Obtaining a POS Device

1. What is a point-of-sale (POS) device?
2. What are the costs and fees associated with using a POS device?
3. Can I charge an EBT card usage fee to cover the costs of POS device fees?
4. Can I buy or sell a used POS device?
5. Can I lease or rent a POS device?
6. My farmers market operates at multiple locations. Does this mean I need more than one POS device?

1. What is a point-of-sale (POS) device?

   At one time, SNAP was a paper coupon system (food stamps). Today, SNAP works primarily through an Electronic Benefit Transfer (EBT) system. The government issues EBT cards to SNAP recipients. The cards link to accounts containing the SNAP recipient’s monthly benefit amount. To spend his or her benefits, a SNAP recipient swipes his or her SNAP EBT card in a SNAP-authorized retailer’s POS device.

   There are multiple types of POS devices: some accept only EBT cards while some accept other forms of payment, such as debit, credit, and mobile payment apps. In some instances, free SNAP EBT POS equipment may be available in your state. Check with the Farmers Market Coalition (FMC) and/or your state or regional association.

   Typically, farmers markets that are SNAP-authorized retailers have one centralized POS device operated by market personnel, and either market currency or a receipt system. Customers swipe their SNAP EBT cards at the POS device and receive either market currency or a receipt to use to purchase SNAP-eligible food items from vendors. For more on market currency systems, scrip/how-market-scrip-systems-work/">click here. If vendors are SNAP-authorized retailers with their own POS devices, customers process their SNAP transaction on each vendor’s machine. For more about vendor-operated SNAP, click here.

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2. What are the costs and fees associated with using a POS device?

   The chart below lists the potential types of costs and fees related to using a POS device at your market. Ultimately, fees vary depending on which service provider you choose. A service provider - also referred to as a “third-party processor” - is the entity that processes EBT, debit, and credit charges. For FNS’ November 2018 list of third-party processors, click here.

   Note: There may be federal or state grants that cover many, if not all, of these costs. To explore funding opportunities, click here.

   EBT-Processing Device Fees Chart

   EBT-Processing Device Fees

   Fee Type	Fee Amount	Fee Description
   Below are the various fees a third-party provider may charge.	Fees vary among third-party providers. The figures below are simply examples.	Below are descriptions of POS device-related costs and fees.
   Equipment Purchase	$470 - $2,000	If a market or vendor purchases the device, there is a one-time purchase fee. Device costs vary, ranging from EBT-only terminals, to smart-device based options with card-readers and apps.
   Equipment Rental	About $20 per month	Monthly rental fee.
   Setup Fee	$50-$150	This is a one-time (or sometimes annual) fee that is charged to set up your account and equipment. Setup fees vary.
   Transaction Fee	$0.10 - $0.30 per transaction	Fees charged for every transaction through electronic transfers (debit, credit, EBT). These fees are paid to, and determined by the merchant service provider. Debit, credit and EBT transactions are subject to transaction fees.
   Interchange Fee	1.5% - 3.0%per transaction	Interchange fees are a type of transaction fee that is paid by the merchant service provider to the issuing bank, and are set by the industry (Visa/Mastercard/ Discover), based on a combination of factors including amount of the transaction, total volume, and type of business. Issuers who collect the fees then pay the fees to the card associations. EBT transactions are excluded from Interchange fees.
   PCI Compliance Fee	About $70 per year	The Payment Card Industry Data Security Standard, often simply referred to as PCI, is designed to protect retailers and customers from fraudulent credit purchases. Many third-party providers charge an annual or monthly PCI compliance fee.
   Seasonal Fee	$25-$50 per year	Third-party providers sometimes charge these fees when the market or vendor only operates for part of the year and choose to temporarily put their service on hold.
   Statement Fee	$5-$10 per statement	Some third-party providers may charge a fee for sending you your statement. These fees can be charged on a monthly or, less frequently, daily basis.
   Data Plan Fees	$15- $30 per month	These are fees paid for transmission of cell data (similar to a cellphone plan, only this is limited to data, and does not include voice calling options).
   Customer Service Fee	About $10 per month	Some third-party providers charge a fee for their customer support services.
   Optional Liability Insurance	$5 - $10 per month	Some third-party providers offer optional liability insurance coverage for an added fee. This coverage protects the retailer in the case of a data breach.
   Early Termination Fee	$50-$300	If the market or vendor chooses to end their service early (before the end of a contract), they may be required to pay an early termination fee.

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3. Can I charge an EBT card usage fee to cover the costs of POS device fees?

   No. Under SNAP rules, farmers markets and direct marketing vendors may not charge any additional fees (fees over the cost of the eligible food items) to SNAP customers to pay for POS device fees.

   Note: This restriction does not pertain to credit and debit transactions. Some markets add surcharges similar to those of an ATM ($1-$3 per debit or credit transaction) to help cover the costs associated with the POS device.

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4. Can I buy or sell a used POS device?

   It depends on the retailer agreement between the equipment owner and service provider.

   Generally, farmers markets and direct marketing vendors may sell POS devices that they own. However, before selling a device you own, check with your third party processor (or state equipment program) to make sure your contract does not contain a provision against resale. Likewise, before buying a device, make sure to ask whether the owner’s retailer agreement permits the sale.

   Note: a farmers market or direct marketing vendor cannot “inherit” the previous user’s SNAP licensing number if they buy used equipment. Each market or direct marketing vendor must have, and operate under, its own SNAP license.

   Accordingly, in the event of a sale, FNS requires that the third-party processor reprogram the device. So if you purchase a used device, send it to your third-party processor for reprogramming before use.

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5. Can I lease or rent a POS device?

   Yes, a farmers market or direct marketing vendor may lease or rent a POS device from an EBT service provider/third-party processor. Notably, to different third-party processors, the terms “renting” and “leasing” may have distinct meanings.

   “Renting” a device may mean that the farmers market or direct marketing farmer is responsible for making monthly rental payments (in addition to other fees, such as service and transaction fees) according to a month-to-month contract until the market or farmer chooses to terminate the agreement. At the point of termination, the market or farmer has no early termination fee, as long as the appropriate notice of termination was provided.

   Alternatively, “leasing” a device may mean that the market or direct marketing farmer enters an agreement for a specified term (usually for at least one year). If the market or vendor wishes to terminate their lease prior to the completion of its term, they may have to pay an early termination fee.

   The upshot: you don’t have to own your POS device. You may rent or lease one. Different third-party processors offer different options in this regard. However, service agreements vary and entail different legal obligations. Make sure you shop around and clearly understand the terms of your POS device agreement before committing to a third-party processor.

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6. My farmers market operates at multiple locations. Does this mean I need more than one POS device?

   Probably. The United States Department of Agriculture Food and Nutrition Service (FNS) defines a farmers market as “two or more farmer-producers that sell their own agricultural products directly to the general public at a fixed location.” (Emphasis added.)

   Accordingly, FNS generally considers a market that operates at two or more separate locations to be more than one farmers market. Because FNS policy requires each farmers market to have its own EBT authorization number, a farmers market must have a separate POS device at each location in which the market operates.

   Occasional exceptions to this rule can be made, for example, for markets that change locations for the winter season. FNS reviews such location changes on a case by case basis. There is no formal rule for determining when an exception is made, but the criteria FNS uses to make its decision are listed here. If your market receives guidance on POS device requirements directly from FNS, keep a copy of that guidance as part of your market's recordkeeping.

   According to an FNS representative, this “one location-one machine” rule is consistent with how FNS treats typical brick-and-mortar SNAP retailers and is meant to help the FNS track where transactions are occurring, partially to help identify and enforce against fraud and abuse. If a market does not comply with this requirement, FNS could revoke its SNAP authorization.

   Many markets find this requirement to be prohibitively expensive. The Farmers Market Coalition and some state associations are advocating for changes to the policy. To read more about their advocacy efforts, click here.

   Note: because direct marketing farmers are not farmers markets, the above rule does not apply to them. Direct marketing farmers may use one POS device at multiple locations.

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