7 U.S.C. § 2016 — Issuance and use of program benefits

**(a) In general** Except as provided in subsection (i), EBT cards shall be issued only to households which have been duly certified as eligible to participate in the supplemental nutrition assistance program. **(b) Use** Benefits issued to eligible households shall be used by them only to purchase food from retail food stores which have been approved for participation in the supplemental nutrition assistance program at prices prevailing in such stores: Provided, That nothing in this chapter shall be construed as authorizing the Secretary to specify the prices at which food may be sold by wholesale food concerns or retail food stores. **(c) Design** (1) **In general** — EBT cards issued to eligible households shall be simple in design and shall include only such words or illustrations as are required to explain their purpose. (2) **Prohibition** — The name of any public official shall not appear on any EBT card. **(d) Delivery and control procedures** The Secretary shall prescribe appropriate procedures for the delivery of benefits to benefit issuers and for the subsequent controls to be placed over such benefits by benefit issuers in order to ensure adequate accountability. **(e) State issuance liability** Notwithstanding any other provision of this chapter, the State agency shall be strictly liable to the Secretary for any financial losses involved in the acceptance, storage and issuance of benefits, except that in the case of losses resulting from the issuance and replacement of authorizations for benefits which are sent through the mail, the State agency shall be liable to the Secretary to the extent prescribed in the regulations promulgated by the Secretary. **(f) Alternative benefit delivery** (1) **In general** — If the Secretary determines, in consultation with the Inspector General of the Department of Agriculture, that it would improve the integrity of the supplemental nutrition assistance program, the Secretary shall require a State agency to issue or deliver benefits using alternative methods. (2) **Imposition of costs** (A) *In general* — Except as provided in subparagraph (B), the Secretary shall require participating retail food stores (including restaurants participating in a State option restaurant program intended to serve the elderly, disabled, and homeless) to pay 100 percent of the costs of acquiring, and arrange for the implementation of, electronic benefit transfer point-of-sale equipment and supplies, including related services. (B) *Exemptions* — The Secretary may exempt from subparagraph (A)— (i) farmers’ markets and other direct-to-consumer markets, military commissaries, nonprofit food buying cooperatives, and establishments, organizations, programs, or group living arrangements described in paragraphs (5), (7), and (8) of [section 2012(k) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section2012/k&num=0&edition=prelim); and (ii) establishments described in paragraphs (3), (4), and (9) of [section 2012(k) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section2012/k&num=0&edition=prelim), other than restaurants participating in a State option restaurant program. (C) *Interchange fees* — Nothing in this paragraph permits the charging of fees relating to the redemption of supplemental nutrition assistance program benefits, in accordance with subsection (h)(13). (3) **Devaluation and termination of issuance of paper coupons** (A) *Coupon issuance* — Effective on the date of enactment of the Food, Conservation, and Energy Act of 2008, no State shall issue any coupon, stamp, certificate, or authorization card to a household that receives supplemental nutrition assistance under this chapter. (B) *EBT cards* — Effective beginning on the date that is 1 year after the date of enactment of the Food, Conservation, and Energy Act of 2008, only an EBT card issued under subsection (i) shall be eligible for exchange at any retail food store. (C) *De-obligation of coupons* — Coupons not redeemed during the 1-year period beginning on the date of enactment of the Food, Conservation, and Energy Act of 2008 shall— (i) no longer be an obligation of the Federal Government; and (ii) not be redeemable. (4) **Termination of manual vouchers** (A) *In general* — Effective beginning on February 7, 2014, except as provided in subparagraph (B), no State shall issue manual vouchers to a household that receives supplemental nutrition assistance under this chapter or allow retail food stores to accept manual vouchers as payment, unless the Secretary determines that the manual vouchers are necessary, such as in the event of an electronic benefit transfer system failure or a disaster situation. (B) *Exemptions* — The Secretary may exempt categories of retail food stores or individual retail food stores from subparagraph (A) based on criteria established by the Secretary. (5) **Unique identification number required** (A) *In general* — To enhance the anti-fraud protections of the program, the Secretary shall require all parties providing electronic benefit transfer services to provide for and maintain unique terminal identification number information through the supplemental nutrition assistance program electronic benefit transfer transaction routing system. (B) *Regulations* (i) *In general* — Not earlier than 2 years after February 7, 2014, the Secretary shall issue proposed regulations to carry out this paragraph. (ii) *Commercial practices* — In issuing regulations to carry out this paragraph, the Secretary shall consider existing commercial practices for other point-of-sale debit transactions. (C) *Operation of individual point of sale device by farmers’ markets and direct marketing farmers* — A farmers’ market or direct marketing farmer that is exempt under paragraph (2)(B)(i) shall be allowed to operate an individual electronic benefit transfer point of sale device at more than 1 location under the same supplemental nutrition assistance program authorization, if— (i) the farmers’ market or direct marketing farmer provides to the Secretary information on location and hours of operation at each location; and (ii) (I) the point of sale device used by the farmers’ market or direct marketing farmer is capable of providing location information of the device through the electronic benefit transfer system; or (II) if the Secretary determines that the technology is not available for a point of sale device to meet the requirement under subclause (I), the farmers’ market or direct marketing farmer provides to the Secretary any other information, as determined by the Secretary, necessary to ensure the integrity of transactions processed using the point of sale device. **(g) Staggered issuance procedures** (1) The State agency may establish a procedure for staggering the issuance of benefits to eligible households throughout the month. Upon the request of the tribal organization that exercises governmental jurisdiction over the reservation, the State agency shall stagger the issuance of benefits for eligible households located on reservations for at least 15 days of a month. (2) **Requirements.—** (A) *In general.—* — Any procedure established under paragraph (1) shall— (i) not reduce the allotment of any household for any period; and (ii) ensure that no household experiences an interval between issuances of more than 40 days. (B) *Multiple issuances.—* — The procedure may include issuing benefits to a household in more than 1 issuance during a month only when a benefit correction is necessary. **(h) Electronic benefit transfers** (1) **In general.—** (A) *Implementation.—* — Not later than October 1, 2002, each State agency shall implement an electronic benefit transfer system under which household benefits determined under section 2017(a) or 2035 of this title are issued from and stored in a central databank, unless the Secretary provides a waiver for a State agency that faces unusual barriers to implementing an electronic benefit transfer system. (B) *Timely implementation.—* — Each State agency is encouraged to implement an electronic benefit transfer system under subparagraph (A) as soon as practicable. (C) *State flexibility.—* — Subject to paragraph (2), a State agency may procure and implement an electronic benefit transfer system under the terms, conditions, and design that the State agency considers appropriate. (D) *Operation.—* — An electronic benefit transfer system should take into account generally accepted standard operating rules based on— (i) commercial electronic funds transfer technology; (ii) the need to permit interstate operation and law enforcement monitoring; and (iii) the need to permit monitoring and investigations by authorized law enforcement agencies. (2) The Secretary shall issue final regulations that establish standards for the approval of such a system and shall periodically review such regulations and modify such regulations to take into account evolving technology and comparable industry standards. The standards shall include— (A) defining the required level of recipient protection regarding privacy, ease of use, and access to and service in retail food stores; (B) the terms and conditions of participation by retail food stores, financial institutions, and other appropriate parties; (C) (i) measures to maximize the security of a system using the most recent technology available that the State agency considers appropriate and cost effective and which may include personal identification numbers, photographic identification on electronic benefit transfer cards, and other measures to protect against fraud and abuse; and (ii) unless determined by the Secretary to be located in an area with significantly limited access to food, measures that require an electronic benefit transfer system— (I) to set and enforce sales restrictions based on benefit transfer payment eligibility by using scanning or product lookup entry; and (II) to deny benefit tenders for manually entered sales of ineligible items. (D) system transaction interchange, reliability, and processing speeds; (E) financial accountability; (F) the required testing of system operations prior to implementation; (G) the analysis of the results of system implementation in a limited project area prior to expansion; and (H) procurement standards. (3) In the case of a system described in paragraph (1) in which participation is not optional for households, the Secretary shall not approve such a system unless— (A) a sufficient number of eligible retail food stores, including those stores able to serve minority language populations, have agreed to participate in the system throughout the area in which it will operate to ensure that eligible households will not suffer a significant reduction in their choice of retail food stores or a significant increase in the cost of food or transportation to participating food stores; and (B) any special equipment necessary to allow households to purchase food with the benefits issued under this chapter is operational at a sufficient number of registers to provide service that is comparable to service provided individuals who are not members of households receiving supplemental nutrition assistance program benefits, as determined by the Secretary. (4) Administrative costs incurred in connection with activities under this subsection shall be eligible for reimbursement in accordance with [section 2025 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section2025&num=0&edition=prelim), subject to the limitations in [section 2025(g) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section2025/g&num=0&edition=prelim). (5) The Secretary shall periodically inform State agencies of the advantages of using electronic benefit systems to issue benefits in accordance with this subsection in lieu of issuing coupons to households. (6) This subsection shall not diminish the authority of the Secretary to conduct projects to test automated or electronic benefit delivery systems under [section 2026(f) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section2026/f&num=0&edition=prelim). (7) **Replacement of benefits.—** — Regulations issued by the Secretary regarding the replacement of benefits and liability for replacement of benefits under an electronic benefit transfer system shall be similar to the regulations in effect for a paper-based supplemental nutrition assistance issuance system. (8) **Replacement of cards.—** (A) *Fees.—* — A State agency may collect a charge for replacement of an electronic benefit transfer card by reducing the monthly allotment of the household receiving the replacement card. (B) *Purposeful loss of cards.—* (i) *In general.—* — Subject to terms and conditions established by the Secretary in accordance with clause (ii), if a household makes excessive requests for replacement of the electronic benefit transfer card of the household, the Secretary may require a State agency to decline to issue a replacement card to the household unless the household, upon request of the State agency, provides an explanation for the loss of the card. (ii) *Requirements.—* — The terms and conditions established by the Secretary shall provide that— (I) the household be given the opportunity to provide the requested explanation and meet the requirements under this paragraph promptly; (II) after an excessive number of lost cards, the head of the household shall be required to review program rights and responsibilities with State agency personnel authorized to make determinations under [section 2014(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section2014/a&num=0&edition=prelim); and (III) any action taken, including actions required under [section 2015(b)(2) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section2015/b/2&num=0&edition=prelim), other than the withholding of the electronic benefit transfer card until an explanation described in subclause (I) is provided, shall be consistent with the due process protections under section 2015(b) or 2020(e)(10) of this title, as appropriate. (C) *Protecting vulnerable persons.—* — In implementing this paragraph, a State agency shall act to protect homeless persons, persons with disabilities, victims of crimes, and other vulnerable persons who lose electronic benefit transfer cards but are not intentionally committing fraud. (D) *Effect on eligibility.—* — While a State may decline to issue an electronic benefits transfer card until a household satisfies the requirements under this paragraph, nothing in this paragraph shall be considered a denial of, or limitation on, the eligibility for benefits under [section 2014 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section2014&num=0&edition=prelim). (9) **Optional photographic identification.—** (A) *In general.—* — A State agency may require that an electronic benefit card contain a photograph of 1 or more members of a household. (B) *Other authorized users.—* — If a State agency requires a photograph on an electronic benefit card under subparagraph (A), the State agency shall establish procedures to ensure that any other appropriate member of the household or any authorized representative of the household may utilize the card. (10) **Federal law not applicable.—** — Section 1693o–2 of title 15 shall not apply to electronic benefit transfer or reimbursement systems under this chapter. (11) **Application of anti-tying restrictions to electronic benefit transfer systems.—** (A) *Definitions.—* — In this paragraph: (i) *Affiliate.—* — The term “affiliate” has the meaning provided the term in [section 1841(k) of title 12](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1841/k&num=0&edition=prelim). (ii) *Company.—* — The term “company” has the meaning provided the term in [section 1971 of title 12](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1971&num=0&edition=prelim), but shall not include a bank, a bank holding company, or any subsidiary of a bank holding company. (iii) *Electronic benefit transfer service.—* — The term “electronic benefit transfer service” means the processing of electronic transfers of household benefits, determined under section 2017(a) or 2035 of this title, if the benefits are— (I) issued from and stored in a central databank; (II) electronically accessed by household members at the point of sale; and (III) provided by a Federal or State government. (iv) *Point-of-sale service.—* — The term “point-of-sale service” means any product or service related to the electronic authorization and processing of payments for merchandise at a retail food store, including credit or debit card services, automated teller machines, point-of-sale terminals, or access to on-line systems. (B) *Restrictions.—* — A company may not sell or provide electronic benefit transfer services, or fix or vary the consideration for electronic benefit transfer services, on the condition or requirement that the customer— (i) obtain some additional point-of-sale service from the company or an affiliate of the company; or (ii) not obtain some additional point-of-sale service from a competitor of the company or competitor of any affiliate of the company. (C) *Consultation with the federal reserve board.—* — Before promulgating regulations or interpretations of regulations to carry out this paragraph, the Secretary shall consult with the Board of Governors of the Federal Reserve System. (12) **Recovering electronic benefits.—** (A) *In general.—* — A State agency shall establish a procedure for recovering electronic benefits from the account of a household due to inactivity, or due to the death of all members of the household. (B) *Benefit storage.—* (i) *In general.—* — A State agency may store recovered electronic benefits off-line in accordance with clause (ii), if the household has not accessed the account after 3 months. (ii) *Notice of benefit storage.—* — A State agency shall— (I) send notice to a household the benefits of which are stored under clause (i); and (II) not later than 48 hours after request by the household, make the stored benefits available to the household. (C) *Benefit expunging.—* (i) *In general.—* — Subject to clause (ii), a State agency shall expunge benefits that have not been accessed by a household after a period of 9 months, or upon verification that all members of the household are deceased. (ii) *Notice of benefit expunging.—* — Not later than 30 days before benefits are to be expunged under clause (i), a State agency shall— (I) provide sufficient notice to the household that benefits will be expunged due to inactivity, and the date upon which benefits will be expunged; (II) for benefits stored off-line in accordance with subparagraph (B), provide the household an opportunity to request that such benefits be restored to the household; and (III) not later than 48 hours after request by the household, make the benefits available to the household. (D) *Notice.—* — A State agency shall— (i) send notice to a household the benefits of which are stored under subparagraph (B); and (ii) not later than 48 hours after request by the household, make the stored benefits available to the household. (13) **Fees.—** (A) *Interchange fees.—* — No interchange fees shall apply to electronic benefit transfer transactions under this subsection. (B) *Other fees.—* — Effective through fiscal year 2023, neither a State, nor any agent, contractor, or subcontractor of a State who facilitates the provision of supplemental nutrition assistance program benefits in such State may impose a fee for switching (as defined in subsection (j)(1)(H)) or routing such benefits. (14) **Mobile technologies.—** (A) *In general.—* — Subject to subparagraph (B), the Secretary shall authorize the use of mobile technologies for the purpose of accessing supplemental nutrition assistance program benefits. (B) *Demonstration projects on access of benefits through mobile technologies.—* (i) *Demonstration projects.—* — Before authorizing implementation of subparagraph (A) in all States, the Secretary shall approve not more than 5 demonstration project proposals submitted by State agencies that will pilot the use of mobile technologies for supplemental nutrition assistance program benefits access. (ii) *Project requirements.—* — To be eligible to participate in a demonstration project under clause (i), a State agency shall submit to the Secretary for approval a plan that— (I) provides recipient protections regarding privacy, ease of use, household access to benefits, and support similar to the protections provided under existing methods; (II) ensures that all recipients, including those without access to mobile payment technology and those who shop across State borders, have a means of benefit access; (III) requires retail food stores, unless exempt under [section 2016(f)(2)(B) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section2016/f/2/B&num=0&edition=prelim), to bear the costs of acquiring and arranging for the implementation of point-of-sale equipment and supplies for the redemption of benefits that are accessed through mobile technologies; (IV) requires that foods purchased with benefits issued under this section through mobile technologies are purchased at a price not higher than the price of the same food purchased by other methods used by the retail food store, as determined by the Secretary; (V) ensures adequate documentation for each authorized transaction, adequate security measures to deter fraud, and adequate access to retail food stores that accept benefits accessed through mobile technologies, as determined by the Secretary; (VI) provides for an evaluation of the demonstration project, including, but not limited to, an evaluation of household access to benefits; (VII) requires that the State demonstration projects are voluntary for all retail food stores and that all recipients are able to use benefits in non-participating retail food stores; and (VIII) meets other criteria as established by the Secretary. (iii) *Priority.—* — The Secretary may prioritize demonstration project proposals that would— (I) reduce fraud; (II) encourage positive nutritional outcomes; and (III) meet such other criteria as determined by the Secretary. (iv) *Date of project approval.—* — The Secretary shall solicit and approve the qualifying demonstration projects required under subparagraph (B)(i) not later than January 1, 2021. (C) *Report to congress.—* — The Secretary shall— (i) by not later than January 1, 2022, authorize implementation of subparagraph (A) in all States, unless the Secretary makes a finding, based on the data provided under subparagraph (B), that implementation in all States requires further study by way of an extended pilot period or is not in the best interest of the supplemental nutrition assistance program; and (ii) if the determination made in clause (i) is not to implement subparagraph (A) in all States, submit a report to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate that includes the basis of the finding. **(i) State option to issue benefits to certain individuals made ineligible by welfare reform** (1) **In general** — Notwithstanding any other provision of law, a State agency may, with the approval of the Secretary, issue benefits under this chapter to an individual who is ineligible to participate in the supplemental nutrition assistance program solely as a result of section 2015(o)(2) of this title or section 1612 or 1613 of title 8. (2) **State payments to Secretary** (A) *In general* — Not later than the date the State agency issues benefits to individuals under this subsection, the State agency shall pay the Secretary, in accordance with procedures established by the Secretary, an amount that is equal to— (i) the value of the benefits; and (ii) the costs of issuing and redeeming benefits, and other Federal costs, incurred in providing the benefits, as determined by the Secretary. (B) *Crediting* — Notwithstanding [section 3302(b) of title 31](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title31-section3302/b&num=0&edition=prelim), payments received under subparagraph (A) shall be credited to the supplemental nutrition assistance program appropriation account or the account from which the costs were drawn, as appropriate, for the fiscal year in which the payment is received. (3) **Reporting** — To be eligible to issue benefits under this subsection, a State agency shall comply with reporting requirements established by the Secretary to carry out this subsection. (4) **Plan** — To be eligible to issue benefits under this subsection, a State agency shall— (A) submit a plan to the Secretary that describes the conditions and procedures under which the benefits will be issued, including eligibility standards, benefit levels, and the methodology the State agency will use to determine amounts due the Secretary under paragraph (2); and (B) obtain the approval of the Secretary for the plan. (5) **Violations** — A sanction, disqualification, fine, or other penalty prescribed under Federal law (including sections 2021 and 2024 of this title) shall apply to a violation committed in connection with a benefit issued under this subsection. (6) **Ineligibility for administrative reimbursement** — Administrative and other costs incurred in issuing a benefit under this subsection shall not be eligible for Federal funding under this chapter. (7) **Exclusion from enhanced payment accuracy systems** — [Section 2025(c) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section2025/c&num=0&edition=prelim) shall not apply to benefits issued under this subsection. **(j) Interoperability and portability of electronic benefit transfer transactions** (1) **Definitions** — In this subsection: (A) *Electronic benefit transfer card* — The term “electronic benefit transfer card” means a card that provides benefits under this chapter through an electronic benefit transfer service (as defined in subsection (h)(11)(A)). (B) *Electronic benefit transfer contract* — The term “electronic benefit transfer contract” means a contract that provides for the issuance, use, or redemption of program benefits in the form of electronic benefit transfer cards. (C) *Interoperability* — The term “interoperability” means a system that enables program benefits in the form of an electronic benefit transfer card to be redeemed in any State. (D) *Interstate transaction* — The term “interstate transaction” means a transaction that is initiated in 1 State by the use of an electronic benefit transfer card that is issued in another State. (E) *Portability* — The term “portability” means a system that enables program benefits in the form of an electronic benefit transfer card to be used in any State by a household to purchase food at a retail food store or wholesale food concern approved under this chapter. (F) *Settling* — The term “settling” means movement, and reporting such movement, of funds from an electronic benefit transfer card issuer that is located in 1 State to a retail food store, or wholesale food concern, that is located in another State, to accomplish an interstate transaction. (G) *Smart card* — The term “smart card” means an intelligent benefit card described in [section 2026(f) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title7-section2026/f&num=0&edition=prelim). (H) *Switching* — The term “switching” means the routing of an intrastate or interstate transaction that consists of transmitting the details of a transaction electronically recorded through the use of an electronic benefit transfer card in one State to the issuer of the card that may be in the same or different State. (2) **Requirement** — Not later than October 1, 2002, the Secretary shall ensure that systems that provide for the electronic issuance, use, and redemption of program benefits in the form of electronic benefit transfer cards are interoperable, and supplemental nutrition assistance program benefits are portable, among all States. (3) **Cost** — The cost of achieving the interoperability and portability required under paragraph (2) shall not be imposed on any retail store, or any wholesale food concern, approved to participate in the supplemental nutrition assistance program. (4) **Standards** — Not later than 210 days after February 11, 2000, the Secretary shall promulgate regulations that— (A) adopt a uniform national standard of interoperability and portability required under paragraph (2) that is based on the standard of interoperability and portability used by a majority of State agencies; and (B) require that any electronic benefit transfer contract that is entered into 30 days or more after the regulations are promulgated, by or on behalf of a State agency, provide for the interoperability and portability required under paragraph (2) in accordance with the national standard. (5) **Exemptions** (A) *Contracts* — The requirements of paragraph (2) shall not apply to the transfer of benefits under an electronic benefit transfer contract before the expiration of the term of the contract if the contract— (i) is entered into before the date that is 30 days after the regulations are promulgated under paragraph (4); and (ii) expires after October 1, 2002. (B) *Waiver* — At the request of a State agency, the Secretary may provide 1 waiver to temporarily exempt, for a period ending on or before the date specified under clause (iii), the State agency from complying with the requirements of paragraph (2), if the State agency— (i) establishes to the satisfaction of the Secretary that the State agency faces unusual technological barriers to achieving by October 1, 2002, the interoperability and portability required under paragraph (2); (ii) demonstrates that the best interest of the supplemental nutrition assistance program would be served by granting the waiver with respect to the electronic benefit transfer system used by the State agency to administer the supplemental nutrition assistance program; and (iii) specifies a date by which the State agency will achieve the interoperability and portability required under paragraph (2). (C) *Smart card systems* — The Secretary shall allow a State agency that is using smart cards for the delivery of supplemental nutrition assistance program benefits to comply with the requirements of paragraph (2) at such time after October 1, 2002, as the Secretary determines that a practicable technological method is available for interoperability with electronic benefit transfer cards. (6) **Funding** (A) *In general* — In accordance with regulations promulgated by the Secretary, the Secretary shall pay 100 percent of the costs incurred by a State agency under this chapter for switching and settling interstate transactions— (i) incurred after February 11, 2000, and before October 1, 2002, if the State agency uses the standard of interoperability and portability adopted by a majority of State agencies; and (ii) incurred after September 30, 2002, if the State agency uses the uniform national standard of interoperability and portability adopted under paragraph (4)(A). (B) *Limitation* — The total amount paid to State agencies for each fiscal year under subparagraph (A) shall not exceed $500,000. **(k) Acceptance of program benefits through online transactions** (1) **In general** — Subject to paragraph (4), the Secretary shall approve retail food stores to accept benefits from recipients of supplemental nutrition assistance through on-line transactions. (2) **Requirements to accept benefits** — A retail food store seeking to accept benefits from recipients of supplemental nutrition assistance through on-line transactions shall— (A) establish recipient protections regarding privacy, ease of use, access, and support similar to the protections provided for transactions made in retail food stores; (B) ensure benefits are not used to pay delivery, ordering, convenience, or other fees or charges; (C) clearly notify participating households at the time a food order is placed— (i) of any delivery, ordering, convenience, or other fee or charge associated with the food purchase; and (ii) that any such fee cannot be paid with benefits provided under this chapter; (D) ensure the security of on-line transactions by using the most effective technology available that the Secretary considers appropriate and cost-effective and that is comparable to the security of transactions at retail food stores; and (E) meet other criteria as established by the Secretary. (3) **State agency action** — Each State agency shall ensure that recipients of supplemental nutrition assistance can use benefits on-line as described in this subsection as appropriate. (4) **Demonstration project on acceptance of benefits through on-line transactions** (A) *In general* — Before the Secretary authorizes implementation of paragraph (1) in all States, the Secretary shall carry out a number of demonstration projects as determined by the Secretary to test the feasibility of allowing retail food stores to accept benefits through on-line transactions. (B) *Demonstration projects* — To be eligible to participate in a demonstration project under subparagraph (A), a retail food store shall submit to the Secretary for approval a plan that includes— (i) a method of ensuring that benefits may be used to purchase only eligible items under this chapter; (ii) a description of the method of educating participant households about the availability and operation of on-line purchasing; (iii) adequate testing of the on-line purchasing option prior to implementation; (iv) the provision of data as requested by the Secretary for purposes of analyzing the impact of the project on participant access, ease of use, and program integrity; (v) reports on progress, challenges, and results, as determined by the Secretary; and (vi) such other criteria, including security criteria, as established by the Secretary.