Well, over ten percent of American residents receive food assistance through the Supplemental Nutrition Assistance Program (SNAP). While this number has fallen significantly from ~15 percent as recently as 2013, food assistance programs continue to be a vital way to provide food security for millions of Americans. It has been estimated that nearly 50% of all Americans will receive some form of assistance through food stamps at some point in their lives.
From the perspective of a small business owner, this can offer both a potential hurdle and a potential opportunity. On one hand, accepting EBT payments will require some foresight. On the other hand, not only does accepting EBT payments benefit your business, but it also benefits the community as a whole.
What is Electronic Benefits Transfer (EBT)?
According to the United States Department of Agriculture: Food and Nutrition Service, “Electronic Benefits Transfer (EBT) is an electronic system that allows a recipient to authorize a transfer of their government benefits from a Federal account to a retailer account to pay for products received.”
In other words, EBT cards are very similar to debit cards where the bank account is replaced by food stamp benefits. The electronic benefit transfer system was established in 2004 as a federal program. EBT is recognized and accepted in all 50 states. In practical terms, this means that the vast majority of food stamp users will be carrying and using EBT cards.
EBT, Food Stamps, and SNAP Benefits
When it comes to food stamps, it can quickly become confusing differentiating between the different terms which seem to be used as synonyms. Here are some of the key terms and their associated definitions:
Electronic Benefits Transfer (EBT) is the electronic payment system through which food stamp users can make payments. As we mentioned in the previous section, this is essentially a debit card for a food stamp account.
Food stamps are “government-issued coupons” which can be used as cash for certain items. Food stamps are intended to be used by low-income families and individuals who may otherwise have a difficult time affording sufficient meals.
SNAP Benefits is the US-issued food stamp program. Where food stamps is a more generic term for a type of government benefit, SNAP is the name of the food stamp program issued by the federal government.
Accepting EBT Payments as a Small Business
So let’s say you would like to begin accepting EBT payments. Where should you start? There are a few high-level concepts to keep in mind, including:
Retailers who accept EBT must first apply. It is important to understand that individuals may receive food stamps through either SNAP at the federal level or another program at the state level. Small businesses must apply as a retailer and become part of the program to get started. Most businesses are accepted as long as they meet the requirements of selling primarily staple foods which consist of meat, fish, grains, breads, fruits, vegetables, and dairy.
Small businesses must receive an EBT account number. Along those lines, you must be issued an EBT account number in order to process EBT payments.
Work with a merchant services provider to process payments. A qualified and experienced merchant services provider should be able to help you with the hardware and software you need to begin accepting EBT payments.
Integrate EBT payments into your regular cash flow. Once everything is set up, accepting food stamp payments is very similar to accepting debit cards. This makes life easier for you and for your customers!
EBT Processing Benefits Customers and Businesses Alike
And those benefits are the real reason why so many businesses choose to accept EBT payments. The initial set up process does take some effort, but once you have begun to accept SNAP Benefits as part of your business model, your accounting and payment processing will not change much whatsoever.
Of course, the real winners here are your customers. For millions of Americans, food stamps are an essential part of their financial reality. Being able to shop local and shop small businesses should not be relegated for the more fortunate. By accepting EBT payments, small business owners are allowing low-income individuals and families to broaden their food choices.
We believe that the benefits of accepting SNAP and TANF (Temporary Assistance to Needy Families) payments through the EBT system far outweigh the potential downsides. There are obvious financial benefits, your customer base will grow, and the community will thank you!
True Merchant EBT Processing Solutions
At True Merchant, we offer a wide range of merchant account solutions ranging from accepting EBT payments, credit card processing, and even funding for small businesses. Our experienced industry professionals put a priority on payment security, reducing your costs, and keeping your merchant account running smoothly.
At True Merchant, we understand that choosing a payment processing service is not what most business owners look forward to. It can be daunting, confusing, and it isn’t the most thrilling part of operating a business. However, working with a well-established payment processor will allow your business to meet customer expectations for convenience, stay protected from fraudulent activity, and avoid costly fees.
Contact True Merchant today to learn about how our payment processing services can help your business reach the next level!