A woman paying at a POS system on her watch.

How to accept EBT payments

Sunday, January 19, 2014

What your business needs to know, including eligibility requirements

If you run a small business, such as a grocery store, convenience store or farmer’s market, you may encounter a customer asking if you accept Electronic Benefit Transfer (EBT) payments. These and other forms of benefits assistance payments can help you boost your business, as long as you’re eligible and able to accept them. In this article, we’ll explore EBT payments: what they are, how they work, how much it costs to accept them and the process necessary to become an EBT retailer. To start, let’s dive into EBT payments.

What is an EBT payment?

EBT is a payment system that utilizes cards similar to debit cards, allowing those who receive government assistance to pay retailers for their purchases. EBT replaces what was previously known as Food Stamps. Now that assistance uses cards, it’s far less conspicuous than the paper food stamps, encouraging more recipients to use them. With the EBT payment system, those who receive assistance under programs like SNAP, TANF and WIC get money directly from the state deposited into their account at the beginning of the month. Then, they can spend that money at eligible businesses just like they’d spend cash. Let’s look at each of the programs included in EBT.


SNAP is the Supplemental Nutrition Assistance Program. The USDA introduced this program in 2008 to replace the Food Stamps Program. The SNAP benefits program gives nutrition assistance to those who meet the eligibility requirements, helping to offset the costs of qualifying groceries. There is an income limit based on a gross monthly income. For example, at the time of this writing, a four-person household would need to have a gross monthly income less than $2,839 to be eligible for the SNAP program. It’s important to note that while customers can spend the SNAP money like cash, this is not a cash assistance program. That’s because recipients can only use SNAP funds for eligible food items.


TANF is the Temporary Assistance for Needy Families program. It’s a state run federal program, helping families to achieve independence after experiencing temporary difficulties. In the case of TANF, each state disburses their own benefits through their own benefits programs.


Another program that relies on EBT is WIC: The Special Supplemental Nutrition Program for Women, Infants, and Children. This program is a joint federal and state program that helps to provide healthy food for low-income women and children. This program is largely focused on supplying healthy, nutritional foods to help alleviate nutrition risks among those with limited resources. In addition, they also provide information on healthy eating, and referrals to health care.

Now that you know the basics of EBT payments, let’s turn our focus to how your business can start accepting them.

How can my business accept EBT payments?

If your business wants to accept EBT payments, it’s not as simple as just saying you’d like to accept them. There are a few things you’ll need to do. The first thing your company needs to do is to apply for a SNAP permit through the United States Department of Agriculture’s Food and Nutrition Service (FNS). This permit allows you to accept EBT payments. Without the permit, you cannot accept these payments. In order to qualify for a SNAP permit, you must meet one of the following criteria:

1. Your business sells a variety of staple foods in each of these four categories:

  • Dairy products
  • Breads, grains and cereals
  • Fruits and vegetables
  • Meat, fish, and poultry

Foods can be fresh, frozen or canned. However, per the requirement, you must stock perishable foods in at least two of these categories.

2. More than 50% of your business’s gross retail sales comes from the sale of one or more staple foods. One example of this would be a butcher.

Once you determine your company’s eligibility for a SNAP permit, sometimes known as an FNS permit, you’ll want to move to the next step. Should your company be eligible, you’ll go to the FNS website and register for an eAuthentication Account with the FNS. This account helps verify your identity. The good news is that you can complete this registration online and it only takes a few minutes.

Next, you’ll get the opportunity to submit the actual application and documentation for a SNAP permit. Once you have an eAuthentication Account, you’ll have 30 days to submit the necessary paperwork and complete the application. This is where a deep dive into your business may require you to gather documentation or do some research. Typically, you’ll need to provide the following information:

  • A copy of your current business license.
  • Copies of your driver’s license, passport or other photo identification.
  • Copies of your Social Security cards (this includes all owners, partners, officers, shareholders and their spouses).
  • Your bank’s name and address.
  • Your merchant account provider’s information (including name, phone number, address and website).

Once you’ve submitted your application, the FNS has up to 45 days to approve your business. Until you receive an approval from the FNS, you won’t be able to accept EBT payments at your business. Once your business is an approved SNAP retailer, you’ll receive your FNS number – a seven-digit number that identifies your business as approved by the FNS. However, you’ll still need to configure your equipment to accept EBT payments. More on that in a little bit. For now, there are a few specific requirements regarding SNAP permits and EBT payments you’ll need to know, including:

  • SNAP permits are also available for qualifying farm stands and farmers’ markets.
  • Multiple Store Owners (MSOs) are unable to use the online application process; the FNS will work with you directly.
  • Recipients can only buy approved using SNAP funds. Some non-allowable foods include hot food, restaurant food, alcoholic beverages, pet food and some other non-food items. Some of these purchases may be allowable with TANF funds.

In addition, there are some parameters around SNAP payments:

  • Payments must be for SNAP-approved food items only.
  • No cash back may be issued.
  • No cash refunds may be issued (must go back into the customer's EBT account).
  • The customer must present their SNAP EBT card and enter their PIN at the time of payment.

For a full list of requirements, visit www.fns.usda.gov

Now that we’ve seen how your business can accept EBT payments, let’s look at the hardware necessary to accept and process EBT payments.

How To Get An EBT Card Reader

As a small business owner, chances are you’ve already gone through the process of getting a card reader (hopefully an EMV chip enabled card reader). Although many card readers or payment terminals will have the necessary settings to accept EBT transactions, there are a few specific things you’ll want to check on your own point of sale (POS) system. First, the payment terminal you’re using must be able to accept PIN debit transactions. That means you’ll need a keypad so customers can input their PINs.

Next, you’ll need to program your card reader with your merchant account provider’s encryption keys. This is usually already programmed correctly. However, if you’re working with a new provider or adding EBT to pre-existing equipment, you may need to reset before accepting payments. Reprogramming the equipment can take up to a week, so prepare accordingly. Also, your merchant account provider will need your FNS number to set up EBT payment acceptance. While EBT cards don’t currently have EMV chip card capabilities, it’s in the works. Therefore, you may as well ensure that your payment terminals can support EMV chip capability. If you need help getting things set up to accept EBT payments, it’s best to talk to your merchant account provider or your payment processing partner. Speaking of payment processing, you might wonder how much processing EBT payments will cost your business. Let’s take a look.

How much does EBT processing cost?

Since the United States government sponsors the EBT program, processing fees are much lower. While in credit and card processing you can expect to pay interchange fees or PIN debit fees, these fees are absent from EBT payments. However, merchant service providers still have the discretion to charge your business a transaction fee to process these types of payments. These prices vary per provider, but they are in sum less than a regular credit card processing fee.

It’s important to investigate the fees your payment service provider or merchant account provider charges for EBT payments. If you expect to process many EBT transactions, the small difference in processing fees between providers can add up. Therefore, it’s important to make sure you know the fees your payment processing partner charges for EBT transactions.

Another important note is that PCI DSS compliance requirements don’t apply to EBT transactions. This won’t make much of a difference if your company processes both debit and credit card payments, since you’ll still need to pay for PCI compliance fees. However, if your merchant account only accepts EBT payments, keep an eye out to make sure you’re not charged for these PCI compliance fees.

As you can see, EBT payments are an important part of the payment ecosystem, helping Americans who need assistance get a variety of food and related items. When it comes to accepting these payments at your business, you’ll want to make sure you follow the correct steps to ensure you qualify and then get set up. All-in-all, the ability to accept EBT payments can help your bottom line while also giving your customers much-needed payment flexibility.

Ready to work with a payment processor who can help you accept EBT payments?

Heartland is the point of sale, payments and payroll solution of choice for entrepreneurs that need human-centered technology to sell more, keep customers coming back and spend less time in the back office. Nearly 1,000,000 businesses trust us to guide them through market changes and technology challenges, so they can stay competitive and focus on building remarkable businesses instead of managing the daily grind. Learn more at heartland.us.