Information and Recommendations for Farmers Markets Organizations and Direct Marketing Farmers/Producers

Transcription

1 Information and Recommendations for Farmers Markets Organizations and Direct Marketing Farmers/Producers DATE: SEPTEMBER 30, 2010 Minnesota Department of Agriculture, Robert Street, N., St. Paul, MN

2 How to Implement SNAP and EBT Into Your FARMERS MARKET Authored by Amanda Baesler, Minnesota Department of Agriculture Reviewed by Kari Dunn, Rochester Farmers Market and Madeline Kastler Local Foods Institute for Agriculture and Trade Policy Thank you for your interest in learning more about implementing Electronic Benefits Transfer (EBT) for recipients of food stamps through the Supplemental Nutrition Assistance Program (SNAP). The Minnesota Department of Agriculture created this manual through support from USDA s Specialty Crop Block Grant Program. This is a user-friendly, how-to manual for farmers and farmers market managers interested in accepting food stamp SNAP/EBT cards at farmers markets.

3 Table of Contents Glossary of EBT and Food Benefit Related Terms...4 How Do SNAP and EBT Work?...6 Why Should a Farmer or Farmers Market Offer EBT?...7 Benefits of EBT...7 Guidelines to Determine if Your Market is Ready for EBT...8 Deciding to Use EBT/Debit/Credit...10 How to Use EBT Technology to Accept SNAP Benefits...10 How to Apply to Accept SNAP and Use EBT...11 Processing Electronic Transactions...14 Purchasing a POS Machine...16 How Should a Farmers Market Implement the EBT System...17 Good Record keeping Practices When Accepting SNAP Benefits...20 Manager Checklist...22 How to Communicate the New EBT System to Customers of the Market...23 How to Reach Out to New Customers...23 Appendix I- Additional Information...24 Appendix II - Tips for Farmers Markets Filling Out the Retailer Application...26 Appendix III - Sample Press Release...28 Appendix IV - Sample Market Day Transaction Daily Redemption Report...29 Appendix V - Sample Vendor Agreement Form...30 Appendix VI- Scrip Example...32 Appendix VII - Vendor Information Sheet...33 Appendix VIII - Sample Log and Transaction Report...34, 35 3

4 Glossary of EBT and Food Benefit Related Terms Access Card A generic term which refers to the physical card used to access a commercial or EBT card system. In the on-line EBT transaction or application, recipients use magnetic stripe cards at POS terminals or ATMs to access the system. In the off-line EBT transaction or application, recipients will use integrated circuit (IC) cards (also called smart cards ) to access the system. Account A food stamp or cash account. Authorization An affirmative response by, or on behalf of, the issuing member to a request to permit a card or card account to be used in a transaction. No posting to an account occurs for an authorization. Balance Inquiry A non-financial transaction that permits the cardholder to obtain the current balance of his or her account. Batch Receipts A print out from the EBT terminal of the daily transactions at the close of market. Either the state or third party vendor will provide instructions for printing the batch receipts. Clearing Account An account maintained for the purposes of settlement and payment of fees. Electronic Benefit Transfer (EBT) A system that uses electronic funds transfer, automated teller machines and point of sale technology for the delivery of public assistance benefits. Farmers Market Nutrition Program (FMNP) A federal nutrition assistance program that provides low income women, children and seniors with a limited number of coupons to purchase fruits, vegetables and herbs. Food and Nutrition Service (FNS) The Food and Nutrition Service of the United States Department of Agriculture. Food Stamp Program (FSP) The government benefits program operated under the authority of the Food Stamp Act of 1964, as amended. Off-line An EBT system or transaction in which individual purchases are authorized without telecommunication between the POS device or ATM and a central database. In an off-line EBT system, data on recipient account balance is maintained on the access card, and purchase authorization only requires contact between the card and local device. In an online EBT system, an off-line transaction requires a manual voucher. On-line An EBT system or transaction in which authorization of individual purchases requires telecommunication between the POS device or ATM and a central data base in which data on account balances is maintained. Personal Identification Number (PIN) An alpha-numeric code selected by or assigned to the recipient and used to control access to individual accounts. The PIN must be entered on a key pad before any transaction can be processed. Point of Sale (POS) Typically used to refer to equipment (e.g., terminal, PIN pad and printer) deployed at a retail location and used to initiate the electronic debit of a recipient account and credit to the retailer s account. These machines do not dispense cash. When POS includes cash back, the merchant, not the machine, dispenses the cash. This device is used to swipe either the EBT/Credit or Debit cards. Market transactions are carried out with either tokens or vouchers that are exchanged at the central POS station. The device can be wireless or use a phone line. 4

5 Receipt In commercial networks, a hard copy description of a transaction that took place at an ATM or POS, containing at minimum date, merchant name and location, type of account accessed, amount, reference number, and an action code. In EBT systems, receipt must include the balance remaining in the account after the current transaction has been processed. Scrip Scrip is any substitute for currency, which is not legal tender. It is money which can only be used with one company, association or group of companies. At the farmers market this is usually in the form of tokens or vouchers. Settlement Process by which funds (i.e., debits and credits) are transferred between any two processing points in the flow of an electronic financial transaction. These include: between financial institutions participating in the network; and, between the financial institution and the merchants for whom it acts as an acquirer or sponsor. Surcharge A fee added to a transaction by an Acquirer, Terminal Operator or Merchant for a transaction initiated at a Terminal. TANF Temporary Assistance for Needy Families Third Party Vendors Vendors that sell and provide services for EBT/Credit/Debit machines. They often charge a monthly transaction and processing fee for their equipment and services. USDA United States Department of Agriculture Vendor The entity with which a government entity contracts for the implementation, maintenance and operation of an EBT program. SNAP Supplemental Nutrition Assistance Program formally known as food stamps. 5

6 How Do SNAP and EBT Work? The Supplemental Nutrition Assistance Program (SNAP) (formerly the Food Stamp Program) is the federal government s largest nutrition assistance program for limited-resource families. The program provides monthly benefits for eligible participants to purchase food items at approved retail outlets. This program formerly used paper coupons which were issued to each program recipient to present to participating retail food vendors. In order to make this program more efficient, the federal government has developed an electronic alternative. Essentially, food stamp recipients will use an electronic debit card, EBT, instead of paper coupons to purchase food. The food stamp, or SNAP office will issue an EBT card once an individual is accepted into the program. They can take the card to any grocery store, food retail outlet or farmers market that accepts electronic food stamps and use it to buy food. At the check-out stand, the EBT card is used just like a bank debit card. The card is swiped through a slot in a machine at the check-out counter called a point of sale (POS) machine. The EBT system will automatically deduct the cost of the food or tokens/vouchers purchased from the recipients monthly food stamp benefit account and provide a receipt stating the balance of the account. The food stamp office notifies recipients on which day of the month their benefits will be available and automatically deposits benefits in the SNAP system each month. The funds are available to the recipient at that time. SNAP regulations provide for manual transactions as a back up when the SNAP system is down. USDA permits retailers to choose when to use the manual system if the electronic system is down. Operating an EBT machine requires a Food & Nutrition Service (FNS) license. FNS allows markets to obtain a single FNS license to include all eligible vendors at the market. SNAP benefits are redeemed using a POS terminal; transactions are processed throughout the farmers markets using scrip (paper certificates, tokens, or receipts). SNAP customers redeem their benefits by swiping their EBT cards at the POS terminal in exchange for scrip, which they can use to buy eligible food products. This process is similar to one sometimes used for accepting credit and debit cards at farmers markets. While it is possible for individual vendors to have their own FNS license and POS terminal, scrip projects are the most common way for farmers markets to accept SNAP benefits. Recipients with food stamp benefits can use their EBT card for eligible food purchases at most grocery stores, some other retailers and participating farmers markets. Food stamps can only be used for food and for plants and seeds to grow food. Eligible items: Fresh fruit, vegetables, meats, dairy products, eggs, breads, jam, pickles, pastries, plants or seed to grow food to eat. Ineligible items: Any nonfood item, such as pet foods, soaps, paper products, household supplies, grooming items, toothpaste, cosmetics, alcoholic beverages, tobacco, vitamins or medicines. 6

7 Why Should a Farmer or Farmers Markets Offer EBT? By accepting SNAP benefits at farmers markets, the market, the community, and the SNAP participant are benefited. Farmers and vendors at the market can see an increase in sales and the market can see an increase in the number of customers. Additionally, low income consumers will have better access to locally grown, nutritious foods. In communities without supermarkets, a farmers market may serve as the only available source of fresh fruits and vegetables. In addition to fruit and vegetable producers, farmers who sell foods such as meat, milk and milk products, and baked goods may also accept SNAP benefits. Benefits of EBT Replaces paper food stamps and checks Safer and more secure than carrying cash or checks Convenient and easy to use Increases the demand for locally grown fruits and vegetables and other farm products Demonstrates that shopping at a market is affordable, easy and fun Provides a long-term incentive that will change shopping habits and results in a change in dietary habits Increases sales for farmers as customers are not limited to the amount of cash they carry Increases the number of markets in the SNAP/EBT program, providing greater access to local foods for SNAP customers Farmers Market EBT projects have shown that some locations and food stamp recipients are a viable market segment for farmers market vendors. The factors that can determine the likelihood of attracting food stamp recipients are: 1. Being located in or within walking distance of low income neighborhoods 2. Having strong community involvement to support the program 3. Having education and promotion programs for SNAP recipients, markets and vendors 4. Having a leader in the market or in the community that is committed to the project 5. Having support from the local, state and businesses 7

8 Guidelines to Determine if Your Market is Ready for EBT The following are general guidelines to help you determine if your market is a good candidate for taking on SNAP. To succeed with SNAP and EBT cards, a market should have: 1. Sufficient Supply and Demand Number of food stamp recipients in a county and adequate selection of fresh produce. While there is a great need across the state for low-income people to have easy access to locally grown, fresh food, the cost of an EBT system might outweigh the benefits. If your community does not have a sizeable food stamp population and/or if your farmers market size does not allow for a sufficient quantity or variety of product, the time may not be right for your market to implement EBT. WHAT CONSTITUTES ENOUGH FOOD STAMP RECIPIENTS? There is no absolutely right number. To find out about the number of food stamp recipients in your community, contact the Minnesota Department of Human Services at It is important to try to give this program as much chance for success as possible. The number of people served is only one measure of success, and it is certainly not the only thing to take into consideration. Sometimes it will depend on which other area markets have EBT, how involved a community might get, who the community partners might be, what the prospects for long-term sustainability of the program might be, etc. WHAT IS SUFFICIENT QUANTITY OR VARIETY OF PRODUCE? As a general rule of thumb, a market should, at peak season, have at least 10 produce vendors EACH of whom has at least eight varieties of produce. 2. Dedicated Staff Staffing is a critical component to this program. The person who runs the SNAP/EBT program cannot also be a vendor at your market. The person in charge of EBT can be a market manager. The EBT manager, the market manager and the vendors all have responsibilities to make the EBT system work. EBT STAFF RESPONSIBILITIES Filing the application with FNS. It is critical that the person responsible for EBT is willing to submit their social security number to FNS. Caring for the EBT machine once it is delivered (including secure storage and charging system as needed). Tracking the tokens that are taken to market and used as bank. Handling EBT transactions at market, and troubleshooting any glitches in the system (contact with terminal leaser/customer service, as needed). Helping the market manager inform growers how to work with the token system. Meeting the scheduled reimbursement dates, requesting checks or cash from an authorized staff member, and reimbursing growers for tokens. Distributing authorized vendor signage to vendors. 8

9 Entering transaction records into an excel sheet or other accounting program after market. Recording how many tokens you redeem from each vendor each day and the total number of tokens redeemed each day. Reconciling the bank statement with EBT print outs. Providing transaction records to the Human Service Department as needed. FARMERS MARKET ORGANIZATION RESPONSIBILITIES Becoming licensed to accept SNAP benefits by FNS. Designing and providing tokens or paper scrip. Training farmers in scrip redemption rules and procedures. The market s ability to accept SNAP benefits could be jeopardized if a farmer commits a SNAP violation while operating under the market s FNS license. Creating signage for authorized vendors, as a customer reference. Developing an accounting system and method for reimbursing vendors. Training staff in scrip redemption rules and procedures. Determining a secure place where the POS equipment, tokens and supplies will be stored when not in use and who will be responsible for proper storage. FARMER/VENDOR RESPONSIBILITIES Selling only eligible items when purchased with EBT tokens. Turning in paperwork/tokens to market manager for reimbursement. Reading and understanding the rules; asking questions of staff prior to misunderstandings. Posting signage at stall that designates vendor as authorized for EBT program. 3. Desire To Make This Happen We all know market managers already have plenty to do, so taking on a new program like this, even if it is just in a management role, is not an easy task. Consider whether or not you have support staff for this project; look at resources to fill this need, if not. Really think about whether you have the time and energy to make this happen in your community. It is also important that the farmers are supportive of the program and are willing to be educated on how to use the system and how to be sensitive to their changing customer base. For more information on FNS SNAP retailer eligibility requirements, please visit: 9

10 Deciding to Use EBT/Debit/Credit Accepting SNAP benefits at farmers markets calls for a well-thought-out business plan, this would need to consider the initial set-up costs, ongoing operating and labor costs for administration and for promoting and marketing the program. The market will spend a good deal of time up front developing the infrastructure (equipment, staff time, and additional accounting procedures). Wireless POS terminals can cost nearly $1,000 to install and program, and there will be operation costs. Many expenses (monthly wireless network service, transaction fees, and labor) will exist for the life of the program. It may take a few years for SNAP redemptions to justify programmatic costs, so it is important to have realistic expectations about how quickly SNAP and credit card sales will grow. Individual vendors can accept SNAP benefit cards and/or debit/credit cards at their stands. Another alternative is that the farmers market accepts SNAP as a collective organization. The market would have a centrally located place where EBT cards would be accepted. How to Use EBT Technology to Accept SNAP Benefits Implementing a scrip project is the most common way for farmers markets to participate in SNAP because it allows multiple vendors at a market to accept SNAP benefits without having to obtain individual SNAP licenses and POS terminals for each vendor. Instead, the farmers market gets one SNAP license and uses an alternate form of currency (paper scrip or tokens are the most common) to complete the transaction between individual vendors and SNAP customers, using a single POS terminal. Scrip can also be used to accept bank-issued credit and debit cards when there is a single POS terminal in use. Vendors process the scrip currency the same way whether or not the shopper is making an EBT or a debit/credit card purchase which can help lessen the stigma sometimes associated with using SNAP benefits. The market is responsible for the design and cost of the scrip. HOW ARE SNAP PURCHASES MADE IN FARMERS MARKETS THAT OPERATE A SCRIP PROJECT? There are many types of scrip that can be used: paper scrip/tokens or receipts. Markets can either swipe the SNAP customer s EBT card on a central POS terminal, or they can fill out a paper voucher to redeem SNAP benefits in exchange for scrip/tokens or receipts. Regardless of the system used, the deposit is made directly into the market s bank account within 2 business days after the purchases are entered into the POS terminal. The market then follows its own procedures for reimbursing vendors. OPTION 1 Using Scrip or Tokens 1. A SNAP customer swipes the EBT card at the central POS terminal. 2. The staff person enters the amount of scrip or tokens requested into the terminal. 3. The SNAP customer enters his/her PIN. 4. Once the transaction is approved, the SNAP customer is given a transaction receipt and scrip or tokens. 5. The SNAP customer then uses the scrip or tokens at any participating vendor s stand to purchase eligible items. 10

11 OPTION 2 Using Receipts 1. A SNAP customer shops at a vendor s stand and receives a receipt from the vendor for food items purchased, and then leaves the purchased items with the vendor. 2. The SNAP customer goes to the central POS terminal without the purchased goods to swipe the EBT card for the amount on the vendor s receipt and enters the PIN. 3. Once approval is granted, the manager gives the customer another transaction receipt to confirm payment, which the customer brings back to the vendor to retrieve the purchased items. OPTION 3 Manual Vouchers Farmers markets without a POS terminal, or those that use an off site terminal, can employ manual vouchers. Manual vouchers are also used if a SNAP customer s EBT card or the EBT system is not functioning. Manual vouchers can be used with scrip, tokens, or receipts. 1. The market staff calls a customer s EBT card number into the retailer EBT customer service number for transaction approval, placing a hold on the customer s SNAP account for the amount of the transaction 2. The staff member records the transaction on a manual voucher that the customer signs, as well as in the market s log book for bookkeeping. 3. The next step depends on whether the market has an off site POS terminal: a. If it does, the manual vouchers are keyed into the off site terminal for processing at the end of the market day. b. If the market does not have a POS terminal, the manual vouchers are mailed to the State s EBT contractor. Markets generally have 15 days to mail in the vouchers. The direct deposit into the market s bank account occurs within 2 business days after the EBT contractor receives the vouchers in the mail. How to Apply to Accept SNAP and use EBT STEP 1 Make Sure You Qualify as a Farmers Market or Direct Marketing Farmer A farmers market is defined as a multi-stall market at which farmer/producers sell agricultural products directly to the general public at a central or fixed location. Typical products are usually fresh fruits and vegetables, but can also include meat products, dairy products, and/or grains. Individual farmers/farms that are directly marketing product to the consumer may also apply. These are individual producers of agricultural products, particularly fresh fruits and vegetables, as well as meat, dairy, and/or grains, that are sold to the general public through a direct marketing venue such as a roadside farm stand, pick-your-own operation, and/or market stall within a farmers market. 11

12 STEP 2 Apply for a Permit Each state has a USDA Food and Nutrition Officer designated to approve the food stamp retailer permits. You can apply online to become authorized to accept SNAP benefits at your farmers market or stand. Applying to accept benefits at your market is a simple three step process: 1) get a USDA account, 2) fill out an application online, 3) mail in your supporting documentation to complete your file. To apply online you first need to set up a user name and password. Go to fm.htm which is the home page. Second, activate a USDA eauthentication account. To create an account, click on the Set Up An Account link at the following web address, retailers/register.htm. You must have a valid address as USDA will send you a confirmation . Once you receive the , it includes a hyperlink to activate your account. If you do not have internet access or prefer a paper application, call the toll-free hotline at STEP 3 Fill out the Application Filling out the online application is fast, easy and convenient. You can start and stop the application process at any time. You have up to 30 days to complete and submit the online application to FNS. Be prepared with the following information ahead of time: 1. Bank Account 2. Owners information 3. Social security number, copy of a photo ID, and estimated sales 4. You will also need to indicate how you will accept SNAP benefits and EBT cards at your farmers market. Each market needs to determine if it will process only EBT cards for SNAP, or if it will also accept debit or credit cards from its customers. Eligible products and EBT fees are different for each of these options. Again, it s important that each market evaluate the demand for EBT and debit/credit card transactions. 12

13 EBT FOR SNAP ONLY EBT for SNAP only means that your market will accept the EBT cards under the regulations of the federal food stamp program. Any market customers that do not have SNAP benefits would have to pay cash or write a check for each transaction. PROS No service fees are attached to using electronic SNAP payments over cash transactions. Vendors need very limited education to implement the program. CONS Many consumers use only their credit or debit card for payment. No potential revenue stream from service fees to card users. SNAP benefit recipients may feel more conspicuous being the only customers using electronic payment. DEBIT/CREDIT TERMINAL This option requires adding the EBT for SNAP function to a terminal already in use for accepting debit/ credit transactions. PROS The terminal may expand the customer base because all income groups can use electronic transactions. SNAP benefit recipients may feel less conspicuous as other consumers are using electronic payment. The market may be able to offset terminal lease and finance charges by charging a usage fee. CONS Terminal service fees and transaction fees may apply to non-ebt transactions. Higher start up cost than a SNAP only terminal. SNAP transactions and debit/credit transactions must be tracked separately. Vendors need education on rules of accepting SNAP EBT transactions versus debit/credit transactions. Visit the following website to register: 13

14 NOTE: The application process is the same for farmers market organizations as it is for individuals. A member of the market s board should submit the application. The market bank account information goes on the application; however, the application must include the name of a contact person whose name will then appear on the permit. The designee will become the contact person for all correspondence from FNS and the person who receives the POS terminal if the market chooses that option. The primary contact to assist farmers market and respond to their questions about becoming an approved retailer is Robin Masters. Robin s contact information is: Robin.Masters@fns.usda.gov Phone: Field Office staff in our local offices can also provide service. STEP 4 Complete Your Application. To complete your application, send all required documentation to your servicing 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 may take up to 45 days to process an application once it s completed. What happens after the FNS application is approved? FNS will send a training manual to the farmers market. Additional guidance is available at: FNS notifies the State EBT contractor. (Each State contracts with an EBT contractor who is responsible for SNAP EBT services in that State.) The EBT contractor will contact the farmers market to determine POS equipment needs. Processing Electronic Transactions The ways to process EBT cards with each requiring different equipment. 1) Standard POS Terminal A standard POS terminal is what you see in any retail store at check-out lanes. The terminal records card transactions and generates a batch total report of transactions at the close of each market day. A standard POS terminal requires a source of electricity and a land-based telephone line. Most telephone companies will install an interface box at market locations if there is a nearby telephone pole or building. GETTING A FREE POS DEVICE Most states offer to provide a free wired POS device to most SNAP retailers. States usually require that the retailer has, or expects to have, a minimum amount of SNAP transactions (typically $100 a month) to get and keep the free POS device. If a farmers market is interested in receiving a free POS device, it must complete the EBT Retailer Agreement that you will receive in the mail. Once a complete contract is received by the State s EBT vendor, they will provide a POS device to qualified retailers. The free POS device will be a wired device needing an electrical connection and a hard-wire telephone line. It will only process EBT cards. It will not process debit or credit cards. 14

15 PROS These terminals are reliable. Most states may provide them free with or more in sales. The terminal may be moved and used at your farm stand if you have one. CONS It requires a telephone line. no service charges if you have $100 It requires an electrical outlet. A portable generator and car battery also works. Transaction fees and service charges apply. States will most likely not cover a wireless device and will only cover EBT transactions not credit or debit. IF YOU WANT A POS DEVICE WITH OTHER CAPABILITIES Another option is to contract with a third party processor. For a fee, these companies will provide a POS device that accepts debit and credit cards as well as the State s EBT benefits card. You can also purchase or lease a POS device on your own and enter into a contract with a third party processor just for their processing service. If you choose to process debit and credit card transactions, additional fees will apply. However, accepting debit and credit cards does have the potential to substantially increase your sales. An option for farmers markets without access to electricity and telephone lines is using a wireless POS device. Most States do not offer wireless machines free of charge, so your farmers market would need to get the device through a third party processor. Wireless POS devices from third party processors can handle debit and credit card transactions in addition to EBT transactions. Information about third party processors and/or various POS devices for sale is available on the Internet. Additional sources of information are other farmers markets that have contracts with third party processors or your State grocers association. It is wise to shop around and ask about all fees as prices can vary greatly. The third-party POS provider that sells or leases the machine will set up an account to automatically transfer funds from the customer s account to the market s account. In addition to a monthly handling fee, each transaction that occurs will also have a swipe fee. 15

16 2) Wireless POS Terminal A wireless POS terminal functions in the same way as a standard POS terminal except that it can be used anywhere the service provider has a signal. It uses cell-phone technology and works on a battery or with an AC adaptor. Many service providers include an extra battery or have them available for purchase. PROS These terminals are reliable. It can be used at the farmers market or at the farm stand. It doesn t require a land line or electricity. It s portable. CONS It may be expensive to purchase, or lease. Transaction fees and service charges apply. The printer needs frequent paper replacement. Purchasing a POS Machine There are many vendors that sell or lease POS machines. On top of that cost, fees are generally charged per transaction. The cost of purchasing a machine can range from $700 to $1,500. Vendors will want to shop around for best prices. An inexpensive machine will often have higher service fees, so be thorough in your price comparisons. The market will be responsible for all service/lease, card provider and transaction fees. If you agree to accept credit cards, you are signing a contract with a processor. An example of the fees charged for using their services are listed below. 1. A percentage fee -- the amount of money charged multiplied by a percentage fee (e.g., 1.79% credit cards or 1.49% check cards x $ charged, estimate only). 2. A transaction fee -- the amount charged each time a transaction is processed (e.g., 25 cents x each transaction, estimate only). 3. A monthly settlement fee -- the amount charged each month for settling the account (e.g., $10.00 per each month for settling the account, estimate only). 4. A monthly wireless access fee -- $12.00 charged each month for using the wireless system (estimate only). 5. A monthly minimum usage fee -- $25.00 charged each month, which is deducted from the percentage fee. 6. An account termination fee -- if the account closes in less than 3 years estimated cost are (1 to 12 months - $295.00, 13 to 36 months - $195.00). 16

17 The equipment costs will vary, depending on which model you choose. The most popular equipment used in a land line model currently costs $ tax (estimate only). The most popular equipment used in a wireless model is $ tax (estimate only). The equipment can be purchased new or used, and in most cases it can have a free placement with a $25.00 monthly usage fee. This fee is applied to the monthly usage percentage fee. If the amount of the monthly usage percentage fee exceeds the minimum usage amount then the equipment is truly free to use. 3) Manual Vouchers Manual vouchers can be used instead of a POS device. This method is the most cost effective when you have very low SNAP sales (less than $100 a month) or you do not have a way to connect a POS device to an electrical outlet and a telephone line. A manual voucher is filled out for each transaction and completed vouchers are mailed to the processor for payment. 4) A Third Party Processor PROS You don t need to bring equipment to the market except for a cell phone. Transactions can be entered on a POS terminal at home at the end of the day. Less expensive than other methods. CONS The transaction takes a few minutes longer to complete. Calling in all transactions at the end of the day runs the risk that customer benefit funds may no longer be available. Markets can accept EBT payments in several ways. The USDA Web site has a list of EBT farmers market projects with specific information on accepting payments. How Should a Farmers Market Implement the EBT System? Each market needs to decide how it will accept SNAP payments. Each individual vendor may have their own equipment to process EBT payments. When it is not practical for individual farmers to obtain an FNS license to accept SNAP using their own individual point-of-sale (POS) device, a farmers market sponsor can step in by getting one license that allows all eligible farmers in the market to accept SNAP benefits using one centralized POS device. This works well for enclosed markets; open markets risk the possibility that customers could visit several vendors and not pay at the central location. When a market decides to use a centralized card reader for debit/credit and/or SNAP transactions, typically the market will implement a scrip system. SCRIP Scrip is a non-monetary currency used at the market to make purchases from vendors instead of using cash or EBT cards. Scrip has a set denomination usually $1, $5 or $10. The scrip must not be able to be easily counterfeited. 17

18 THERE ARE TWO BASIC SCRIP SYSTEMS Paper scrip- or Market Bucks A paper currency developed to be used like cash in a specific market. Paper scrip should be designed with the market name prominently displayed. Sequenced serial numbers on all scrip are strongly advised. Market bucks are easier to counterfeit, but it is possible to avoid this problem by using watermarked paper. Use of non-photocopy-able paper is required. Tokens Tokens are generally wooden or plastic. The tokens should be printed specifically for each market. It is recommended that markets design one side of each token with the market logo or name and a value amount, and the phrase NO CASH VALUE on the other side. Since tokens are more difficult to duplicate than paper, they are more secure. Tokens may be purchased online from a number of vendors. Prices vary depending on style and color. It is advised to request an agreement with the manufacturer of the tokens that no other parties be authorized to commission the printing of tokens with your farmers market name on them. Tokens travel generally from the market tent to shoppers and vendors, the vendors then give them to the market staff. It is the duty of the market manager or authorized staff to keep records of transactions. PURCHASING MARKET TOKENS Tokens are easy to use and make shopping at the market fun. Since tokens are more difficult to duplicate than paper, they are more secure. Tokens may be purchased online from a number of vendors. Prices vary depending on style and color. The tokens should be printed specifically for each market. It is recommended that markets design one side of each token side with the market logo or name and value amount, and the phrase NO CASH VALUE on the other side. It is recommended using $2 tokens for SNAP and $5 tokens for debit and credit. The debit and credit tokens should be similar but differentiated from the SNAP tokens. You can do this by using different colors, and having EBT or CC/DEBIT printed on each series. Tokens can only be used at the market where they were purchased, so markets should put their name or logo on the tokens. SCRIP RULES Only eligible food can be purchased with scrip purchased with SNAP benefits. No cash back can be given to SNAP customers. The sale must be for the exact amount of the scrip or the customer can make up the difference with cash. The customer must be able to get a refund back onto his/her EBT card for unused SNAP scrip. EBT accounts may also contain non-snap cash benefits. Scrip issued in exchange for these cash benefits, such as TANF, can be used to purchase non-food items and is not subject to the above rules. However, scrip issued for SNAP benefits must be distinct from scrip issued for cash benefits. HOW THE SCRIP SYSTEM WORKS Now, that you have your scrip produced, how do you process the transactions? The market designates a central location where SNAP customers may purchase the amount of scrip they want. This location should be well marked so that customers can easily find it. It s recommended that you label your scrip location as an information booth or something equally neutral especially if you are a SNAP-only EBT market. This way, customers will not feel singled out. A staff person must be trained to operate the scrip system. The EBT terminal operator swipes the card for the total dollar amount of purchases the customer chooses for that day, records the approval code for the sale and issues the scrip to the customer in that same amount. 18

19 Customers then spend their scrip at any food vendor using it just like cash. There are different spending rules for SNAP benefits versus debit/credit purchases. If a SNAP benefits customer doesn t use all of the scrip purchased for the day, they may return to the EBT stall and have the remainder credited back to their SNAP account. Or, he/she may save the scrip to shop at the market the following week. Debit/Credit customers cannot be given a credit to their account. They either have to use the scrip on that market day or hold it for another visit. Markets differ in how they decide to handle vendor reimbursement. Some markets will reimburse their vendors the same day. When a farmer turns in their scrip for the day, he/she signs a vendor token redemption log, and receives a check on the spot. This requires extra money in the market s checking account to cover the cost until the reimbursement amount is transferred to the market account by the EBT vendor. An alternative system is to place a separate log sheet in an envelope for each vendor at the beginning of each market day. For Markets that find it more convenient and cost effective to reimburse once or twice per month, another alternative is to keep a notebook with individual vendor forms where turned in tokens are recorded each Market day, until the designated reimbursement date. At the end of the day the market manager or representative will collect the envelopes, along with the tokens. The following week the vendor will receive a check for the amount of token sales from the previous week. The check can be placed in the vendor s envelope prior to the market. If this system is used, the check from the last market day of the season should be mailed to the vendor within a week. See Appendix VI for Scrip Example. VENDOR INSTRUCTIONS ON ACCEPTING TOKENS Vendors will not exchange tokens for U.S. currency with any person except authorized market staff. Tokens are accepted on par with their cash value, i.e. a $1 token has a value of a $1 bill. Products will be priced the same for SNAP customers as cash customers. Do not mail tokens to the market office in an envelope. Damaged tokens will not be reimbursed. Tokens should be redeemed in person. If there are any questions or concerns about this program, please talk to a designated market staff person. NOTE: The market manager or board member is responsible to train farmers in scrip redemption rules and procedures. ACCEPTING SNAP IN OTHER WAYS The market can use a central terminal where all SNAP customers pay for their goods, with the market reimbursing each vendor separately. Receipts: Customers get a receipt from each farmer for food purchases, leave their items at the stand, bring the receipt to the centralized POS device to pay for their items with their EBT card, and then return with the paid receipt to each farmer to pick up their purchases. SNAP and debit card service charges have a relatively fixed fee structure and, consequently, it s easier to project future program costs. Credit card usage fees are based on a percentage of sales which are much less predictable and require more complex accounting. The following documents provide support for the market s pursuit to add card services. 19

20 When choosing a provider it is important that the farmers market determine what card service fits best. Keep in mind that each company uses different technologies which are not necessarily transferable to other companies. This means that each card service device is specific to that company only. Keep in mind that if you are in a rural area you will need to use a provider that has cell phone service in your area. Below is just a sample not a complete list of vendors that offer services that may be of use to you and your market. FIS-Fidelity National Information Services. For more information efundsgovernment@fnis.com or call x 3422 Global Payments. For more information visit their website or call * MDA does not endorse any specific provider. Each market should research and select a provider that is best suited to their specific needs as each provider has a different financial structures and fees for EBT and Debit/Credit usage. Good Record keeping Practices When Accepting SNAP Benefits Markets that operate a scrip project should keep records of scrip sales. The Appendix section includes sample record keeping forms. Farmers markets typically track: Amount spent on scrip by customers using each of the different accepted payment types (EBT, debit, or credit cards). Scrip returned and credited back to the customer s EBT/debit/credit accounts. (SNAP customers cannot receive change or cash back. All returns must be credited back onto the customer s SNAP EBT account.) Scrip turned in for reimbursement by every vendor on each market day. Monthly and yearly sales reports. MONTHLY ACCOUNTING While there are few accounting records that need to be kept, how a market tracks the flow of money through the system becomes more complex as farmers markets add debit and credit card services to their SNAP/EBT services. It s important that accurate records are kept. Each month the market manager or market SNAP coordinator will receive a statement showing the EBT, debit and credit card transactions from either the third-party POS provider or the state office depending on which device is used. These should correspond to the batch receipts that the machine prints out at the end of each market day. 20