry's current settlement exchange system. The Treasury's Financial Management Service and the Richmond Federal Reserve Bank are in the process of assessing implementation approaches. ---Develop integrated EBT program and operating rules. For example, recipient responsibilities presently vary among different benefit programs. Obtain agreement across programs on how to combine program requirements into a uniform set of EBT rules and responsibilities. Review and modify ongoing efforts to adapt industry's electronic transfer operating procedures and rules. Coordinate with private sector entities to define the government EBT system: this includes technical considerations such as standards and type of equipment deployed, security and privacy protection, and operating rules (e.g., roles and responsibilities of all parties, liabilities, indemnifications, and settlement timing). ---Define benefits delivery options. The presumed method of payment for all new enrollees in direct federal programs would be direct deposit or EBT service. While total conversion from paper checks to electronic payments is the goal, it probably is best to start with a highly publicized voluntary direct deposit program and phase in EBT service over a 3-year period. However, a voluntary dual paper-based and EBT system is not the preferred method for the federal-state administered programs, especially for the Food Stamp Program. An objective shared by the Food and Nutrition Service, food retailers, and financial institutions is to eliminate paper coupons, not create a dual-delivery system. A dual system would be too costly to manage, hinder the interstate flow of transactions, cripple efforts to obtain economies-of- scale pricing, and defeat efforts to combat fraud and abuse in the trafficking of coupons. Consumer and recipient advocacy groups will need reassurance that strong recipient preference exists for EBT and that adequate privacy safeguards are in place.
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