South Carolina Signs $51 Million EBT Contract With Xerox

South Carolina’s Department of Social Services expects to simplify and better secure the delivery of government assistance to nearly half a million state residents through an electronic benefits transfer (EBT) initiative supported by Xerox Corp.

Xerox is replacing JPMorgan Chase as the state’s EBT card provider. Chase recently said it was leaving the commercial and government prepaid card market, reportedly because of hackers and liability. Gloria Colgan, managing director of Market Platform Dynamics, offered up her views on Chase’s departure from the commercial prepaid market in a recent PYMNTS.com commentary.

State benefit disbursement fraud is estimated at between $6 billion to $10 billion annually, and it is expected to double over the next five years, Xerox and the South Carolina’s Department of Social Services said in the contract announcement.

Some 420,000 South Carolina residents use reloadable EBT debit cards to access Supplemental Nutrition Assistance Program (SNAP) funds. Under a $51 million, seven-year contract, Xerox will provide the cards, process the card transactions, manage interactions with retailers and ATM networks, and offer customer support, according to the contract announcement.

Cardholders may use the cards for approved purchases or cash withdrawals at authorized retailers and ATMs.

Xerox’s Web-based data warehouse, which comes programmed with 70 prewritten reports developed through Xerox’s experience working with other state EBT programs, will aid the state’s SNAP fraud unit in detecting suspicious and fraudulent card behavior.

Xerox’s data warehouse in South Carolina can begin tracking for suspicious behavior right away, without having to customize or create the required reports, they said.

“With this card program, South Carolina is making sure benefits are delivered quickly and easily, and through a system that will help the state prevent fraud,” said Nancy Collins, Xerox group president, state enterprise solutions, said in a statement. “Programs like this are modernizing state government by simplifying the processes at the critical intersection between benefits delivery and people who need help making ends meet.”

Also under the deal, Xerox will support another 20,000 residents who access Temporary Assistance for Needy Families benefits using a reloadable MasterCard debit card. Recipients can access the funds anywhere MasterCard is accepted, the companies said.

Xerox works with 29 states supporting 25 million people in getting cost-effective, convenient access to their benefits. Up to 28 percent of all adults in the U.S. are unbanked or underbanked, and they rely on cash to pay for goods and services.

Innovation in the card business can allow underbanked or unbanked Americans to participate in the ever-growing cashless economy, Xerox noted in a statement provided to PYMNTS.com.

“States need tools that use disruptive technologies (like mobile, social media, data analytics, and the cloud) to connect unbanked people with today’s financial systems,” Xerox said. “Prepaid, state-issued cards allow people to make payments and obtain cash more easily, while avoiding the risk and costs that can be associated with checks. For people who don’t have a bank account, the only way to turn a check into currency is to use a check-cashing service, which usually incurs a steep fee.”

Nationally, cards are being used to deliver funds to recipients of state tax refunds, Social Security benefits, unemployment insurance and more. Future application of these technologies could mean card solutions for utility providers, public housing agencies, or even health and wellness agencies.

“There are also ways for state programs to leverage mobile technology,” Xerox said.