EBT is the automation of cash or cash-like benefits through electronic authorization, data capture and settlement processes. This is accomplished with the use of plastic magnetic-striped cards at the point-of-sale terminal. The end result is the elimination of coupon benefits distribution. The electronic process results in increased security, thereby reducing fraud and benefit misuse.

The US Government has mandated that all federal financial support services and entitlements be distributed through direct electronic deposit by the year 2002.