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The state’s new high-tech bank card system for distributing welfare payments and food stamps is up and running–except that the bank with the most ATMs in New York City won’t play along, and is blaming the # 2 bank.

With the Electronic Benefit Transfer system now being phased in across the city, debit cards take the place of stamps and checks. Cardholders can swipe the cards at grocery-store cash registers, or pop them into ATMs to get their cash benefits.

But Chase Manhattan Bank won’t take EBT cards, forcing New York City’s 300,000 food stamp and welfare recipients to use Citibank and other banks.

In some neighborhoods, that means there’s no convenient ATM at all. “I went to the Chase ATM because it was close, but my card didn’t work in the machine,” said Lucille Robinson, who lives in East Harlem and receives EBT cash benefits. “When I went in to the tellers, they told me that only Citibank does it.” The tellers gave Robinson the same explanation that Chase spokespeople have been giving the state government and New York welfare advocates–that it’s Citibank’s fault.

In a June 9 letter to the state welfare office, Chase vice president Denis O’Leary says that his bank refuses to participate in the EBT card network because it is not as large and convenient as the most common ATM network, NYCE. In the letter, Chase accuses Citibank, which holds a $1 billion contract with New York and six other states to administer EBT, of having “chosen to bypass the NYCE network” in order to avoid paying fees to NYCE.

But the technicians who designed the system said the cards do work with NYCE–all Chase has to do is ask. EBT transactions are guided by the Quest system, which permits transactions to simply “piggyback” on any ATM network, such as NYCE, Cirrus or Mellon. “All we do is change the database to allow that,” said EBT expert John McKenna of the NYCE Corporation. “It’s really a seamless process.” Both McKenna and a spokeswoman for Citibank also confirmed that Citibank pays a 33-cent fee to NYCE for each transaction.

Pablo DeFillippi of the Lower East Side People’s Federal Credit Union confirmed that his bank had no trouble getting its network provider, Mellon, to accept EBT cards. “It was pretty easy to set it up,” offered DeFillippi.

As the holder of New York’s contract, Citibank is obligated to persuade as many banks as possible to accept EBT transactions at their ATMs. About 14 banks have agreed to the process, including Carver Federal and Apple Bank for Savings. Chase is the biggest holdout.

So EBT users are turning elsewhere. About 350 city check-cashers accept EBTs, but they slap on a $1.50 surcharge. Ida Cameron, also of East Harlem, explained that she has to take the subway 20 blocks to get to the nearest EBT-accepting ATM. “By the time I pay $1.50 going and $1.50 coming back, I might as well pay just $1.50 at the cash place,” sighed Cameron.

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