A Guide for Accepting SNAP Benefits at South Carolina Farmers' Markets

A GUIDE FOR

Accepting SNAP Benefits at South Carolina Farmers’ Markets

SOUTH CAROLINA

ASSOCIATION OF

SM FARMER ARKETS

SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM The Supplemental Nutrition Assistance Program (SNAP) is administered by the United States Department of Agriculture’s (USDA) Food and Nutrition Service (FNS), and serves as the nation’s largest domestic hunger safety net. FNS works with state-level agencies and partners to inform the public of nutrition assistance opportunities, sign up beneficiaries, and ensure program integrity. To receive SNAP benefits, eligible individuals must apply through their states.

Each state administers SNAP in the department of its own choosing. SNAP transactions use electronic benefit transfer (EBT) technology, on a swipe card similar to your average debit card. States often call their SNAP cards by different names. EBT is a system that allows customers to use government-issued benefit debit cards to pay for food. All states now use EBT to issue SNAP benefits rather then the old system of paper vouchers (although paper vouchers can still be used in certain cases). SNAP benefits are accessed by swiping the EBT card on a point-of-sale (POS) terminal at an FNS retailer location and entering a personal identification number (PIN).

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HOW IT WORKS FOR A SNAP CLIENT Individuals and families apply to receive USDA SNAP benefits through the South Carolina Department of Social Services (DSS), which is the state’s SNAP agency. Potential SNAP clients can apply 1 or 2 ways: online or by visiting the local DSS office.

The amount of benefits a client receives is based on an informational evaluation involving family, housing, and financial status.

Once an amount is determined, those benefits are made available to the client on an EBT card, similar to a common bank-issued debit card. The client keeps the same EBT card as long as they remain a recipient of SNAP benefits. Funds are made available on the card on a monthly basis. The SNAP client activates his/her card with a personal PIN number.

To use the EBT card, the SNAP client swipes the card at a Point of Sale (POS) terminal and enters the PIN number. If the transaction is authorized, the client’s account is debited for the amount of the purchase, which is then deposited directly into the bank account of the retailer within a 48-hour period. A receipt is then printed and given to the client showing the amount of the purchase and their remaining benefit balance.

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HOW IT WORKS FOR A SNAP RETAILER (FARMERS’ MARKET) A farmers’ market’s first step to accept SNAP is to acquire a license from the USDA Food and Nutrition Service (FNS). For guidance on the application process and to fill out and submit an application, visit www.fns.usda.gov/snap/apply.

Basically, the farmers’ market applies for a license on behalf of participating vendors. The farmers’ market is considered the sponsoring organization, with the market manager or treasurer usually named as the “responsible party”.

The primary purpose of All retailers, including farmers’ collecting Social Security markets, are legally required to file a numbers is to maintain Social Security number at the time of program integrity and the application, in addition to a copy discourage fraud. FNS of a legal form of photo identification. only needs ONE market Exception: A Social Security number is representative’s personal information. not required if the market is owned by a government agency. All collected information is kept strictly confidential and is, again, only collected to help prevent fraud. Other supporting documents will need to be provided to FNS, such as a copy of the market’s business license, to complete the application as well.

A farmers’ market is allowed to accept SNAP and be granted a FNS number if the market sells eligible food products and meets at least one of the two following criteria:

1. Offer on a continuous basis at least 3 different varieties of food in each of the following 4 food groups, with perishable foods in at least two categories, on a daily basis: fruits and vegetables (includes plants and seeds for growing fruits and vegetables), breads and grains, dairy, meat, poultry and fish.

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2. Have at least 50% of total gross farmers’ market retail sales in eligible staple food items: fruits, vegetables, breads, grains, beef, chicken, fish, etc. (Most farmers’ markets meet this requirement.)

USDA FNS does provide EBT-only machines, free of charge, either wired or wireless. Many SNAP retailers choose to pay for a commercial POS terminal that accepts EBT, bank debit, and credit cards on the same machine. A system that accepts all types of cards is referred to as an “integrated system”.

It is rare for farmers’ markets to have a wired phone line connection or an electrical outlet available, so most markets opt for a handheld, wireless POS terminal.

The initial setup and reoccurring costs of accepting SNAP at a farmers’ market should be thoroughly considered before a market applies.

You should consider:

• Operational expenses Monthly wireless network service, transaction fees (only for integrated systems).

• Labor costs Trained personnel on-hand to accept SNAP during market, market management personnel to oversee and keep an accounting of the program, market representatives to promote and advertise the SNAP program.

SNAP purchases cannot be taxed, regardless of state or local food tax rules.

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CHECKLIST TO ASSESS A MARKET’S CAPACITY TO ACCEPT SNAP A manager or other staff member able to oversee the SNAP program day-to-day Bank account with enough money to pay out vendors for same-day sales Business license Market-wide sales total of $100 each market day Possible funding needed for the POS machine Vendors who want to accept SNAP Community SNAP clients interested in shopping at the market

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USING SNAP AT THE FARMERS’ MARKET So, what happens with a SNAP client swipes their EBT card at the market? How are they able to shop with multiple vendors?

The answer is - with “scrip”.

Scrip simply refers to an alternative form of currency.

Some market use paper scrip, but the best scrip for farmers’ markets is wooden or plastic tokens. Tokens can be purchased online from various printing and specialty item companies.

Ordering tokens in smaller denomPrint tokens with the market inations, such as $0.50 or $1.00, is logo and denominations, more convenient for the SNAP client thereby making them more to use with vendors than larger difficult to counterfeit. dollar amount denominations.

In South Carolina, the average SNAP purchase at a market is more than $10, which is a lot of wooden tokens for one person to carry around. But smaller amounts per scrip piece allows the client to make better use of their money when buying from vendors, especially when purchasing fresh fruits and vegetables that are sold by the pound or piece.

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Here’s how it works on market day:

• SNAP client tells market staff how much they would like to • • • • • • •

spend Market staff member swipes the EBT card and the client enters their personal pin number Market staff member punches in transaction amount on POS machine A receipt is printed for the client A second receipt can be printed for market records Wooden or plastic scrip totaling paid-for amount is given to the client SNAP client pays market vendors with scrip Market vendors turn in scrip at the end of market for reimbursement by the market

If the SNAP client did not spend all their scrip, they can return unused scrip to market management for credit back on their EBT card on the same day as purchase. More scrip CANNOT be credited back than were purchased that day. There is no time limit for using scrip.

Occasionally, the EBT system is down and a manual voucher can be issued to the SNAP client.

Benefits are redeemed through telephone verification.

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PREPARING YOUR MARKET’S VENDORS TO ACCEPT SNAP Letting vendors know “why” the market is going to offer EBT and/or debit/credit is very helpful. One of the reasons may be that the market is adopting this program to increase vendor sales. Remind vendors that the market is paying for and shouldering most of the work in managing the EBT and debit/credit program. If you plan to charge vendors for this service, make sure to explain this to them early in the process. Regardless, some vendors may be hesitant or unwilling to participate. Other markets have found that these vendors will likely change their minds once they realize they are losing sales by not accepting the EBT or debit/credit tokens.

Market managers should include SNAP acceptance training in their pre-season vendor orientation meetings. Vendors should be made aware of what items can and cannot be purchased with SNAP benefits, told never to give change or cash back, and asked not to charge tax. Also, management should explain to vendors how they will be reimbursed.

The majority of farmers’ markets that accept SNAP reimburse vendors for scrip collected on the same day of the sale. Most vendors prefer same-day payment and might refrain from accepting scrip if made to wait several days before reimbursement.

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RECORD-KEEPING REQUIREMENTS Markets must maintain good records while accepting SNAP. Record-keeping requirements include:

• • • • • •

Total $ amount of SNAP transactions # of transactions (batch receipts) # of tokens distributed # of tokens redeemed Vendor payouts (keep records for each individual vendor) Monthly and yearly reports

Make sure to track credit and debit transactions SEPARATE from SNAP transactions.

Remember, USDA FNS reserves the right to request any information as needed, at any time.

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SNAP BOOKKEEPING FOR FARMERS’ MARKET MANAGERS Why Keep Records?

• • • • •

Financial accountability Track trends and progress Demonstrate impact Inform market operations Monthly and yearly reports

Critical Information to Collect at Market

• • • • •

Total $ amount of SNAP transactions # of transactions (batch receipts) # of tokens distributed # of tokens redeemed Vendor payouts (keep records for each individual vendor)

*Track credit/debit transactions separate from SNAP transactions Optional Data to Collect from SNAP Clients

• • • •

# First time SNAP users Zip codes Travel distance General demographics

General Data to Collect at Market

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Weather conditions Customer attendance # Vendors # Volunteers and hours worked Accepting SNAP Benefits

What to do with Unredeemed Scrip?

(Scrip = term for any substitute for legal tender/your market’s SNAP tokens)

• USDA FNS does not have a policy for unredeemed tokens.

• Markets can put an expiration date on tokens, as long as it is clearly disclosed to SNAP clients prior to distribution.

• Unredeemed scrip is a liability on the books. It is up to each individual market to determine when to reallocate those liabilities for operational purposes.

IRS Time – 6050W Rule – Third-Party Network Payments Third Party Network: Any arrangement which involves the establishment of accounts with a central organization by a substantial number of persons (50 or more), the parties are unrelated to such organization, the parties provide goods or services, the parties have agreed to settle transactions pursuant to standards of the agreement, and the persons providing good or services are guaranteed payment pursuant to such agreement.

Reportable Transactions: Debit, credit, or EBT transactions conducted at a merchant.

Third-party settlement organizations must report the gross amounts of reportable transactions of any payee for whom they settle payments using their network, provided that a payee’s reportable transactions exceed $20,000, and the aggregate number of those transactions exceeds 200.

Translation = your market is EXEMPT from this rule if you do NOT have a vendor making US $20K in gross payment volume in a single year and 200 separate payments in a single year.

If not exempt, the market must issue 1099K forms to the vendors that had 200 or more transactions and grossed $20K or more in a year.

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How do you Document Exemption?

Every farmers’ market (central payor) that accepts forms of electronic payment (credit,debit, and/or EBT) on behalf of its vendors needs to track the following information:

• # of vendors to which they make payment • # of payments to each vendor • The individual and aggregate amounts of payments to each vendor This information should be collected and maintained for each calendar year beginning January 1st.

Good rule of thumb: keep the market’s financial records forever.

FARMERS MARKET COALITION’S FREE SNAP EBT EQUIPMENT PROGRAM Information in this section adapted from farmersmarketcoalition.org

USDA FNS has continued to partner with the Farmers Market Coalition (FMC) to provide eligible farmers markets and direct marketing farmers with the free EBT equipment necessary to process SNAP benefits in 2016.

Who’s Eligible?

SNAP-authorized farmers’ markets and direct marketing farmers (who sell at one or more farmers’ markets) are eligible for funding if they: A. Do not currently possess functioning SNAP EBT equipment; OR B. Currently possess functioning SNAP EBT equipment, but received that equipment before May 2, 2012.

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*Note that the date of SNAP authorization is no longer included in eligibility requirements. FMC needs to know that your SNAP permit is active and in good standing, but doesn’t need to know when you obtained it.

What’s Covered?

FMC will cover the costs of purchasing or renting SNAP EBT equipment and services (set-up costs, monthly service fees) for up to three years. Approved applicants choose their own SNAP EBT service provider from a list of participating companies: MarketLink, MerchantSource, and TSYS. Transaction fees (for SNAP, credit, and debit payments) will not be covered.

Where Do I Apply?

Visit www.FMCtoolbox.org to fill out the online application. An email address, FNS number (also known as SNAP permit number), a signed W9 form, contact information, and some general information about your farm or farmers’ market will be required.

How Does It Work?

1. GET APPROVED: After FMC confirms your eligibility with the USDA FNS, you’ll receive an approval email from FMC containing your FMC order number, and a link to information on participating SNAP EBT service providers.

2. CHOOSE A SERVICE PROVIDER: Contact your preferred service provider directly to begin their sign-up process.

Once all contracts or agreements have been signed by you, the provider will issue an invoice to FMC. 3. RECEIVE EQUIPMENT: The service provider will send equipment directly to you. Activate your equipment and service. Start using your new equipment to accept SNAP! 4. REPORT: At the end of the year, report your SNAP redemption and transaction totals to FMC. Accepting SNAP Benefits

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HEALTHY BUCKS PROGRAM What is Healthy Bucks?

SC Department of Social Services (DSS) has developed a program to allow recipients of SNAP to be able to double the amount of fresh fruits and vegetables purchased with their EBT cards.

The Healthy Bucks program is an incentive of SNAP that allows:

• SNAP recipients who purchase at least $5 of goods with their SNAP EBT card will receive $10 in Healthy Bucks tokens • SNAP recipients can purchase additional fresh fruits and vegetables with their tokens • The token is distributed to SNAP recipients only • The token can only be used to purchase additional fruits and vegetables How the Healthy Bucks Program is Operated Farmers must be set-up to accept SNAP before they can participate in the Healthy Bucks program.

Once a customer has purchased at least $5 with their SNAP EBT card, the Farmer/Market Manager fills out the Healthy Bucks log with the participants’ date, card #, name, and the customer’s signature verifying that they received $10 in tokens. They can only use the tokens to purchase fruits and vegetables. The SNAP EBT card can be used to purchase any approved food item. They can use the tokens the same day or return at a later date. You don’t have to mark anything down 14

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on the log when they return to use the tokens to purchase the fruits and vegetables, only mark it down on the log when they receive the tokens.

There are no limits on how many times a customer can participate in a market season. Healthy Bucks reimburses for one (1) transaction per visit. Multiple rapid and repetitive swipes will not be reimbursed. The forms are turned into DSS who reimburses the farmer for the amount of Healthy Bucks tokens given to the customers.

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APPENDIX A SAMPLE CHECKLIST FOR MARKETS ACCEPTING SNAP Day BEFORE Market:

• Charge terminal battery if using a wireless POS machine • Organize scrip (group in amounts most requested, such as $5 bags) • Pack equipment: • POS terminal • Receipt box • Scrip • Blank note cards to record sales and manual vouchers (in case of machine failure) • Bag to hold returned scrip • Identification tags for market staff • Binder of POS machine instructions, resource contacts, and other information • Calculator • Pens • Stapler • Extra paper rolls

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Market Day, EARLY:

• • • •

Organize booth and set up equipment Display signage Brief market staff on SNAP acceptance protocols Review redemption procedures with vendors

Market Day, DURING:

• Keep staff available to operate SNAP terminal, record transactions, safeguard scrip, and answer any vendor questions Market Day, LATE:

• • • •

Collect tokens from vendors Reimburse vendors and give them a receipt Print out a batch report from the SNAP POS terminal Reconcile the batch report with all receipts, scrip received/ returned, and vendor reimbursements • Record all vendor reimbursements

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APPENDIX B GLOSSARY DSS: Department of Social Services; State agency that administers the SNAP program EBT: Electronic benefit transfer; technology used to transfer scrip Farmers’ Market: a common facility or area where several farmers or growers gather on a regular, recurring basis to sell a variety of fresh fruits and vegetables directly to consumers FMC: Farmers Market Coalition; organization in which farmers can get free SNAP terminals Healthy Bucks: South Carolina program that allows SNAP recipients to double the amount of fresh fruits and vegetables purchased with EBT cards POS: Point-of-sale; terminals used to conduct SNAP transactions Responsible party: the person(s) responsible for administration of SNAP program at the farmers’ market; usually the market manager or treasurer.

Scrip: an alternative form of currency SNAP: Supplemental Nutrition Assistance Program; formerly known as food stamps USDA: United States Department of Agriculture; federal agency administering SNAP 18

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APPENDIX C RESOURCES Farmers Market Coalition P.O. Box 499 Kimberton, Pennsylvania 19442 www.farmersmarketcoalition.org South Carolina Association of Farmers Markets 1200 Senate Street Wade Hampton Building, Suite 500 Columbia, South Carolina 29211 (803) 734-2210 www.southcarolinafarmersmarkets.com South Carolina Department of Agriculture 1200 Senate Street Wade Hampton Building, Suite 500 Columbia, South Carolina 29211 (803) 734-2210 www.agriculture.sc.gov South Carolina Department of Social Services 1535 Confederate Ave Columbia, South Carolina 29201 (803) 898-7601 www.dss.sc.gov South Carolina Fruit & Vegetable Outlet Inventory Map http://gis.dhec.sc.gov/farmersmarkets USDA – FNS 61 Forsyth St., SW Room 8T36 Atlanta, Georgia 30303 (404) 562-1801 www.fns.usda.gov Accepting SNAP Benefits

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NOTES

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NOTES

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SOUTH CAROLINA

1200 Senate Street Wade Hampton Building, 5th Floor Columbia, SC 29101

ASSOCIATION OF

SM FARMER ARKETS

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803-734-2210 southcarolinafarmersmarkets.com Accepting SNAP Benefits