Life is tough, and it is tougher for underprivileged people. Addressing the hunger cause and helping poor the US government started a program to help low-income families get access to government funding and buy food. They issued EBT cards loaded with funds that people could spend on food and other goods.
These EBT cards were to be used just like any credit/debit card. However, the problem was that thesrcards did not work with all retailers & merchants. So, if you sell food and want to accept such payments, then you need to register your merchant account with the government.
In this guide, we will discuss everything about EBT in detail, including the payment processing, card processing, pros and cons of supporting these transactions, SNAP permit requirements, and much more.
Before we jump into details, let’s understand the concepts of EBT.
If you work in the B2C food industry, you might be familiar with a term called EBT, where customers ask you, “Do you support EBT/SNAP Payments?” here is what it means.
EBT stands for Electronic benefit transfer; it is a payment gateway which allows user under supplemental nutrition assistance program (SNAP) or other state-sponsored programs to make needed purchases of food and goods. With this arrangement, the customer gets a magstripe card just like a debit/credit card to make a payment for the purchase.
Customers can use the authorized benefits given by the federal & state governments to pay for the received products. This service has been implemented in all states of the USA since 2004.
The government used physical stamps for financial assistance until the 1990s; then, the program was officially renamed as Supplement Nutrition Assistance Program or SNAP.
EBT payments are perfect for merchants who wish to expand their customer base. Since the processing costs is significantly lower as compared to debit and credit card processing, small businesses and budding merchants can make the most out of it.
In order to accept EBT payments, you need to fulfill a criterion and submit relevant documents. While the SNAP program is designed to help grocery stores, farmworkers, and some restaurants, this payment processing program supports authorized retail purchases. In simple words, if you are a traditional retail merchant, then you should opt to have this payment method to cater customers.
Now you would be wondering how would you get registered for an EBT and SNAP permit? Well, let’s discuss this in detail.
An EBT transaction is not applied to the following purchased items. (varies state-to-state)
Note that if your customer wishes to purchase these items, they will have to do two separate transactions – One via EBT and the other via cash, credit card, or any other payment process you offer.
Most SNAP recipients are not aware of this, so it’s better to warn them rather facing an official legal repercussion.
Just like any other govt-sponsored program, you will need to wade through a lot of bureaucracy before you could actually accept EBT payments. However, the registration process is fairly simple and doesn’t require a lot of hard work. The SNAP permit is administered by the FNS (Department of Agriculture Food and Nutrition). The permit is granted to any business that fulfills statutory criteria & is backed with relevant documents.
Your business must fulfil at least one of the following criteria:
Did you meet the requirements? Great! Now you need the following documents to get verified.
The documentation can be submitted online, and the approval process can take up to 45 days.
In addition, to get registered with the SNAP permit, you need to acquire a few hardware accessories. Although most popular terminals are compatible with these payments, it is important to be aware of the requirements.
The very first of all is to ensure that the terminal can accept debit PIN transactions. This means that you will need a dedicated PIN-Pad to enter customers’ PINs. The PIN-Pad can be a separate unit or integrated into the terminal.
Once the terminal and PIN-pad are aligned, then you’d need to program your merchant account with the encryption keys. Please note that your merchant account provider will need the 7-digit FNS account number to accept EBT payments.
It is advised that grocery stores and restaurants who wish to participate in the EBT payment process that they must buy their own equipment or obtain from the merchant account provider.
Most providers do not disclose their pricing for these transaction and process. So, you need to look into the contract details or ask the sales representatives for a straight answer. Be vigilant as the costs associated are less as compared to debit or credit card processing. They are state-sponsored, so it hardly has an interchangeable fee on these transactions.
However, if your merchant account is set to support these payments, only then you should not be charged with PCI compliance fees.
It is important to see if the provider supports EBT payments before opening a merchant account. Read if they support these payments on their website before committing to them.
The Pros and cons of supporting EBT payments are as follows;
While consumers are using different ways to pay for goods and services, old credit cards remain as one of the most popular payment processes. Taking payment from the customer requires a channel through a credit card processing service. As mentioned, an EBT process is sponsored by the US government; thus, its cost for processing is much smaller as compared to traditional debit and credit cards. While a few providers will allow you to process them for free, some might charge a little in light of the transaction fee. It is to be noticed that these providers are the best merchant service providers in general.
If you are a business that is eligible to conduct EBT payments under SNAP, then there is no reason not to signup for the service. The processing costs are minimal, and most businesses which use online credit card processing service can easily make the most out of it. Registering as a SNAP merchant doesn’t require lengthy paperwork, today,it is leading the way which takes a few weeks for approval.
An EBT merchant account can expand the types of payments and also help your customers ease of payments. It is a win-win situation for your business and your customers.