What is SNAP and EBT?
The government uses EBT (Electronic Benefit Transfer) to help qualifying consumers pay for nutritional foods. EBT is under the Supplemental Nutrition Assistance Program (SNAP). In that sense, EBT is the mechanism and SNAP is the program that provides assistance.
EBT and SNAP replaces the old food stamps program with a convenient card for a faster checkout process.
On the merchant side, accepting SNAP and EBT payments can help broaden your customer base. Also, processing a SNAP payment is significantly cheaper from a transaction standpoint, which can help your business save more money. That said, business owners must apply and be admitted into the USDA's FNS program. You are also responsible for installing and managing specific SNAP or food stamp processing equipment. This is needed to adequately report all SNAP transactions as they occur.
Indeed, your SNAP point of sale equipment must be configured to report your FNS ID number along with each transaction. This can be frustrating for merchants that already have a POS terminal that deals with electronic payments. The good news is that certain terminals can do all the above, including accepting EBT and SNAP transactions. This makes managing all your transactions easier than ever.
EBT Regulatory Requirements
Before you can accept any EBT or SNAP payments, you'll have to first register as an EBT retailer. The program is run by the USDA's Food and Nutrition Service, which is responsible for administering the SNAP program. Any business that wants to accept EBT payments must first apply for a permit from the FNS.
The first option is that your business must sell food staples in the following four categories: dairy; breads and grains; fruits and vegetables; and meat, fish and poultry. Additionally, you must also sell perishable foods in at least two of these categories.
The second option has to do with whether you sell food staples at more than 50 percent of your total retail sales.
If your business meets either of these two criteria, you can apply directly on the FNS website. After you obtain an account and start your application, you'll have 30 days to complete it. If you neglect to complete your application within 30 days, your application will be reset and you'll have to start over. Note that you'll also need to provide specific financial information as well as supporting documents for all managers and partners involved in the enterprise.
Once approved, you'll receive an FNS account number that identifies your business as an approved EBT retailer.
Rules Regarding SNAP Point of Sale Payments
Ensure SNAP Transactions are for SNAP Approved Food Items Only
Business that accept SNAP point of sale payments must adhere to certain FNS regulations. In addition to requiring an FNS capable point of sale device, as well as the sharing of important data with each SNAP transaction, each EBT retailer must ensure that all SNAP transactions are for SNAP approved food items only. Things like cash back or refunds are forbidden, and SNAP transactions may not be used to pay back previous debts. For all EBT payments, the customer must be present at the time of the payment and have entered the PIN themselves.
Get Point of Sale Equipment That Processes SNAP Payments
For most retailers, you'll need a SNAP point of sale card reader to process your EBT payments. You can do this yourself. However, any errors in setup can jeopardize your payments and your standing as an EBT retailer. That's because each payment must include your FNS tax number and any misconfiguration can end up nullifying the transaction altogether.
Furthermore, if your point of sale equipment does not allow PIN based transactions, you'll need a dedicated PIN pad to allow customers to input their SNAP PINs. Some POS terminals include these PIN pads on the device itself while others may feature a plug-in port to add a separate unit. As long as you have a suitable terminal and PIN pad, you can accept SNAP POS transactions.
That said, your terminal will also need to be programmed with your FNS account number for submission with each transaction, which can delay payments or block them altogether if this is not done correctly. You won't need an EMV terminal for touchless payments since EBT cards still use magstripes, but you may need to upgrade at a future time if the requirements change. Besides, your customers may already have certain touchless payment options, and offering that capability can help you do more business.
Note that EBT approved businesses are required to obtain their own SNAP and food stamp processing equipment, or to configure their existing equipment to work with the SNAP program. Exceptions are available for certain farmers' markets, direct-marketing farmers, military commissaries, nonprofit food buying coops, group living arrangements, treatment centers and prepared meal services.
Save Money With EBT Processing
The SNAP point of sale program is run by the government, so there are no processing/interchange fees for EBT transactions. This can help your business save significant amount of money over time. However, that also assumes you can set up your exiting POS devices to work with the program. That may end up being more trouble than it's worth.
Even still, working with a trusted SNAP point of sale provider can help you streamline all of your transactions with the convenience of SNAP processing equipment that does it all for you. You'll pay a little bit for the simplicity, but your transactions will still be cheaper than comparable credit/debit card transactions.
Get started today by contacting Velocity Merchant Services. We can send you brand new point of sale plug-and-play equipment. We'll show you how your business can accept EBT and SNAP payments without having to jump through complicated hoops.