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Chase glitch hits food stamps

By Claes Bell, CFA · Bankrate.com
Tuesday, November 20, 2012
Posted: 3 pm ET

Last week, millions of people had their cards declined at grocery stores across the U.S., thanks to a computer glitch at JPMorgan Chase & Co. The twist? Those cards weren't debit cards or credit cards, they were government benefit cards.

These days, most government benefits from programs like Temporary Assistance for Needy Families, commonly referred to as welfare, or the Supplemental Nutritional Assistance Program, commonly known as food stamps, are loaded on to electronic benefit transfer, or EBT, cards rather than distributed as paper checks or coupons.

If you've ever seen someone use an EBT card or have used one yourself, you know that it looks almost identical to a debit card. Like debit cards, they're swiped at terminals. Users have to enter a PIN. Then, the transaction is processed electronically.

In a lot of states, that last part is handled by Chase, which is contracted by 24 state governments through a subsidiary called JPMorgan Electronic Financial Services to administer the EBT cards.

Unfortunately, a computer glitch at Chase on Friday morning spelled trouble for EBT card users in 10 states, including Florida, New York, Pennsylvania, Georgia, South Carolina, Indiana, Kentucky, Connecticut, West Virginia and Delaware. All told, that meant no access to benefits for about 7 million SNAP beneficiaries in those states.

Mike Feusco, a Chase spokesman, says technical teams began working on the problem as soon as they noticed something was amiss.

"We have technical teams monitoring our programs around the clock," Feusco says. "We caught it as soon as it occurred, and we worked very quickly to resolve it.

Still, it took six hours to resolve the problem, he says.

Feusco was quick to emphasize that the outage was isolated to JPMorgan's EBT systems.

"It did not affect debit, credit or any other cardholders," Feusco said.

Nevertheless, I think it's fair to say the incident underscores the fragility of today's high-tech systems of payment. Cash and checks may be clunky and inconvenient, but their ability to conduct transactions isn't contingent on the smooth functioning of massive networks run by far-off banks of servers.

I'm a big fan of electronic payments, but imagine if something similar to this incident happened to a major bank's payments systems that went down at a particularly bad time, say Black Friday, or suffered an extended outage, rendering debit cards and credit cards useless. Not good.

What do you think? Are today's payment systems too fragile?

Follow me on Twitter: @ClaesBell

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46 Comments
Wendy
November 21, 2012 at 10:55 am

I think it is ridicules that you are "Stock piling" food from a food bank. I am sorry that you are on assistance but to stock pile food (and possibly keep others from receiving their share) it HORRIBLE!

We are too dependent on the government and banks. Social security will not be around when I am able to claim it - I am paying into it but I am expecting that I will have to support myself. The future is uncertain but we have only ourselves to blame when the excrement hits the vortex.

Vickie
November 21, 2012 at 10:42 am

Rick,

Please climb off of your high horse...for many people in this country, assistance is their only "means of living" and not by choice, by life circumstance(s)! That is not to say that folks should not attempt to be prepared, but things happen that make it necessary to use your "back up" and there may not be funds available to replace the "back up" provisions when needed. I have been a working tax paying citizen for the past 40 years and in my mid 50s at this time; however, I broke my back 18 years ago which put a crimp in my life plan, but I keep going, and going, because I can't lie down and die. Many people depend on me to keep going and these many people rely on "assistance" in addition to myself. So, I ask you again, please climb down, before you fall down.

Maggie
November 21, 2012 at 10:25 am

Nancy......you are one smart woman. I have been blessed,and also worked hard, and have never been on government assistance but I live the same way.I always save some,give some and spend for what I need. You are living proof of what I have always said.Take care of yourself and prepare for bumps and or cliffs in the road,they almost always show up. There may not be someone to help.Take care of yourself first.

John
November 21, 2012 at 10:04 am

Beginning next year, all social security checks will be payed electronically.[ no paper checks ] Lets hope that transition goes well.

ARTHUR SCHOTTENHEIMER
November 21, 2012 at 10:02 am

MOST PEOPLE ON FOOD STAMPS ALSO USE FOOD BANKS. SO A 2 OR 3 DAY PERIOD OF NOT BEING ABLE TO USE FOODS STAMPS WOULD NOT BE A PROBLEM. BUT OF COURSE YOU WILL ALWAYS HAVE PEOPLE WHO DO NOT PLAN AHEAD. MY WIFE AND I ARE SENIORS AND WE HAVE A STOCK PILE OF FOOD FROM THE FOOD BANK, WE COULD GO FOR A COUPLE OF WEEKS WITH OUT THE STAMPS. PEOPLE NEED TO USE THEIR HEADS AND HAVE FOOD ON HAND FOR A PROBLEM LIKE THAT.

marmil
November 21, 2012 at 9:59 am

I am also on a food stamps in NJ- last year there was a glitch as they call it & I didn't get my money available for 3 weeks- it was always excuses on their part

Rick Phillips
November 21, 2012 at 9:59 am

The point is not weather some one can hold out 6 hours, before being able to use the system. But how dependent we are on these new electronic infrastructural systems. We are at the mercy large institutions that control them. I can not see a fail safe way to make the system perfect but there must be back up measures for instances like this.

Nancy
November 21, 2012 at 9:54 am

I get one check a month and budget it very carefully. A small portion of it, as difficult as it is, is put away for unanticipated expenses.
Some food should always be on hand anyway. Things like tuna, soup, rice, pasta, oatmeal hold up for a while and can be purchased when it goes on sale.
Initially it may not be easy to buy one additional meal each month, but if you can do that for a year it means twelve meals on hand. Even if it is one extra meal every other month. One you have 10 or 12 meals on hand, then you only need to maintain that number of extra meals. Snow storms, hurricanes, car problems, illness, and other emergencies happen.

Gordon Burns
November 21, 2012 at 9:17 am

Rick,I don't think it may be difficult for you but a Senior who gets a ride to the supermarket one day a week to pick up their meager weekly food order it would be a problem or a parent that has to tell their children sorry you have to wait until tomorrow to eat. We seem to forget how many people are living day to day in this environment.

Rick
November 21, 2012 at 8:50 am

NO... It is not, someone should be able to hold on for 6 hours or even a day.. This is assistance not means of living