Electronic benefits transfer card payments accounted for roughly 2.2 billion transactions in 2018 (most recent Federal Reserve report), for an incredible $60 billion in sales. The EBT system allows state welfare departments to issue benefits via a magnetically encoded payment card.
EBT cards are similar to debit cards in that they are assigned to a specific individual and require a PIN for access to funds. One key difference between EBT cards and debit cards is that individuals can add money to a debit card, either at their bank, via ACH payment, reloading options at participating stores, or online by transferring funds from one bank account into another.
On the other hand, only the benefit issuing agency has the authority to add funds to an EBT card. With an EBT merchant services account, processing an EBT card payment is the same as processing debit card payments. You ring up the sale (being careful that there are no disallowed items included for SNAP purchases), the EBT cardholder swipes the card, inputs their PIN, and the funds are taken from their card and put into a type of holding account for your business. Within a couple of business days, you receive the proceeds of that sale in your business’s bank account.
Opening your doors to accepting EBT payments allows you the opportunity to grow your business while providing EBT customers in your neighborhood access to your goods and services.
Regulatory Requirements for EBT Merchant Services
Every government program requires a bit of hoop-jumping. Before you can begin taking EBT cards for purchases, you have to register your business with the USDA’s Food and Nutrition Services program. Thankfully, registering your business and applying to accept EBT card payments is a relatively simple process. In fact, in most cases, you can submit the application and subsequent documentation entirely online.
What Does a Business Need to Qualify as a SNAP Retailer?
The USDA FNS application asks for information about your business. Approval of your SNAP retailer application requires your business to meet certain criteria. Your business must meet at least one of these two requirements:
- You must offer staple foods.
- Your gross revenue from the sale of staple foods must be at least 51% of your overall revenue.
Now, what’s meant by “staple foods”? And how is this qualification determined?
Staple foods comprise — or should comprise — the majority of an individual’s diet. These foods are often bought, taken home, and consumed as part of a well-rounded meal. In most cases, prepackaged foods (with the exception of items like cereal) aren’t included in the definition. Meals or items that have been prepared by someone else or already cooked, such as a rotisserie chicken at the grocery store deli counter, also don’t qualify in most cases.
To qualify under the first requirement, you must continuously stock at least three varieties of three different staple foods. Staple foods include:
- Vegetables and fruits
- Eggs, poultry, or fish
- Breads and cereals
Two of the categories must also offer one perishable type at minimum. So, for instance, suppose one of your two categories is dairy. Powdered milk would count as a non-perishable, while a gallon of whole milk would be considered perishable. A large grocery store would meet this requirement in most cases.
To qualify under the second requirement, more than 50% of your store’s gross sales must come from the sale of foods in the categories above. A butcher shop typically qualifies because more than 50% of sales are within a staple category. A bakery, on the other hand, may not be granted a SNAP permit because, while they’re in the business of selling food, bakery items don’t typically qualify as staple foods in most cases.
Now that you know some of the criteria for a Food and Nutrition Services qualification, it’s time to apply.
How Do I Apply for an FNS Number?
While getting your FNS number from the USDA’s FNS website is certainly worth it, it’s not quite as cut and dried as simply asking for one. There are some hoops to scale and an application to file with the USDA. While this may sound like a lengthy, drawn-out process, in reality, it’s really rather expedient.
To apply for your FNS number:
- Review program guidelines on the USDA’s FNS website at https://www.fns.usda.gov/snap.
- Register your business with the USDA. After registering, you’ll receive a link to activate your account.
- After activation, you’re free to begin filling out the application to accept SNAP (If you’re the owner of more than 10 store locations, review the information for multi-store owners — these applications can’t be completed online. You’ll get a dedicated FNS account manager assigned to your application who will work with you directly to help you through the application process.) You then have 30 days to finish the application and provide all your supporting documentation. The FNS number application only takes about 15 minutes to complete. Some questions are simple, while others might require a bit of research into your business to answer. For instance, some of the information and documents required include:
- An up-to-date copy of your business license
- Legal photo ID, such as a driver’s license or passport
- Social Security Numbers (SSNs) for all controlling business personnel, including owners, business partners, company officers and shareholders, and spouses
- Business bank account’s name and address
- Information about your EBT merchant services account provider, including contact name, address, telephone number, and website address
4. Now you’re ready to submit your application. After you submit the application, you’ll receive instructions for submitting the required documentation to back up your application, such as business license(s) and proof of staple foods access and/or revenue numbers, for instance. You can upload your documentation online or print it out and mail it to the FNS processing center at:
Food and Nutrition Services
Braddock Metro Center II
1320 Braddock Place, Fifth Floor
Alexandria, VA 22314
From the date that the FNS receives your complete application and supporting documents, it can take as many as 45 days to receive your approval (or denial) letter. You can’t accept EBT card payments while you’re waiting for approval. The same applies if you’re awaiting FNS number renewal. You can’t accept EBT card payments outside the dates printed on your current SNAP permit. If you need help with your EBT merchant services account, reach out to Bankcard for assistance.
- Once you’ve submitted your application and all requested documents, you can check the real-time status of the application at any time. During processing, Food and Nutrition Services might reach out if they need clarification or further info. You can also call the hotline for SNAP retailers at 1.877.823.4369.
Once the USDA’s FNS approves your food stamp retailer application, all that’s left to do is acquire a POS system and PIN pad that works with EBT card acceptance.
Important Rules for SNAP Participating Retailers
There are several rules for EBT card and SNAP payment acceptance you must commit to memory. If you fail to comply with the rules of the program, there can be serious consequences. The most important rules include:
- EBT card SNAP payments can only be used for food that’s been approved by the SNAP program.
- You cannot issue any cash back to cardholders.
- You can issue a refund, but all refunds must be initiated through the EBT system. You cannot issue a refund in cash money.
- Card Not Present transactions are not allowed for EBT card purchases. The card must be physically swiped or — if the magstripe doesn’t work — handed to the cashier, who will then manually enter the card number, followed by the recipient entering their PIN on the keypad.
The only situation in which Card Not Present transactions are allowed for SNAP payments is through such online retailers as Amazon Pantry, Walmart, and, most recently, Target.
Costs of Processing EBT Card and SNAP Payments
Processing charges for EBT card payments are much less expensive than processing fees for traditional card transactions. This is because electronic benefits transfer programs are federally funded and not facilitated by private banks, credit unions, or credit card companies. In fact, EBT card payments aren’t charged an interchange or PIN debit fee.
But EBT merchant service account providers have the right to implement reasonable fees for providing payment processing services for your EBT transactions — and most do. This is one of the biggest reasons store owners look into switching merchant service account providers when they transition to accepting EBT card payments.
Bankcard EBT merchant services have no transactions fees. You’ll always only pay a flat fee of $75 per month, per EBT machine.
Traditional credit and debit card transactions must comply with PCI DSS requirements. That said, PCI DSS doesn’t apply to transactions with EBT cards. Now, this won’t matter for you if you already accept traditional cards — but if you’re a store that only accepts EBT card or SNAP payments, be wary of merchant services providers that bundle PCI DSS compliance fees into your monthly charges.
Finally, as you research EBT merchant services, you’ll find that not all merchant accounts support EBT card payments.
Should You Accept EBT Card Payments in Your Store?
Do you need EBT merchant services? If you operate a business that meets the basic criteria outlined above for accepting EBT card and SNAP payments, it’s really in your store’s best interests to do so. It doesn’t cost much to process these payments, and the majority of today’s businesses already have the necessary equipment to accept EBT cards. Registering for a SNAP merchant permit allows you to open your business to more customers. You’re also providing a service to your community by helping those who are less fortunate — those who rely on SNAP benefits to feed their families. It’s a smart business decision that you can also feel good about as an individual.
How to Accept EBT Payments
You must be eligible, approved, and authorized to accept EBT transactions before you can process these types of payments.
Fortunately, the requirements for approval are straightforward. Here’s how to accept EBT payments:
How do I know if my business meets the requirements for EBT card processing?
Stores must meet one of two requirements for staple foods (those that are most often prepared at home and account for a substantial portion of a person’s daily diet).
SNAP-eligible foods must account for more than 50 percent of your store’s retail sales. Or you must sell at least three varieties of qualifying food in each eligible food group, plus offer perishable foods in at least two qualifying groups:
- Breads and cereals
- Fruits and vegetables
- Meats (including poultry and fish)
What kind of equipment is needed to process EBT card payments?
EBT cards aren’t processed through the same network as other credit or debit cards and subsequently require a point-of-sale machine capable of accepting this form of payment, also known simply as an EBT machine. Your current terminal may be compatible, but it must be a terminal that’s set up for PIN debit payments with either a dedicated, stand-alone PIN pad or one that’s part of your terminal.
Once you have the right equipment, encryption keys from your merchant services provider must be programmed into it. When you obtain your EBT processing equipment from Bankcard, we program your terminal and other equipment for you, so all you have to do is set up and start taking payments. If you’re keeping your existing equipment and merging EBT acceptance capability, we can reprogram your current terminal. All we need to complete your EBT merchant account setup is the FNS number on your SNAP permit. Bankcard offers free EBT payment processing equipment. Get your EBT machine with Bankcard.
How to Choose the Right EBT Card Processing Equipment
If your current point-of-sale (POS) machine isn’t compatible with EBT card payments, you’ll need a new POS system. The most important items you should look at are:
- Software costs
- Price of terminal
- Terminal features
- EBT compatibility
Most POS terminals have free software built in, but the terminal itself may be expensive. Always confirm pricing before committing, and ensure the terminal offers the features you need for your specific business. A particular terminal might have several cool features — but if those features don’t serve a purpose for your store, it’s likely an added expense you can avoid.
What Are Some Other Benefits of EBT and SNAP?
By this point, you’ve probably decided that accepting EBT cards at your store with an EBT merchant services account would be a great way to support your local neighbors. But here are a few other benefits of EBT and its various programs:
- EBT cards eliminate cumbersome processes, simplify accounting procedures, and reduce labor costs.
- Electronic benefits transfer automates the entire accounting process.
- EBT cards could reduce or even eliminate fraudulent use of food benefits.
- EBT cards are both convenient and secure, can’t be used without the PIN, and can be canceled and replaced if the card is lost or stolen.
- SNAP and TANF recipients don’t feel as singled out or stigmatized with EBT cards as earlier recipients did when receiving paper food stamps.