Project Proposal

IT Program Area ESA EBT

Administration
Admin. Rank
Clarity Number
Project Type
Governance Date

1. What do you want to do? (Provide brief description)

The USDA Food and Nutrition Services has issued direction and guidance to both Governor Whitmer and MDHHS
executive leadership to replace existing EBT cards used by Michigan residents to access cash and food assistance
benefits with chip enabled cards. This project is expected to realize significant advancements in both improved
program integrity as well as benefit delivery modernization.

2. What is the high-level estimate for this request?

Total project cost: $16,307,145.80

After 50% FNS Match: $ 8,153,572.90

Note potential cost reduction: MDHHS has a plan pending with FNS that would allow for expungement of cards
that have not been used in over 274 days. If the plan is approved and implemented prior to Chip card replacement
we would not need to replace those cards. This would reduce the total project cost by $2,147,156.07.

If approved, total project cost: $14,159,989.10

Cost Breakdown:
Total FIS Implementation Costs:
Chip Implementation Project - Estimate Summary
Chip Implementation Estimated Costs
Chip Implementation - System and Technology Changes $3,310,479.42

Mass Card Replacement - Mailed mass card replacement to

$9,855,016.85
cardholders, State card inventory, FIS card inventory
Chip Implementation - Customer Service Impact
30% expected increase in FIS IVR call volume $1,794,958.82

Chip Compatible Equipment - POS Devices and PIN Select Devices $128,080.72
TOTAL $15,088,535.80

Total MDHHS/DTMB staff costs:

Project Manager 14: $352,560
Project Lead (FIM): $241,050
Total: $593,610

Special Mailing: $625,000

Project duration is expected at 18 months to allow for planning, implementation and closeout.

Strategic Integration Administration Rev. 01/24/2020

 Project Proposal
IT Program Area ESA EBT
Administration
Admin. Rank
Clarity Number
Project Type
Governance Date

3. Why do you want to do it? (Include background information)

EBT fraud, including the use of card skimming to steal benefits, is on the rise. Modernizing EBT, including the introduction
of chip cards for SNAP EBT, is an important step to ensure that SNAP benefits are protected. Chip cards are a more secure
payment option meant to protect SNAP retailers and SNAP participants from the devastating impact of stolen SNAP
benefits as cards with chips are harder to copy and steal SNAP account information.

Current industry standards for bank cards as well as credit cards include EMV/chip card technology as well as tap to pay.
EMV/chip or “smart” cards are credit, debit or prepaid cards that have an embedded microchip, which securely stores data
that currently resides on the magnetic strip on the back of the card. The microchip also generates a dynamic one-time use
code for each transaction called a cryptogram. Because the cryptogram changes with every transaction, even if the card
data is stolen, the information can’t be used to create counterfeit cards because the stolen cryptogram would have
already “expired.” This feature makes EMV chip card data a less attractive target for criminals to steal. The “tap to pay”
option add additional safeguards to the account as the card is not required to physically inserted into a POS device or ATM.
The industry standard protects its users from potential fraud well also expanding efficiency and uses for its card holders.

In November 2024, FNS distributed a letter to all state governors strongly encouraging the transition to chip card
technology to align with the current industry standards of non EBT debit and credit card standards. In that communication,
FNS offered to lend their technological expertise as well as card replacement strategies, business and functional design
requirements, implementation planning, system testing, and education campaigns. It was also emphasized the transition
to chip type card replacements is an administrative expense reimbursed at the federal level at 50%. Currently California,
Oklahoma have issued EMV/Chip cards to its residents who access SNAP benefits and Maryland is in progress toward
distributing and utilizing EMV/Chip cards for SNAP benefits.

Michigan has seen a significant increase in fraud activities as monitored by OIG in addition to the replacement of
fraudulently used benefits by the FAP policy unit. This comes at a significant cost in manual effort by MDHHS and OIG
employees as well as in the benefit issuance for replacement. In 2023 fiscal year, 651 total requests or reports for
replacement of benefits lost due to fraud were made. MDHHS approved 592 of the 651 and replaced $181,778 in benefits.
In fiscal year 2024, 1926 total requests or reports for replacement of benefits lost due to fraud were made. MDHHS
approved 1664 of the 1926 and replaced $884,947 in benefits.

Strategic Integration Administration Rev. 01/24/2020

 Project Proposal
IT Program Area ESA EBT
Administration
Admin. Rank
Clarity Number
Project Type
Governance Date

The Office of Inspector General (OIG) has also indicated an increase in the number of requests to unpin client cards due to
fraud or suspected fraud. This is often due to the identification of skimming devices at Michigan retailers or through
online or out of state purchase transaction monitoring. In January and February of 2025, 6,987 requests were received to
unpin client cards due to fraud or suspected fraud. In March of 2025 the number of requested cards to be unpinned was
increased substantially to 18,060.

OIG continues to report a consistent spike in MI-EBT fraud related to the card-skimming/cloning fraud scheme. In one
weekend in 2025, Michigan reports a loss of over $75,000 in MI-EBT across several out-of-state retailers related to the
Card-Cloning/Skimming fraud scheme. For FY 2023, The Michigan Office of Inspector General conservatively estimates a
yearly loss of around $3 million in Michigan EBT funds (SNAP and cash).

4. What is the overall policy goal being addressed and how will this request support this goal?

The goal of this initiative is to protect SNAP recipient from benefit theft by moving EBT transactions to more secure
technology, including chip cards and tap payments, and to enhance security for online purchases. This initiative will align
Michigan EBT card use with EBT X9 standards.

New Version of X9.58 Standard Upgrades USDA SNAP EBT Cards - Accredited Standards Committee X9

5. How will you measure the performance of the outcome of this request?

Performance Measures include:

- Replacement of identified EBT cards within identified timeline and budget

- Ensuring no reduction to resident ability to use EBT card at participating ATM/s/retailers

- Ensuring adoption of chip card and tap to pay use

o Limiting use of magnetic stripe following replacement

- Reduction in card skimming fraud

- Reduction in unpinned EBT cards

6. What are the legal impacts? (Include impacted Statutes)

N/A

7. Who are the stakeholders? (Who is interested in the outcome)

Cardholders / EBT Customers:

MDHHS will work collaboratively with the EBT contract vendor and FNS to formulate plans to distribute information to
cardholders which may include educational flyers sent to account holders, social media material, help desk scripts and
job aids and more.

Strategic Integration Administration Rev. 01/24/2020

 Project Proposal
IT Program Area ESA EBT
Administration
Admin. Rank
Clarity Number
Project Type
Governance Date

Retailers:

There is a significant impact on SNAP EBT retailers. The State, in coordination with FIS and FNS, will inform retailers of
the change and assist them in working with their POS device vendor and TPP provider to upgrade their current
technology to ensure it will function with the new EMV/chip cards. Retailers need to train their employees in the
handling of the chip-enabled cards and terminals as well as in the handling of customers who might be unfamiliar with
tweaks in the purchasing process.

MDHHS Economic Stability Administration

MDHHS Office of Inspector General

USDA Food and Nutrition Services

Fidelity Information System (FIS); EBT Contract Vendor

MI Grocers Association

8. Who will be on the team? (Project manager, team lead, resources, are they existing or new, etc.)

MDHHS Project Champion

MDHHS Project Lead

MDHHS ESA Resources

Program Policy

EBT Staff

MDHHS Office of Inspector General

MDHHS Office of Communications

USDA Food & Nutrition Services

FIS Vendor Staff

DTMB E-PMO Project Manager

9. Who are the end-users of the system; are they internal or external users? (How many users, what population, target audience,
etc.).

Primary users include:

Cardholders / EBT Customers:

Approximately 800,000 households actively receive benefits issued to an EBT card.

EBT Retailers:

All FNS approved EBT retailers in Michigan

Strategic Integration Administration Rev. 01/24/2020

 Project Proposal
IT Program Area ESA EBT
Administration
Admin. Rank
Clarity Number
Project Type
Governance Date

10. What alternative solutions were evaluated?

Due to the contractual relationship with the current EBT vendor (FIS) for all EBT related services, MDHHS is restricted to
only partnering with them on solutions relating to increasing account and card security.

11. What is the impact if not approved?

Potential continuation or expansion of fraudulent cash and SNAP/FAP benefits including benefit loss, monitoring and
manual activities of unpinning suspected cards with fraudulent activities, the manual efforts in reviewing and issuing
replacement benefits for fraudulent activities, and impact to clients access to their approved SNAP/FAP benefits.

It is expected that as other States implement chip card technology the risk for card skimming will increase in States
continuing to solely utilize magnetic stripe cards.

12. How will the request be accomplished? (Are you modifying a current system, implementing something new – is it custom
development, commercial-off-the-shelf, or something else?)

This project includes modification to the FIS system to issue EMV/chip cards as well as update correspondence and
updates to retailer POS systems to ensure the successful use of EMV/chip cards. The bulk of the cost is the physical card
replacements for residents and supporting EBT vendor costs.

13. Are there any assumptions, constraints and risks related to the business need?1

Assumptions

1) Cardholders access to benefits at ATM or retailer locations that do not support the Chip/EMV technology (including
out of state interoperability) requires that magnetic stripe technology remains enabled on the Michigan EBT card.

2) Stakeholders including, but limited to FNS, ISO Standards Committee, TPPs, Retailers, card and equipment suppliers,
consortia, county, advocates and as identified can accommodate engagement and support activities once defined in
an implementation schedule.

3) Michigan Bridge card interoperability will continue to function as anticipated, meaning Michigan Bridge Cards will
function in other states, as required by FNS.

Constraints

1) Chip/EMV and tap pay enablement may require the replacement of all equipment (Point of Sale (POS), Printers,
Personal Identification Number (PIN), and Balance Inquiry Only (BIO)) machines. Access to equipment must be
considered when determining statewide roll-out strategies and schedules. It is further recommended that an
attempt to mitigate this impact is to order and purchase the equipment during the Project Planning phase.

2) Chip/EMV and Tap Pay technology and card use will not be validated in an internet online (Mobile) shopping
environment. Multi-factor Authentication (MFA) is not a consideration in the implementation of Chip/EMV or Tap
Pay but is an option that will be evaluated and included with implementation of Mobile Pay functionality.

3) FIS can reach out to Third-party processors (TPPs) to secure testing of the Chip/EMV and Tap pay, however, actual
testing and acceptance is dictated by the TPPs. It will be necessary to encourage the retailers and TPPs work
collaboratively on EMV chip card testing and the potential upgrade of equipment at the retailer level.

1
An example of a business assumption would be that the budget is contingent upon a grant award.
An example of a constraint would be that the business process must be updated by a specific date to comply with outside requirements.
An example of a risk would be that an assumption or constraint may fail and result in consequences.

Strategic Integration Administration Rev. 01/24/2020

 Project Proposal
IT Program Area ESA EBT
Administration
Admin. Rank
Clarity Number
Project Type
Governance Date

Potential Risks

1) Budget considerations.

2) Personnel resource considerations and staffing.

3) Schedule considerations and potential conflicts.

14. What resources are required to be maintained once complete? (Staff, software, maintenance, etc.)

It is expected that ongoing annual costs to support chip card issue will total $2,703,455. This is inclusive of issuing EBT
cards to newly eligible residents, replacement cards and ongoing operational support.

50% of annual costs will be provided by FNS.

Monthly Operations

Monthly Chip Mailed Cards $145,523.39

Monthly Chip Vault Cards $4,794.81

Monthly Chip Transaction Processing Fee $24,161.70

TOTAL $174,479.90

Annual Operations - Invoiced Monthly

Chip Credential/Technology Fee - EMV Implementation Year $271,891.83

Chip Credential/Technology Fee - Annual Operations (Each year

$337,805.00
after EMV Implementation Year)

15. Is Testing Center of Excellence (TCoE) staff requested to test this change(s), do they have capacity (discuss with Manager), and
do you have funding to support the required TCoE staff? (IT money cannot be used for this funding.)

TCoE support will not be leveraged for this project.

16. Questions 16-18 to be completed by Business Delivery Liaison (BDL):

17. An LPI is required for any IT project with an estimated cost of $2 million or more. Has the Lean Process Improvement (LPIB4IT)
evaluation been completed for this IT project? If no - explain why. If Yes – Describe the outcomes of the evaluation/LPIB4IT
project.

The LEAN process improvement evaluation has not yet been completed for this project, however, there are no other
options present than to partner with the current EBT contract holder, FIS, for this project. The costs involved will be
established and set forth by FIS.

18. Has a Strategic Review been completed for this IT project? If no - explain why. If Yes – Describe the outcomes of the review.

No

Strategic Integration Administration Rev. 01/24/2020

 Project Proposal
IT Program Area ESA EBT
Administration
Admin. Rank
Clarity Number
Project Type
Governance Date

19. If this project includes a procurement request, what is the outcome of the Pre-Procurement Checklist activities? Please provide
the SIT team review outcomes.

This project will require a customer authorization for the projected cost from the current EBT contract vendor, FIS. If
approved, a contract change notice will be required which includes FNS review and approval prior to execution.

Strategic Integration Administration Rev. 01/24/2020