Deluxe Electronic Payment Systems Inc., which provides much of the processing support to government electronic benefits transfer systems, is having trouble keeping up with demand.
Several states working with the company to deliver food stamps and other services have been beset by system failures. Telephone inquiries from aid recipients and merchants have gone unanswered for long periods.
On top of that, the transaction services subsidiary of Deluxe Corp., Shoreview, Minn., has faced legal problems. This month a federal court in Pennsylvania ordered it to pay $30 million to Mellon Bank Corp. in a breach of contract suit involving a joint bid for the benefits processing contract of the Southern Alliance of States.
The Deluxe unit thus seems to be absorbing many of the growing pains of electronic benefits transfer, or EBT, a government efficiency initiative that has been shifting into high gear during the last couple of years.
The Milwaukee-based payments unit is a primary EBT contractor in seven states and a secondary contractor to a Citicorp affiliate in 12 more. An accusation that it had decided to stop working with Mellon and join Citibank EBT Services, the largest electronic benefits purveyor, in the Southern Alliance deal prompted the lawsuit. Deluxe said it may appeal. Its various contracts put Deluxe in direct or indirect service to millions of aid recipients, including more than 2.7 million food stamp households.
Deluxe would not make company officials available for comment, but it answered questions submitted in writing.
The company said it has responded to system problems by enhancing its equipment, hiring people, and outsourcing a portion of call center activities-fielding cardholder and merchant inquiries-to Information Technology Inc. of Lincoln, Neb.
"The result thus far in November has been very positive," the Deluxe statement said. "We will continue to plan for and add additional customer service representatives, lines, and equipment as we roll out. Our track record in EBT processing is very good, and we have met with states and discussed the plans and resources being applied to address current and future rollouts."
Deluxe won a vote of confidence Monday. Prompted by the service complaints, the Department of Agriculture, which oversees the food stamp program, examined Deluxe's processing reports for the first few days of November and decided it is ready to boost its capacity.
Deluxe's biggest mishap, a system outage Oct. 14, caused processing delays and telephone call overloads in 19 states.
"The Oct. 14 processing slowdown was caused by an operator error," Deluxe observed. "It lasted approximately one hour and 20 minutes and impacted EBT processing significantly in Alabama, Massachusetts, and Louisiana, and had a limited impact in Missouri, Kansas, Oregon, and Arkansas."
But that problem came after similar delays earlier in October and over Labor Day weekend, and it prompted a conference call among state EBT project managers and Agriculture Department officials.
Deluxe has "worked on these problems and tried to get them resolved," said Gerald Siscoe, the Kansas EBT coordinator. "I'm not saying they are totally gone (but) things have to be going somewhat better."
"If you don't have the people, and they're not trained, and you don't have the lines going in there, you're going to have those problems," he said.
Maria Woodyear, communications director for the Louisiana Retailers Association, said some woes persist. "People in the state will tell you we have no problems in Louisiana," she said. "If that's the case, why is my phone ringing 57 times in two and a half hours?"
Recalling the Oct. 14 crash, she said, "I myself called to get an answer to a question and spent two hours and 15 minutes," she said. "That's not acceptable if you're standing in a store with somebody who wants to make a purchase for groceries. By that time the ice has melted and the milk is spoiled."
Jeff Cohen, acting director of the Agriculture Department's benefit redemption division, said the computer problems Deluxe had experienced caused a ripple effect Oct. 14. "What started as a few glitches on the processing side were exacerbated by the customer service side," he said.
Each state government's contract stipulates that call centers must answer telephones promptly. Citibank said it will work with Deluxe to make sure that requirement is met.
A Citibank spokeswoman said, "If issues arise as a result of any subcontractor's performance, it is our standard practice to immediately review and remedy the situation."
"There is no reason to think the system can't handle this volume," Mr. Cohen said of Deluxe. The recent meetings were held to see "what we can do to make it easier to handle."
