Nearly two decades ago, Federal Reserve Bank of Boston's smart card program became a key means to eliminate the inefficiencies of cash use among military personnel. The payments industry has evolved substantially in that time, requiring the military smart card program to keep pace.

The Boston Fed manages two card programs, EZpay and EagleCash, as part of the Department of Defense's push "to take cash off the battlefield," said Nadir Isfahani, manager of the stored value cards portfolio for the fiscal service area of the U.S. Treasury Department.

The Treasury's Bureau of the Fiscal Service provides financial management services to the federal government, and this particular group is tasked to find e-commerce solutions for government agencies. It chose the Boston Fed to develop and manage the soldier smart card program.

Since the program's May 1997 launch at Fort Leonard Wood, a military base in the Missouri Ozarks, it has been upgraded a number of times as technologies evolve and the needs of the stakeholders changed, said Isfahani.

At the beginning, military bases were not equipped with cashless kiosks for account management. But in 2006, the Boston Fed began working with NCR to deploy the 24-hour kiosks, and "subsequently usage numbers and dollar volumes of the card really took off," said Isfahani.

Before the kiosks, transferring money from a linked bank account to the card or between cards had to be done in-person at the finance office.

EZpay is a non-reloadable prepaid card for soldiers going through basic training at nine military bases in the U.S. EZpay cards eliminated the need for basic training units to hand out cash, thus reducing loss, fraud and workload, said Isfahani.

EagleCash is a reloadable card that all Army, Air Force and Marine personnel receive before deployment to other countries. The card is linked to the soldier's U.S. bank account so money can be loaded from the account to the card through the cashless kiosks at international bases and vice versa.  Plus users can move money from one card to another.  

EagleCash customer service was expanded in 2009 with the creation of the EagleCash Sustainment Team, a group dedicated to providing training, troubleshooting and hardware and software support to keep the program operating.

The program was also updated recently to enhance security, which has been a major focus of the payments industry this year because of the recent high-profile data breaches. 

"We recently introduced the ability for the finance office to send transaction files back to the [Federal Reserve Bank of] Boston via secure Internet channels," Isfahani said. "This significantly speeds up transaction times and allows for a more secure communication protocol with our stakeholders."

There are 276,963 total EagleCash cards active today, and soldiers can use them at 181 kiosks on military bases in 13 countries internationally, said Jim Cunha, senior vice president of financial and treasury services at the Federal Reserve Bank of Boston.

The cards can also be used at 2,363 merchant point of sale terminals on the bases.

"Now we're not sending over huge C-130 cargo planes full of cash overseas," Cunha said. Not only does the EagleCash card decrease the amount of cash that needs to be sent to military bases overseas, but the program saves the bases the cost and space needed to store cash.

Currently the Boston Fed is moving about a billion dollars per year onto the cards, Cunha added.

The military cards are designed to work offline, which is important in the uncertain conditions deployed soldiers face. "We were in Baghdad before they had communication lines put up…and even when they did we weren't the first priority. Sometimes we'd go months without connection," said Cunha. All transactions are reconciled by the Boston Fed.

While the program has overall benefitted military personnel, there are still a number of pain points that the Treasury, with the Boston Fed, is working on correcting.

From the ground, Zhang Nan, a cashier and disbursing technician with the U.S. Army stationed in Fort Shafter, Hawaii, said while the program is easy for soldiers to use, he suggests the Boston Fed sets up an online portal for EagleCash. In this way, soldiers could check their balance and transfer money online when they have internet access, instead of waiting in line at the cashless kiosks. Nan has been in the Army for two years.

The biggest pain point, as Isfahani sees it, is that there are multiple card programs instead of one universal, reusable product. This lifetime card would be issued to recruits during basic training but work across all current environments, irrespective of where they deploy, he said.

"We are currently working on an initiative to combine all our card programs into a single, universal stored value card," Isfahani said. "We'll be leveraging industry-standard EMV technology to build this multi-functional card that will operate in offline, online, open-loop and closed-loop environments."

Once the universal stored value card is deployed, the project could also implement Near Field Communication technology for contactless payments as well.

The smart card programs leverage payment-industry standards to minimize costs and the use of proprietary technology, said Isfahani. Military personnel are a unique customer base and the Treasury is eager to work with partners to adapt new technologies into the environment, he said. 

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