EBT Deep Dive – What does it mean for you?

What is EBT?

Electronic Benefit Transfer, or EBT, is an electronic payments system that allows welfare programs to issue benefits via a plastic, magnetically encoded card. EBT is primarily used in the United States and in the United Kingdom.

In general, there are two kinds of benefits that can be provided through EBT cards: one is food and the other is cash. Food benefits are typically distributed through the Supplemental Nutrition Assistance Program (SNAP), which was formerly the Food Stamp Program. Cash benefits are generally regulated through state guidance via a program called Temporary Assistance for Needy Families (TANF) which help under-served and relocated families.

Accepting EBT Transactions

All states have systems that use magnetic stripe cards and online authorization. Similar to PIN Debit transactions, EBT transactions require a PIN number. Businesses who want to accept EBT benefits must be approved by the state of operation and provided an 8 digit FNS number and have a PIN pad device capable of accepting EBT transactions. Cash should never be exchanged. Payment is typically made to the retailers via an automated clearing house (ACH) settlement process typically at the end of the business day.

Businesses accepting EBT are getting used to new standards with regards to their equipment. In the past, once a retailer was approved by their state to accept EBT, SNAP participants would receive free EBT equipment and supplies. However, a new piece of legislation titled the Agricultural Act of 2014 now mandates that EBT equipment and supplies can no longer be provided free of charge to the retailers. This is a national mandate which means, businesses must now buy or lease the equipment necessary to accept EBT.

New EBT Legislation


The Agricultural Act of 2014 was passed in February 2014. This law was outlined by a few important deadlines for states and EBT accepting businesses. Retailers that became SNAP-authorized after March 21, 2014, must pay for their own EBT equipment and services. Retailers authorized on or before March 21, 2014, and who have already been given free EBT equipment and services by their state may be able to use the EBT equipment and services for free until September 21, 2014 (at the state’s discretion). Retailers who are using free equipment will need to make arrangements to lease or purchase their EBT equipment to avoid penalty after the September deadline. These penalties vary from state to state. Massachusetts for example has given their EBT accepting businesses a 30-45 day window for businesses to pay for their equipment before shutting down the devices.

The law also added restrictions for certain businesses at a national level. Liquor stores and gambling establishments have been removed from consideration for EBT acceptance. States were also granted permission to place restrictions on other types of establishments as well.  

EBT is still a popular tender method for many retailers and rightfully so. It provides businesses with opportunities to sell goods to customers who normally wouldn’t be able to afford them. This new legislation has made it more costly to accept EBT as a stand-alone option. However, businesses that want to accept EBT should know that if they already use a PIN pad solution to accept PIN debit transactions, they should be able to use that existing equipment to accept EBT creating some relief.  Solution and service providers such as Cayan have multiple solutions and can answer any questions you may have regarding accepting EBT and the Agricultural Act of 2014.