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Accepting Food Stamps Through the Supplemental Nutrition Assistance Program: An Emerging Customer Payment Option for Food Retailers

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Accepting Food Stamps Through the Supplemental Nutrition Assistance Program: An Emerging Customer Payment Option for Food Retailers

By NicoleD
Published: April 15, 2010

In times of high unemployment, more and more families and individuals rely on the Supplemental Nutrition Assistance Program - formerly known as the food stamps program - to purchase food items with the use of an EBT card. Small food retailers looking to expand their market share can access EBT cardholders by becoming licensed retailers through the US Department of Agriculture. Read on for retailer requirements, licensing guidelines, and methods for accepting EBT cards in your food business.

The USD;s supplemental nutrition assistance program (SNAP)- formerly known as the food stamps program- helps low-income people purchase the food they need for good health. Individuals and families that meet certain eligibility requirements are provided with an electronic benefits transfer card (EBT card) that they can use like cash to purchase food. EBT uses a plastic card similar to a bank debit card to transfer funds from a SNAP benefits account to a retailer's account.

Expanding Your Market Presence by Targeting EBT Cardholders

SNAP is widely available at most grocery stores, but now more and more food businesses - including farmer' markets - are accepting EBT cards to broaden their customer base. And i's a pretty large base that they are targeting - the USD's Food and Nutrition Services (FNS), which administers the program, estimates that SNAP puts healthy food on the table for more than 38 million people it serves each month.

Why the change? Food retailers that previously did not accept EBT are now considering the option to move perishable stock and bring in new customers, including those on temporary unemployment benefits, who could remain loyal shoppers long after they stop receiving financial assistance.

Retailer Requirements

Businesses that want to accept EBT cards should first become familiar with their rules of use. To be eligible to accept SNAP benefits, retailers must sell food for home preparation and consumption and meet at least one of the criteria below:

  • On a daily basis, offer for sale at least three different varieties* of food in each of the four staple food groups (with perishable food** in at least two categories): bread and grains; dairy; fruits and vegetables; and meal, fish, and poultry, OR
  • At least 50% of the total sales at your store must be from the sale of eligible staple food***

    *Variety is defined as different types of food. For example, your store has a variety of dairy items if you sell milk, yogurt, and cheese on a daily basis. It would not have a variety of dairy items if you only sold three versions of milk (e.g., skim milk, evaporated milk, whole milk).

    **Perishable foods are fresh, refrigerated, or frozen. Packaged or canned goods are not considered perishable.

    ***Staple Foods are basic dietary items (e.g., bread, flour, fruits, vegetables, beef, chicken, fish, etc.). Snack or accessory foods; such as chips, soda, coffee, condiments, and spices, are not staple foods. Ready to eat, or prepared foods, are not considered staple foods.

    Licensing for EBT Transactions

    Local FNS field offices are responsible for the licensing and monitoring of retail food stores participating in SNAP. Any retailer that would like to accept SNAP benefits (EBT) must be licensed to participate in SNAP by following this three step process:

    • First, you will need to get an USDA account, which you can set up either online or through the USD's toll-free hotline at 1-877-823-4369.
    • Once you have registered, sign into your account and fill out the online application on USDA.gov. You have up to 30 days to complete and submit the online application, which you can stop and save at any time. If you choose to apply by paper, request an application from the hotline.
    • To complete your application, send all required documentation to your local FNS office. A list of required documents and your servicing FNS office is provided during your online application process or in your application packet if you prefer to apply via paper.

    FNS estimates approximately 45 days to process an application once i's complete, and reviews all applications for accuracy, including conducting a background check for past SNAP history, and evaluating your store for eligibility. FNS inspectors may also visit your store to confirm eligibility.

    Accepting EBT Cards
    Once your store is licensed, you may elect one of three ways to accept EBT cards:

    • Use your existing point-of-sale equipment or purchase new devices. If you have existing equipment, check with your vendor to see if it can be programmed to accept both SNAP EBT and commercial debit/credit transactions. The government does not reimburse you if you elect to purchase third party equipment, so be sure to discuss potential costs with your vendor prior to signing any contracts.
    • Use government supplied point-of-sale devices provided by your State. This equipment only works with SNAP EBT cards and there is no cost for the device if your store averages $100 a month in SNAP transactions. You must sign an agreement to cover the use of the equipment and provide banking information to the company that handles processing before you can receive a device.
    • Fill out a paper voucher for each transaction. If you do not have electricity, a phone line, or average at least $100 a month in SNAP transactions, manually completing paper vouchers offers an alternative.

    Special Needs Groups

    If you run a drug and alcohol treatment center, group home, battered wome's and childre's shelter, homeless meal provider, senior communal dining or meal delivery service; you must contact your local FNS office to obtain a paper Meal Service Application, Form FNS-252-2.

    Training and Assistance for Small Businesses

    The key to making EBT transaction work for your business is a balance of understanding the laws that apply to their use and training your employees to do the same. Store owners should review the SNAP Retailer Training Guide and instructional video in their approval package with all employees to ensure compliance with rules and regulations.

    If you have questions about SNAP or accepting EBT payments, contact your local FNS field office. Some states, such as Massachusetts and Oregon also provide additional information for retailers. For more information about SNAP, visit the Food and Nutrition Service website.

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