electronic benefits transfer systems, but state officials who must administer the payments are skeptical about the economics. "Who is going to pay for the infrastructure?" asked Sandra Mathas, director of the EBT project in Georgia, during a conference sponsored by the Electronic Funds Transfer Association. Ms. Mathas made her comment after a gung-ho talk on the status and potential of EBT-the conversion of welfare checks, food stamps, and other paper-based benefits to plastic cards and electronic payment terminals. "EBT is here, it's real," said Martha N. Johnson, chief of staff of the General Services Administration. "All parties must be willing to rethink the way they do business." More than half the states have started distributing food stamps and cash benefits using conventional magnetic stripe cards, which allow them to piggyback on payment systems established by the private sector. Chip cards with their enhanced storage capacity are seen as well suited to programs such as Medicaid, Head Start, school lunches, and WIC-the Women, Infants, and Children nutritional plan. WIC, for example, monitors such data as how much milk and cereal a family buys each month. As a result, the system requires more storage and processing capabilities than a magnetic stripe can handle. Merchants, processors, and government officials are eager to automate the more complicated government programs, but they are hampered by the economic and logistical problems posed by smart cards and their need for compatible reading devices. Dan Chambers, manager of Arkansas' EBT unit, said smart card terminals would have to be widespread. "It's going to be hard for us to do it until" the infrastructure in place, he said. Ms. Johnson of the federal GSA tried to address this point by saying EBT administrators must be "willing to think outside of the box." Ohio has had a smart card system for food stamp recipients since 1992, and Wyoming has rolled out smart cards for WIC beneficiaries. But the cost per case in Wyoming is $5 a month, which is considered prohibitive. Arthur Burger, president of Burger, Carroll & Associates Inc. of Santa Fe, N.M., said the industry must find a way to better the $1 per case costs of WIC overall. To achieve economies of scale, conference attendees said, the government should bundle applications together. "The one way to achieve success of the smart card is to integrate payment solutions on one card," said John Wojcik, director of business development and government programs at Verifone Inc. "It's going to be a reality in the country in the next five years."

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