A Complete Guide to Accepting EBT for Small Businesses

Every once in a while a business has a customer that asks whether they accept EBT payments. With some more often than others, you may be thinking about acquiring what is necessary for accepting EBT cards. You are in the right place. Follow this article for all the details you’ll need to establish your EBT system and how to connect it with respectable administrative and financial instances.

What is EBT?

For any who stumbled upon this page at 2 am not knowing what EBT is, and to clarify to all those who are not sure. EBT, or Electronic Benefits Transfer, is a benefit transfer system posed by government instances that supplements the old food stamps program. 

Why accepting EBT?

Being that EBT is a Federal-funded program and state-funded in some instances, merchants should see them as an additional source of income. In some areas, a large number of customers possess assets available over these cards.

The appealing difference between EBT and other payment processing cards is the significantly lower transaction costs. Because of their nature, federal and state government aid and benefits regulations are prescribed the transaction costs.

The difference between EBT and the SNAP program, which applies to grocery stores, some restaurants, and farmers’ markets, EBT incorporates the TANF program, which means small merchants can benefit from accepting EBT.

How to get your business to start accepting EBT?

We will now go over the requirements you have to meet before your business starts accepting the EBT payment method. We will split them into a few steps.

Step 1: Regulatory requirements

This step won’t make many happy since it involves a lot of state bureaucracy. 

The first requirement is to obtain a SNAP program permit from FNS (The US Department of Agriculture’s Food and Nutrition Service). This document is usually called an FNS permit or SNAP permit. To qualify for this program, you have to have a business selling staple foods in the dairy, bread, grains, and cereals category, and one or more of these groups account for 50% and above of the businesses’ gross sales.

If you qualify, check out the FNS website and verify the identity in just a few minutes. After you’ve been verified, you have 30 days to complete the application with the supporting documents:

  • Copied Business License
  • Copied Driver’s License, Passport, or some other ID with a photo
  • Copied SS Cards (all partners, owners, shareholders… and their spouses)
  • The Bank’s Name and Address
  • Information about your Merchant’s Account Provider (name, ph. number, website, and address)

You will have to wait 45 days until your application is approved. You will be given an FNS Account Number, and your store is approved. Multiple Store owners of 10 and more stores can’t apply online.

There are some special rules for SNAP purchases that have to be had in mind:

  • Qualified farm stands are also eligible for SNAP permits
  • Purchases apply for approved food, which excludes restaurant food, hot food, alcohol, pet food, vitamins, etc.
  • Payments can be conducted only for SNAP approved food
  • Cash-back can’t be issued
  • Cash refunds can’t be issued
  • Customer presents an EBT card and has to enter their PIN only at the time of payment

Step 2: Getting an EBT Reader

Along with getting a SNAP/FNS permit, an adequate card reader should be acquired and set up. Most terminals can accept EBT cards, but there are a few requirements worth mentioning.

  • Accepting PIN Debit cards is necessary since EBT cards have a PIN.
  • A PIN pad is needed for customers to input their PINs.

Next, you need to make sure your devices are set up for accepting EBT payments. Your merchant’s account provider does this. The provider installs encryption keys for different payment methods. In many cases, businesses acquire the devices directly from MA providers with the required software tweaks already implemented.

In case you have to switch your provider or add EBT capability onto equipment you already own, terminal reprogramming has to occur. This process usually takes a week-worth of turnaround time. Note that Magstripe is sufficient for now, but the government has announced they planned EMV cards. We don’t know when this is going to happen.

It is worth mentioning that some merchant entities can be eligible to get free devices from FNS. These potential entities are:

  • Farmer’s Markets
  • Direct-marketing farmers
  • Non-profit food-buying cooperatives
  • Group-living arrangements
  • Military commissaries
  • Treatment centers
  • Prepared meal services (any that are not for profit that participates in state-option restaurant programs)

If you believe your business may be eligible, you can contact FNS directly for more information.

Specifics to EBT payments and purchases

EBT is a long-term government program that is still in progress. Its goal is to incorporate and unify different government programs like SNAP and TANF. However, at the moment, SNAP issues the most benefits and has strict rules on what can be purchased through these funds.

To correctly process payment and be sure the payment is processed for adequate store items, you need to train your employees for adequately charging in case of EBT cards. For example, all staple foods allowed by the SNAP program should be paid separately via EBT. The governmental manuals are at your disposal.

Introduction to other government funding programs has widened EBT cards’ use, and TANF programs have allowed other commodities to be paid via EBT. What we can expect in the future is to have an EBT card that incorporates all funding in one place and make it the same as other payment cards. With a flat $0.10 per transaction, they seem more appealing as time passes.

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