The below is a copy of the article that appeared in PaymentsSource on October 9, 2019 entitled, With Square’s backing, a Texas startup declutters benefit payments. Original article available here.
Note to readers: Mobile Market+ was rebranded to TotilPay in February 2020.
Small merchants often have to squeeze a hodgepodge of hardware onto their counters to manage government electronic benefit transfers, a distinct niche Novo Dia Group is working to solve with an investment from Square.
The Austin, Texas-based startup observed that large merchants like Walmart and Kroger integrate EBT payments into their general checkout process, but smaller merchants accepting SNAP (food stamps) or WIC supplemental nutrition cards often maintain one or more separate payment terminals, because of EBT programs’ unique requirements.
Helped by a $2 million investment earlier this year from Square, Novo Dia recently obtained broad industry EBT certification to expand distribution of an all-in-one solution enabling small merchants to consolidate state and federal EBT payment acceptance through a single piece of hardware.
The investment will help Novo Dia build sales to serve a sizable addressable market and could give Square indirect access to a payment category that was outside of its traditional umbrella.
About 260,000 U.S. merchants are certified to accept SNAP. State and federal benefits agencies list Novo Dia as a payments provider, but with its new certification the company is building a direct sales force to promote its services, said Josh Wiles, Novo Dia’s founder and president.
“There wasn’t a whole lot of EBT card acceptance technology development for mom-and-pop stores, especially in rural areas, and we saw an opportunity,” Wiles said.
Novo Dia is attempting to master a specific payment type that other merchant services companies only touch on, or don’t serve at all. Novo Dia has spent several years developing Mobile Market+, a cloud-based portal certified by the USDA enabling merchants to accept credit, debit and SNAP and WIC cards with no hardware add-ons. The solution includes a digital register with tools for business management and tracking inventory in compliance with EBT payment acceptance requirements.
Among other payment companies, First Data’s Clover also serves EBT merchants, though Novo Dia’s all-in-one EBT register is exclusively focused on the government benefits niche.
“Square invested in our company because they saw we were serving a sector they don’t reach and we needed funding to complete the development of our register product, making it vendor-worthy,” Wiles said.
Square did not make an executive available for an interview. In announcing the investment, James Loftus, Square’s corporate development lead, said “Novo Dia’s SNAP and WIC payment-acceptance tools provide a critical service to important and underserved customers.”
For smaller supermarkets, convenience stores and bodegas, the move provides new options to streamline their checkout process, eliminating clutter at the point of sale and the need to support multiple EBT payment terminals that can be confusing for store workers and customers.
Novo Dia is the only standalone solution connected to the FIS EBT gateway—a major provider of state and federal benefits—which automatically matches program-eligible items with the best payment method for merchants, according to Wiles.
Drawing on his own background at corporations handling government payments, Wiles has spent more than a decade developing new technology for small merchants to accept EBT payments, developing solutions that were initially used in farmer’s markets.
“We became a payment facilitator for those smaller merchants, and gradually we developed our own payments hardware to consolidate EBT along with all other types of payments including credit and debit,” Wiles said.
MobileMarket+, Novo Dia’s core product, is available on smartphones and tablets for merchants, state agencies and other groups that purchase and use EBT payments, he said.
“Until recently, a merchant would need a merchant account with another processor to offer our solution, but now they can sign up directly with us and get a solution that’s got the kind of rich features other merchants have had available for a long time,” Wiles said.