SNAP EBT Equipment, Services and Implementation
To accept SNAP electronic benefit transfer (EBT) access at your market, you will need to select a service provider to provide the point of sale (POS) equipment, process transactions, and deposit money in your bank account. Finding the right service provider for your market requires a little research. Like shopping for a cell phone, there are multiple service providers, equipment options, types of service, and a range of fees to learn about before signing a contract.
To choose the right service provider for your market, first assess your market’s capacity and needs:
- Connectivity: Most farmers markets require a wireless POS device due to their outdoor location away from landlines. In that case, you need to have reliable wireless service. Find out which major cell carriers (like AT&T, Verizon, T-Mobile, etc.) have the best signal at your market. If you’re in an area without a strong cell signal, you’ll need to explore other options such as getting a cell booster, connecting to a landline, or as a last resort, using manual/paper vouchers.
- Payment Options: EBT-only equipment is available, but many markets choose to also offer debit and credit payment options. Each type of transaction comes with its own set of fees, so estimating how many transactions you might have at your market will help in determining costs. See our section on debit and credit to learn about the benefits, costs, and requirements of each.
- Funding: Multiple costs are associated with EBT programs, including equipment costs, service fees, transaction fees, wireless costs, purchasing scrip, and even staff time to run the EBT machine and handle the accounting. Properly promoting your EBT program can also be costly, requiring staff time, design, printing, and other outreach costs. Ask yourself what resources your market has available, and if there are any organizations in your community that might be interested in sharing the financial or staffing burden.
- Organizational Stability: An EBT service agreement or contract is for a set term, anywhere from one month to five years. More established markets may be comfortable with a long-term contract while newer markets, or those without much organizational structure, may opt for a shorter, more flexible agreement. Similarly, organizational stability may impact your decision to purchase or rent EBT equipment.
Once you’ve considered these questions, ask around to other market organizers in your state. Who’s their service provider? Has it been a good experience? After consulting your peers, contact your service providers of choice for more information.
Questions to Ask Prospective Service Providers
When contacting service providers, come prepared with a list of questions, and be ready to negotiate.
- Experience with Farmers Markets: Ask the provider if they have experience working with farmers markets, farmers, and processing SNAP EBT transactions. This is critical to a smooth experience. Ask for references from other farmers market and farmer customers.
- Connectivity: One of your first questions is whether or not the processor’s wireless provider has a strong signal at your market site. Typically, the processor can tell you if their service is comparable to cell service for major carriers such as AT&T or Verizon. If you manage multiple market locations, be sure to ask about each site.
- Equipment: What type of equipment do they offer? If it breaks, will the provider provide a new one? What are the features? If rental options are available, will you be renting to own, or will you be able to upgrade your equipment during your rental period? Most service providers offer a wireless EBT terminal, which includes a keypad and a printer. EMV technology, (named for its creators, Europay, Mastercard and Visa) refers to a chip that’s been integrated into payment cards. This ‘chip and PIN’ technology protects confidential data better than magnetic stripes traditionally used to swipe cards. All POS devices and payment cards transitioned to EMV in October of 2015. If your POS isn’t EMV compliant, it will continue to work, however, liability for any fraud or data stolen from your POS will fall on you. Ask your service provider if their equipment is EMV compliant.
- Contract: How long is the contract term? Are there cancellation fees? Are month-to-month, seasonal, or rental options available?
- Customer Service: What is their customers service plan? Do they have a 24-hour hotline, or someone available on evenings and weekends, if that’s when your market is open? Will the customer service providers have farmers market experience? How will they respond if billing problems or issues arise? When doing reference checks, ask other markets about this service.
- Fees and Billing: Will you be able to turn off your machine or billing at the end of the market season? What are the fees to turn it on and off? What will you be charged while it’s off? Ask for samples of monthly statements. Can you easily understand them? You’re likely to see the following fees in your service provider agreement:
- Transaction fees: Fees charged for every transaction through electronic transfers (debit, credit, EBT). These fees are paid to, and determined by the merchant service provider. American Express cards, Rewards cards, Business/Corporate cards and other various types of credit and debit cards incur varying types of transaction fees. Your provider may list out all of these various rates, or lump them into one rate. Similarly, swiping a credit or debit card and verifying with a signature incurs a lower transaction fee than using the PIN (personal identification number) feature. Providers may include a swipe transaction fee (also called an offline transaction) and a separate PIN transaction fee.
- Interchange fees: A transaction fee on credit and debit transactions that is paid by retailers to card issuers (the banks that sponsor the credit or debit cards). The rates are set by the card associations (e.g. MasterCard or Visa) and are based on a combination of factors including amount of the transaction, total volume, and type of business. The interchange fee is supposed to cover the risk of fraud, transactional costs, and other overhead. SNAP EBT transactions are excluded from interchange fees. Some providers include interchange fees within their total transaction fees, and list them separately. Ask your provider if interchange fees are included in their posted transaction fees.
- Early termination fee: A fee charged by merchant service providers when a contract is ended prematurely. Early termination fees vary by provider.
- PCI compliance fee: The Payment Card Industry Data Security Standard (PCI DSS, commonly referred to as simply PCI) compliance is designed to protect businesses and their customers against payment card theft and fraud. If your retailer accepts, stores, or transmits card data, PCI DSS compliance certification is required by card brands such as Visa, MasterCard and Discover.
- Many service providers charge a PCI compliance fee and provide compliance support. For example, a PCI fee may be something in the area of $70-$120 a year, or about $6-$10 a month for compliance support involving scans and assistance completing compliance questionnaires once per year. The PCI fee may be greater or less depending on the level of support the provided. If the annual PCI compliance survey isn’t completed by the retailer annually, the service provider will often charge a non-compliance fee.
- Seasonal fee: A fee that a service provider may charge if services are only used for a portion of the year. Paying the seasonal fee allows a market to avoid paying monthly service fees during months when the market is not operating. (As opposed to paying for an early termination fee, which could be higher).
- Set up fee: A one-time, or annual administrative fee to set up your account and equipment. Ask your provider what’s included in the set-up costs, as these vary greatly between providers.
- Statement fee: A monthly fee for producing and sending your monthly transaction statement. This fee may also include other services – ask your provider.
- Wireless fee: Fees paid for wireless service to an outside provider (like AT&T or Verizon).
The following service providers have experience with farmers markets, and have been recommended by FMC members. This is by no means an exhaustive list—ask your peers for more service provider recommendations.
Implementing your New Program
Tokens are a form of market currency, also known as scrip, that is used with a centrally-located POS terminal program. Tokens allow customers to use EBT benefits as well as debit or credit cards and all vendors in the market have the opportunity for increased sales.
Here is how it works: a customer purchases market tokens from the central EBT location (often at the market’s information table) using their debit, credit, or EBT card, and then uses the tokens to purchase products from participating vendors. The vendors exchange the tokens back to the market according to an agreed-upon reimbursement schedule. The market keeps track of token sales versus token redemption to ensure that the system is functioning properly. A market can also use paper scrip instead of tokens, which tends to be less bulky, but also more easily counterfeited.
An alternative to tokens or scrip is a receipt system. With this system, the cardholder brings the produce she wishes to purchase to the vendor’s checkout. The vendor totals the sale and writes a receipt which includes the the vendor name, amount purchased, and items purchased. The vendor holds the shoppers purchase while the customer then brings this slip to the central POS market site. Here her card is swiped and she receives a sales receipt from a market staff-person, who signs the vendor receipt to show proof of purchase. The customer returns the vendor receipt to the vendor in exchange for her food purchase. At the end of the market, the vendor tuns in all shopper receipts and the market reimburses the vendor according to an agreed-upon payment schedule.
The advantages of the receipt system are that a) it has an extensive paper trail; b) it’s cost-efficient; c) there is nothing of value, like tokens, to be lost; and d) purchases can be precisely calculated down to the last penny (token systems usually are just use dollar tokens). On the other hand, tokens are much more shopper friendly and the debit/credit tokens have the advantage of multiple uses: to purchase products now or later, give as gifts, and brand the market with the market logo, to name a few. In addition, tokens may seem familiar and easy for customers to understand, attracting debit/credit customers as well.
Here are more great resources for using tokens at your market:
- For ways to communicate about your token system, look at Portland Farmers Market’s Tokens 101 for Shoppers.
- For token system logistics, see Market Umbrella’s YouTube Video, FAQ Token Systems Marketshare.
Other Resources from the FMC Resource Library:
- The Food Trust’s A Survey of Farmers Market SNAP Incentive Programs: Lessons, Challenges, and Trends
- Darlene Wolnik’s Vermont Market Currency Feasibility Report
- Project for Public Spaces SNAP/EBT at Your Farmers Market: Seven Steps to Success