Here's a good explanation:
The United States Supplemental Nutrition Assistance Program (SNAP), historically and commonly known as the Food Stamp Program, is a federal-assistance program that provides assistance to low- and no-income people and families living in the U.S. Though the program is administered by the U.S. Department of Agriculture, benefits are distributed by the individual U.S. states.
Today, most food-stamp benefits are now distributed using cards but for most of its history the program had actually used paper denominational stamps/ coupons worth US$1, US$5, and US$10. These stamps could be used to purchase any prepackaged edible foods regardless of nutritional value (for example soft drinks and confectionery could be purchased on food stamps). In the late 1990s, the food-stamp program was revamped and actual stamps were phased out in favor of a specialized debit-card system known as Electronic Benefit Transfer (EBT) provided by private contractors. Many states merged the use of the EBT card for public-assistance welfare programs as well. The successful replacement over time of all paper food stamps by EBT cards enabled the U.S. Congress to rename the Food Stamp Program to the Supplemental Nutrition Assistance Program, as of October 2008, and to update all references in federal law from "stamp" or "coupon" to "card" or "EBT". This was effectuated on June 18, 2008, by U.S. House Resolution 6124, The Food, Conservation, and Energy Act of 2008, enacted as Public Law over U.S. President George W. Bush's veto.
The number of Americans receiving food stamps reached 35 million in June 2009, the highest number since the program began in 1962, with an average monthly benefit of $133.12 per person. Recipients must have near-poverty incomes to qualify for benefits.
They were originally a booklet of stamps - well, they look just like currency, but you could only spend them for food - not hot food and not alcohol - and everything in between. Now, they have credit cards that carry the same restrictions but speed the checkout process big time.