The ability to accept EBT payments can have significant impacts to a small merchant’s business, especially if the majority of sales come from food items. Learn how to choose the best POS with EBT capabilities.
Roughly 40 million people in the US used federal aid for financial help meeting their nutritional needs in 2018. They do this through an electronic benefit transfer (EBT) system that issues magnetically encoded payment card distributed to those in needthrough the Supplemental Nutrition Assistance Program (SNAP) – formerly known as the Food Stamp Program – and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).
Forty million is not an insignificant number, and small merchants that sell groceries and food products must account for how they accept EBT payments. Merchants that don’t have the necessary POS system in place to process EBT could see significant, negative impacts to the bottom line. In addition to business ramifications, not having the capabilities to serve customers using EBT cards negatively impacts the customer experience.
It’s integral to understand what type of retail point of sale (POS) systems and software are needed to accept these types of payments and whether or not a merchant qualifies.
Farm stands, farmers’ markets, and CSAs (Consumer Supported Agriculture) also have the opportunity to become authorized SNAP vendors. Farm stands can apply as individual retailers while farmer’s markets can apply for a single SNAP retailer licensed that all individual vendors within the market can use. Alternatively, individual vendors within the farmer’s market can apply as individual retailers.
How to Accept SNAP
While restaurants do not currently qualify under the Supplemental Nutrition Assistance Program, merchants that sell food and groceries that can be used for meal preparation and home cooking are eligible to accept EBT payments if they meet the following criteria:
- Carry at least three different qualifying foods from each of the following stable food groups that are regularly available for purchase:
- meat/poultry/fish
- bread/grains/cereals
- vegetables/fruits
- dairy products
- 50% of gross retail sales are from the sale of eligible staple foods.
Farm stands, farmers’ markets, and CSAs (Consumer Supported Agriculture) also have the opportunity to become authorized SNAP vendors. Farm stands can apply as individual retailers while farmer’s markets can apply for a single SNAP retailer licensed that all individual vendors within the market can use. Alternatively, individual vendors within the farmer’s market can apply as individual retailers.
How to Accept WIC
While the WIC Program is administered at the federal level, merchants must apply through state agencies who ultimately authorize vendors. Upon applying, each state will consider the following in addition to any local requirements:
- Food prices
- Whether or not the owner is eligible or disqualified from SNAP and other matters related to the business integrity of the store’s owner
- Variety/quantity of food available in-store
Other requirements, which vary by state, may include:
- Health Permit/Food Protection License
- State-specific sales and tax forms
- On-site preauthorization assessment
How to Get Started Accepting EBT as Farmer’s Market or Mobile Business
Merchants must first qualify to accept EBT payments, which requires a permit. Merchants can file an application with the USDA Food and Nutrition Service (FNS), the latter of which manages SNAP food stamps. After obtaining the free permit, merchants must adhere to the rules for processing these types of payments. That includes:
- Accepting SNAP (formerly known as food stamps) only for eligible food items
- Ensuring purchases made with an EBT card are exempt from sales tax
- Requiring both the EBT card and PIN to accept SNAP transactions
- Not issuing cash refunds for items purchased through SNAP benefits
- Not allowing SNAP to be used on credit
- Processing EBT-eligible food item transactions and non-EBT-eligible item transactions separately (though both transactions can be completed within the interface of the POS system).
Merchants whose sales are mostly comprised of food items should strongly consider qualifying for a permit to accept EBT payments. The sizable number of people who participate in federal food assistance programs makes a strong case in favor of this ability. Not only will you be able to receive payments made with food stamps and other SNAP benefits, but your business will also benefit from having an enhanced customer experience.
Choosing the Best POS with EBT Capabilities
Merchants should consider how EBT payments are processed when choosing the best POS with EBT capabilities. EBT payments are not unlike debit or credit card transactions. EBT participants use swipe cards that are run similarly to these card-based transactions, but they require specific POS software.
EBT-enabled POS software makes sure the items in the transactions qualify (that they are food items) for SNAP benefits. The software also accounts for and separates all purchases made with an EBT card, making it easier to accommodate reporting for each state’s EBT vendor.
Novo Dia Group (NDG) recognized that EBT-capable POS software was in demand with few solutions to accommodate. We developed TotilPay, formerly known as Mobile Market+, as an EBT solution that gives small merchants the ability to process EBT transactions plus all other forms of tender from the same device. This solution is also advantageous for farmer’s markets, who may lack access to power outlets or Wi-Fi, empowering these merchants with the same sales abilities via minimal additional software.
TotilPay benefits customers, too. Our solution is customer-friendly and makes fresh local produce more available to families receiving food assistance.
How it Works
Rather than paying for an additional wireless terminal or turning away EBT payments altogether, TotilPay offers a secure, encrypted connection for accepting EBT payments through any smartphone or tablet. The software can be downloaded from the app store and using the card reader – which can be inserted into the smartphone or tablet – and a compatible printer, merchants can easily accept EBT payments on the spot. Customers simply swipe their benefits cards, enter their personal PIN, and confirm the transaction amount.
Since the system is battery operated and communicates wirelessly via Wi-Fi or cellular network, merchants don’t need to worry about having a dedicated terminal, phone line, or even electricity. This solution is quickly becoming the standard for farmers and other small independent retailers that need a cost-efficient way to process EBT cards.