Business & Real Estate

U.S. retailers face charges for food stamp machines

“Important Notice: EBT processing equipment is no longer free!”

The announcement in bold red letters on the GoEBT program’s website is bad news for small-business owners whose customers shop using electronic benefit transfer, the method for distributing CalFresh benefits (formerly known as food stamps) from the federal Supplemental Nutrition Assistance Program.

The U.S. Department of Agriculture used to pay for the “point-of-service” devices used by some retailers specifically to swipe EBT cards, but the machines will now come at a cost.

The elimination of the free EBT equipment program in all states is a result of the February passage of the Agricultural Act of 2014. Retailers using a government-issued machine could continue doing so for free until Sept. 21, at which point they were instructed to arrange payment for EBT services through a third-party processor.

Any retailer with a machine from Xerox Corp., the manufacturer of the EBT machines in 19 states, including California, that failed to enter a paid processing agreement was required to return its machine by Saturday , according to Jennifer Wasmer of Xerox.

“We have communicated broadly with retailers to ensure they are aware of the change,” she said in an email. “We have offered for retailers to keep the devices that they currently have by joining the GoEBT program.”

Retailers who neglected to sign up for the agreement or return their devices will be automatically enrolled Saturday in the GoEBT program instituted by Xerox to ensure uninterrupted service. GoEBT charges a $75 monthly rate to retailers who signed an agreement before Sept. 21. Those whose agreements were not processed by Sept. 21 face monthly rates of $100 or higher, and might encounter disruptions while trying to process transactions, according to a GoEBT memo.

Retailers’ other options include adding EBT processing to the debit/credit card device, as some larger grocery stores do, or terminating EBT service altogether.

The latter is not an option for Paul Singh, owner of Pacific Market in midtown, who said EBT users make up 30 percent to 40 percent of his customer base. He began paying the $75 fee this month, and said it’s a hard hit on top of already rising food prices. Singh is prohibited by SNAP regulations from charging additional processing fees to an EBT customer.

“They called us and they said if you don’t pay you have to stop, but we depend on it,” he said.

Parminder Grewal, owner of Sam’s Market in Oak Park, chose to add EBT transactions to his credit and debit card device for an additional cost of $95 per month. He said if he can’t charge a processing fee, he’ll have to start charging more for food items in order to make up the difference.

“We will see if we can manage. If not, customers will share this burden,” he said. “For a small-business owner, it’s a dilemma ... I have to make ends meet.”

Certain retailers – including farmers markets, military commissaries, treatment centers and nonprofit cooperatives – are exempt from the payment requirement and can keep their EBT machines for free.

About 500 Sacramento County food vendors accept CalFresh payment, according to the California EBT client directory. Some of them are farmers markets, but many are gas station marts, dollar stores, delis and corner markets.

About 4 million people access CalFresh across the state, said Michael Weston, spokesman for the California Department of Social Services. About 103,000 Sacramento households were on the program in September, according to county data.

“You want as much access to individuals using their benefits as possible, because it’s a nutrition assistance process,” Weston said. “When there’s access at markets in urban areas where there may not be as many retail locations, that is a big thing.”

Davida Douglas, executive director of Sacramento nonprofit Alchemist Community Development Corp., which aims to improve low-income families’ access to healthy food, said that many Sacramentans who lack transportation to a grocery store rely on corner markets and bodegas for the bulk of their shopping. Her organization has worked with two of these kinds of stores, including Sam’s Market, to incorporate more local produce.

Douglas also was running fruit and vegetable stands in parks and low-income housing developments, using her own EBT processing machine. But because she wasn’t a certified farmers market or a farmer herself, the stands were subject to the new federal regulation. Douglas chose to return her machine and discontinue the stands, though she is still continuing her efforts at corner stores and farmers markets.

She said bodega owners choosing to discontinue EBT would be a problem for many low-income residents.

“If they’re relying on CalFresh to do the bulk of their shopping, if they don’t have this other source that they can utilize their benefits at, that will impact their ability to feed their family,” she said.

SNAP benefits, which used to be administered through paper coupons, have been distributed through EBT cards since 2004. About half of the nation’s SNAP recipients are children and 9 percent are over 60 years of age.

Eden Barness, who used an EBT card for two years before he found a job as a contractor, said the regulation change will be a hard hit for Oak Park.

“It’s too hard to make it on CalFresh benefits as it is,” he said. “There’s a lot of people around here who need help, and they don’t have a lot of choices.”

Call The Bee’s Sammy Caiola, (916) 321-1636.