America’s supplemental nutrition assistance program (SNAP) helps ensure 20 million households — about 40 million people — have food to put on their tables. More than two-thirds of those 40 million SNAP recipients are households with children. In fact, children are considered SNAP’s most impacted population. Nearly one-sixth of all American children live in a household receiving “food stamp” grocery assistance, which research from the U.S. Department of Agriculture, among others, shows increases several critical childhood health outcomes.
Yet not every business that sells food qualifies for an electronic benefits transfer (EBT) license to accept SNAP — and not every qualifying business follows the legal guidelines for using EBT.
What Is an EBT License?
Administered by the Food and Nutrition Service (FNS) of the United States Department of Agriculture (USDA), EBT licenses allow businesses to accept SNAP benefits from their customers, then get reimbursed for the value of the transaction from the federal government. The FNS grants EBT licenses after a business completes an online or mailed application. According to the USDA’s most recent studies, approximately 260,000 retailers today participate in EBT.
Top Ways to Break EBT Licensing Rules
If your business has an EBT license, you must adhere to a set of business practices and SNAP management guidelines. SNAP fraud includes breaking these guidelines. Depending on the nature and range of a violation, food stamp fraud penalties include fines, a revoked license and, in extreme cases, prison time.
Today, the FNS penalizes a handful of major EBT license violations.
1. Trafficking SNAP/EBT
SNAP trafficking occurs when an individual exchanges cash for EBT cards and their food stamp benefits.
In a handful of cases, these refunds can be made accidentally, such as when a cashier gives a refund or change to a customer in cash rather than returning a balance directly onto an EBT card. However, the vast majority of SNAP EBT trafficking cases that the FNS investigates center on retailers fraudulently exchanging money at the register for swiped EBT card “payments,” and in some instances, buying the cards outright to re-sell them for a small profit.
Those found guilty of EBT trafficking face a zero-tolerance policy. The FNS immediately revokes the EBT license, and liable parties could face fines and criminal prosecution.
2. Accepting SNAP/EBT for Non-Eligible Items
SNAP is designed to help low-income households maintain an adequately nutritious diet according to health standards set by the USDA. Given that design, there are a wide variety of food products people can use their EBT cards to purchase — and a variety of items they can’t.
Retailers cannot redeem SNAP for any of the following:
- Vitamins or supplements
- Hot or prepared foods ready for immediate consumption, such as a rotisserie chicken or deli-counter potato salad
- Pet food
- Household items, such as paper towels, dish soap and shampoo
- Any non-food item
SNAP benefits can be used to purchase:
- Fresh fruits and vegetables
- Grains, bread and cereals
- Diary products
- Red meat, poultry and fish
- Non-alcoholic beverages
- Moderate amounts of snack foods
- Garden or plant seeds
3. Lapses in License Renewal
Retailers must reapply for an EBT license every five years. Luckily, you don’t have to pencil in that date. The FNS will send you a license renewal notice, including your renewal deadline plus any supplementary information they might need. Official renewal notices will include an online code and password to easily and securely begin the renewal process, which you enter on the FNS’ online EBT licensing portal.
4. Accepting SNAP/EBT for Controlled Substances
EBT cards cannot be used to purchase any federally controlled substances. Items that commonly fall under federally controlled classification include:
- Cigarettes and tobacco products
- Firearms and other weapons
- And more
Penalties for selling alcohol or cigarettes vary but will often mean a three- to five-year EBT license disqualification period. In cases where a retailer proves they’re a vital source of groceries in their community, prosecutors may allow you to keep your license in exchange for paying a fine.
5. Manually Processing SNAP/EBT Transactions
EBT card transactions must follow a certain protocol. For example:
- The customer/cardholder must enter their PIN: You cannot ask for their PIN or enter it into your point-of-sale system yourself.
- You cannot store EBT card information: Even for frequent or repeat customers.
- You cannot accept EBT cards on credit: Cards must be swiped for real-time transactions, not paying a previous or future balance.
- EBT cards must be present: Customers must present their physical EBT card to complete a compliant transaction. You cannot manually enter card numbers into your point-of-sale system, with the exception of cases when your card terminal goes down.
The key to a proper EBT card transaction is to be sensible, treating it as you would any other card-based payment.
6. Disrespecting or Discriminating Against SNAP Customers
In a handful of cases, the FNS has revoked EBT licenses after fielding complaints SNAP recipients were treated differently than non-SNAP customers.
Examples of discriminating against SNAP food stamp users can be implicit and explicit. Any of the following situations would constitute breaking EBT compliance and risk losing your license:
- Making SNAP recipients use a different line or register
- Accepting SNAP only on certain days or specific shopping hours
- Vocally harassing or demeaning a SNAP-based purchase
- Calling unnecessary attention to a customer with an EBT card
7. FNS Inspection Violations
Under certain circumstances, FNS agents may conduct on-site inspections of businesses applying for or holding an EBT license. Refusing to let agents on the premise after a valid presentation of credentials or obstructing any inspections can result in a lost or barred license as well as hefty fines.
How to Maintain an EBT License
To obtain or maintain a license for EBT and SNAP reimbursement, your business must meet the following criteria. Don’t worry — it’s actually pretty straightforward.
- Regularly sell a minimum of three qualifying food products: These food products include meat, eggs, dairy, bread, grains, cereals and fresh produce. In short, your business must provide a regular selection of staple household grocery items. Note that under this requirement, specialty food businesses cannot apply for an EBT license. For example, bakeries, butchers or seafood markets likely won’t qualify to accept SNAP benefits since they do not sell three or more distinct food categories.
- Make at least 50% of total sales from qualifying food items: Again, to support the nutritional onus behind the SNAP program.
- Cannot be a restaurant or prepared-food-service establishment: Sold food products must be for home preparation and consumption. This is why food items such as salad bars, soups, rotisserie chickens, sushi and other commonly prepped meals from grocery stores cannot be paid for using SNAP.
Businesses that meet these three basic guidelines can apply with the FNS directly, using their online application or via a mailed application. Approvals take, on average, 45 days after completing your forms and submitting all supplementary business documents.
Once a certified EBT-accepting business, your organization must renew its license every four to five years.
Learn Guidelines for EBT From an Expert
Velocity Merchant Services’ own EBT and SNAP specialists can help walk you through applying for and receiving your EBT license. We also work with you to ensure proper point-of-sale terminals accept EBT cards, as well as maintain software that keeps you compliant with SNAP transaction types and amounts — giving you peace of mind.
Connect with an EBT expert to ask questions about accepting at your business SNAP today.
Although this is not an exhaustive list, it does give you a good idea of the top issues SNAP/EBT providers encounter, and the easy steps you can take in order to maintain your license. This also lets you keep the stream of business (and profit) you can gain from accepting benefits from the SNAP program. If you have any questions, we have EBT/SNAP specialists available to answer them at (888) 902-6202 or firstname.lastname@example.org. You can also call the retailer toll free information number at (877) 823-4369.