How to Accept EBT and SNAP Payments

Millions of Americans rely on the Supplemental Nutrition Assistance Program (SNAP)—formerly known as food stamps—to make ends meet. Approximately 20 million households with 40 million individuals used the SNAP program in Fiscal Year 2018, according to the U.S. Department of Agriculture. The Electronic Benefit Transfer (EBT) is a payment system designed to allow recipients of assistance to make necessary purchases of food and goods under SNAP.

EBT, which used in all 50 U.S. states, the District of Columbia, Puerto Rico, the Virgin Islands, and Guam, offers a convenient and secure magstripe card that’s similar to a PIN debit card to make purchases.

For merchants, being able to accept EBT payments offers the opportunity to expand their customer base. Also, processing costs for EBT transactions are significantly lower compared to traditional debit and credit cards.

How to Apply to Accept EBT Cards

The SNAP program is administered by the U.S. Department of Agriculture’s Food and Nutrition Service (FNS). Merchants must obtain a permit to accept SNAP payments. These permits are available to any qualified business that meets criteria and submits an application and documentation. For a business to qualify for a SNAP permit, it must meet at least one of the following criteria:

  • A business sells staple foods in the following four categories: dairy, breads, grains, and cereals; fruits and vegetables; and meat, fish, and poultry. At least two of these categories must include perishable foods; or
  • One or more staple foods account for over 50 percent of your gross retail sales.

When a business completes the registration process and is approved for a SNAP permit, it will be issued a seven-digit FNS Account Number that identifies the business as an FNS-approved store. There are also special rules that apply to SNAP payments that business owners should be familiar with, including:

  • EBT payments are for SNAP-approved food items only
  • No cashback
  • No cash refunds
  • A customer must present an EBT card and enter their PIN at the time of payment

Most grocery stores and restaurants must purchase their own processing equipment or obtain it from their merchant account provider. However, some entities, such as farmers’ markets, treatment services, and non-profit food buying cooperatives, are eligible for free processing equipment that’s provided through the FNS.

Payment Processing Hardware for EBT Payments

Once merchants have a permit approved for EBT payments, they need to acquire and set up the appropriate processing hardware. Most popular terminals are compatible with EBT payments, but it’s important to be aware of specific requirements.

PIN Pad: A payment terminal must accept PIN debit transactions and feature a dedicated PIN pad for customers to input their PINs. The PIN pad can be either a stand-alone unit or integrated directly into the terminal.

Programming: A payment terminal and PIN pad must be programmed with a merchant account provider’s encryption keys. If equipment was purchased directly from an account provider, this should be all set ahead of time. But for merchants who are changing providers or adding EBT capability to pre-existing equipment, they will need to have their terminal re-programmed before accepting payments.

What are Processing Fees for EBT Payments?

Since the EBT program is government-sponsored, the costs for processing EBT transactions are much lower than they are for traditional debit or credit card transactions. While there are no interchange or PIN debit fees for EBT transactions, keep in mind that a merchant account provider has the right to charge a reasonable fee for processing such transactions.

EBT for merchants is a fairly straightforward process. The choice to accept EBT card payments can increase a merchant’s customer base, improve cash flow, and help people in need. If you'd like to find out how to get started, our payment professionals are standing by to walk you through the process. Give us a call today.