SNAP/EBTLegal TopicsWho Administers Benefits?Vendor-Operated SNAP Systems

Who Administers SNAP?

Woodcut illustration of a hand holding a farmers market token

Option 2: Vendor-Operated SNAP Systems

For vendors who want to accept SNAP benefits at a market that does not offer a market-operated SNAP system or who are interested in also accepting SNAP benefits at their other direct-marketing outlets (CSAs and farm stands, for example), operating their own SNAP system may be a good option.

  1. How can individual vendors accept SNAP benefits directly from market customers?
  2. How is a vendor-operated SNAP system different from a market-operated SNAP system?
  3. When vendors operate their own POS devices, is the market still responsible for becoming a SNAP-authorized retailer or operating a POS device itself?
  4. Is a SNAP-authorized vendor required to use its POS device at only one market/location?
  5. Does the vendor need to use a market currency or receipt system to track SNAP transactions?
  6. Is a farmers market liable when SNAP-authorized vendors violate SNAP rules?
  7. What key legal responsibilities do vendors assume as SNAP-authorized retailers?
  8. How should a SNAP-authorized vendor protect against fraud and trafficking?
  9. What are the advantages and disadvantages of relying on vendors, rather than the market, to become SNAP-authorized retailers?
  10. How can market leaders support vendors in their efforts to become SNAP-authorized retailers?
  1. How can individual vendors accept SNAP benefits directly from market customers?

    Like farmers markets themselves, individual market vendors may qualify to become SNAP-authorized retailers. Specifically, a vendor may apply for SNAP authorization as a “direct marketing farmer.” According to the USDA Food and Nutrition Service (FNS), direct marketing farmers are “farmer-producers that sell their own agricultural products directly to the general public, which includes fruits and vegetables, meat, fish, poultry, dairy products, and grains” (definition here). Once approved by FNS, vendors may obtain a POS device to process SNAP EBT transactions for SNAP-eligible items.

    Here’s how it works:

    1. The SNAP customer hands the vendor their SNAP EBT card to pay for SNAP-eligible food items.
    2. The vendor uses a POS device (or equivalent technology) to process the SNAP EBT payment for the amount of the SNAP purchase. The funds transfer from the customer’s SNAP account to the vendor’s bank account tied to the POS device.
    3. Once approval is indicated and the transaction is complete, the vendor provides the SNAP customer with a receipt for the transaction and the customer takes his or her purchase.
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  3. How is a vendor-operated SNAP system different from a market-operated SNAP system?

    Vendors and markets interested in operating SNAP systems must go through similar application processes at FNS to become SNAP-authorized retailers. However, implementing SNAP systems differs for vendor and market operated SNAP systems. For more, see the comparison chart here.

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  5. When vendors operate their own POS devices, is the market still responsible for becoming a SNAP-authorized retailer or operating a POS device itself?

    No.  However, if a market’s vendors are using their own SNAP POS devices, it benefits the market (in terms of professionalism, marketing, the avoidance of negative press, etc.) to understand key SNAP rules to support vendor compliance.  Markets may consider incorporating requirements regarding SNAP compliance into their vendor agreements.

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  7. Is a SNAP-authorized vendor required to use its POS device at only one market/location?

    No. However, if a market’s vendors are using their own SNAP POS devices, it benefits the market (in terms of professionalism, marketing, the avoidance of negative press, etc.) to understand key SNAP rules to support vendor compliance. Markets may consider incorporating requirements regarding SNAP compliance into their vendor agreements.

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  9. Does the vendor need to use a market currency or receipt system to track SNAP transactions?

    No.  The vendor simply swipes the customer’s EBT or credit/debit card, enters in the appropriate charge, and provides a printed or electronic receipt once the transaction is approved as a record of the purchase.

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  11. Is a farmers market liable when SNAP-authorized vendors violate SNAP rules?

    Generally, no. The vendor is liable for legal violations related to the use of its own POS device. For more information on potential penalties for SNAP rule violations, click here.

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  13. What key legal responsibilities do vendors assume as SNAP-authorized retailers?

    SNAP-authorized vendors must follow all SNAP laws, regulations, and the terms of their state or private POS device retailer agreements. To review the laws and rules governing SNAP, click on the links in the table below.

    SNAP Statute SNAP regulations
    The law Congress passed establishing the SNAP program and authorizing the USDA to create program rules (read the statute here: 7 U.S.C. 51). The rules the USDA created to implement the SNAP statute (read the rules here: 7 C.F.R. 271-285).

    Among other requirements, vendors must:

    • Become licensed by FNS to accept SNAP benefits (i.e., become a SNAP-authorized retailer) and undertake reauthorization as required.
    • Train employees/personnel regarding SNAP. For training expectations and materials, review:
    • Post a sign designed and provided by FNS which provides information on how people may report abuses they have observed in the operation of the SNAP program.
    • Guard against trafficking. In short, “trafficking” is the exchange of SNAP benefits for cash or non-eligible items. (Read a full definition of “trafficking” here.) Trafficking can result in disqualification from the SNAP program, monetary penalties, and/or criminal prosecution. For tips on avoiding trafficking, see next question.  For more on potential consequences of SNAP violations, click here.
    • Guard against fraud. In short, fraud involves being dishonest to the government. Examples include lying on an application to become SNAP-authorized or knowingly accepting EBT cards from persons who have no right to possess them. Fraud can result in disqualification from the SNAP program, monetary penalties, and/or criminal prosecution. For tips on avoiding fraud, see next question. For more on SNAP fraud, click here.
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  15. How should a SNAP-authorized vendor protect against fraud and trafficking?

    Since SNAP-authorized vendors are responsible for SNAP fraud or trafficking that involves their POS device, they should take precautions to protect against potential illegal transactions and SNAP misuse. For example, vendors should:

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  17. What are the advantages and disadvantages of relying on vendors, rather than the market, to become SNAP-authorized retailers?

    Decentralizing the implementation of SNAP by relying on vendors (rather than the market) to (1) obtain SNAP authorization and (2) obtain and operate POS devices in compliance with SNAP rules has advantages and disadvantages for markets, vendors, and customers:

    For Markets:

    Advantages of Vendor-Operated Systems Disadvantages of Vendor-Operated Systems
    Avoids the financial and administrative costs of obtaining, operating, and maintaining a POS device, administering a scrip system, and complying with SNAP rules. Little oversight of vendors’ compliance with SNAP rules.
    Avoids liabilities related to being a SNAP-authorized retailer. Some eligible vendors may choose not to become SNAP authorized. This potentially reduces customer choices and may make SNAP customers feel unwelcome with some vendors or at the market in general.
    Encourages vendors to accept responsibility for marketing to a new customer base.

    For Vendors:

    Advantages Disadvantages
    Once SNAP authorized, a vendor can use one POS device to process SNAP/EBT at other locations where he or she is engaged in direct marketing. Vendor is responsible for understanding and complying with SNAP rules.
    Potential to increase sales to SNAP customers, as well as debit/credit customers for vendors who have POS machines that can also process credit/debit purchases. Vendor is responsible for SNAP violations.
    Sales are credited directly to the bank account connected with the SNAP-authorized vendor (no need for reimbursement, which occurs in centralized SNAP systems). Vendors pay for EBT equipment, transaction fees and monthly fees (see Point of Sale Technology)  Federal and state policy and programs may have funding available to lower startup and ongoing costs, but, if that funding is not available, those costs fall to the vendor. See examples of costs from the Farmers Market Coalition here.

    For Customers:

    Advantages Disadvantages
    Expedient. No need to go to market’s central POS device or participate in market currency or receipt systems to use SNAP benefits. No need for customers to keep track of unredeemed market currency. Not all vendors selling SNAP-eligible foods may seek SNAP authorization, limiting customers’ options.
    SNAP EBT transaction appears same as Debit/Credit Card transaction to minimize stigma for SNAP participants.
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  19. How can market leaders support vendors in their efforts to become SNAP-authorized retailers?

    Having SNAP-authorized vendors at your market opens doors to new customers, especially if your market is not able to administer a market SNAP system. However, being SNAP authorized comes with financial, administrative, legal, accounting, and logistical burdens. To support your vendors in becoming SNAP-authorized, consider doing the following:

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Farmers Market Legal Toolkit