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Guidance for Selecting a TPP for Paid SNAP EBT Equipment and Services

When Selecting a Third Party Processor (TPP)

Compare Deals from Several Companies

  • We recommend talking to at least three companies.
  • Compare services, contract requirements, pricing and reputation.
  • Select the company that represents the best deal for your business.

Decide What Services You Need

  • Do you need credit, debit and EBT, or just EBT (SNAP and/or cash)?
    • Some companies just provide EBT terminals, others provide EBT but only as an add-on to credit/debit card services.
  • If you already have a credit/debit terminal, ask your current service provider if they can add EBT – that may be the best deal for you, but first make sure they really understand EBT operations. Do/will they:
    • Support SNAP refunds?
    • Understand the use of vouchers and have a process to clear them so you can get paid?
    • Understand that EBT does not require Payment Card Industry (PCI) or EuroPay MasterCard VISA (EMV) compliance for terminals?
    • Continue to support swiping cards to read data from the magnetic stripes?
  • If you want to take credit/debit, it makes sense to use the same terminal for EBT – look for a full service provider.
  • If you are only interested in accepting EBT, find out if they offer EBT-only services.
  • Do you want to buy or lease equipment – if you buy you will still have to pay monthly fees for processing but it may be cheaper in the end. If you lease you may be in a better position to upgrade equipment if technology or security requirements change.
  • Are you also a WIC-authorized vendor? Contact your WIC state agency regarding your current or future WIC EBT options.

Consider Contract Requirements and Services

  • Length of contract – what is the minimum and maximum available – how does that affect pricing?
  • Does the contract renew automatically?
  • Are there penalties for early termination? If so, how much?
  • How much advance notice is required for no-penalty termination?
  • Who is responsible for equipment repair? You or the terminal provider?
  • How are service fees paid?
    • Direct debit from retailer’s bank account? Daily or monthly?
    • Billed and pay by check?
  • What, if any, insurance is required?
  • Who pays for shipping fees to return or replace equipment?
  • How soon is replacement equipment guaranteed to arrive?
  • Does the company provide manual voucher forms for use during system outages and disasters? If so, what do they cost?
  • Are any of the following important to you? If so ask.
    • 24 X 7 customer assistance?
    • Seasonal downtime – is there a reduced cost for out of season periods?

Consider Cost

Find out about all costs – some companies charge extra for certain services

Up front and other one-time fees

For cost comparison purposes these should be averaged over the life of the proposed contract; we recommend using three years for month to month contracts

  • Equipment purchase
  • Application processing fee
  • Initial set-up or activation fee
Transaction fees

Most companies charge a fee for every transaction.

  • Credit and debit card fees are the most expensive because the card issuers pass interchange fees back to the merchant
  • EBT cards, by law, have no interchange fees and, therefore, should be much lower in cost
  • Many companies offer tiered pricing – the more transactions you do, the lower the cost, for example, 15 cents for first 100 transactions, 13 cents for next 400, 10 cents for anything over 500
  • Some companies do not charge EBT transaction fees but have a higher monthly rate, or require that you accept credit/debit instead
Monthly fees

These may be combined into a single monthly fee or may be charged separately; make sure you identify the cost of each:

  • Equipment lease
  • Equipment maintenance
  • Processing costs
  • Direct deposit fees
  • Monthly statement
  • Customer service and technical support
  • Online access to transaction data
Other ongoing fees

Processors are not required to pass these costs onto merchants but some do; ask if these are charged

  • PCI compliance fee – applies only to credit/debit and should not be charged for EBT-only terminals
  • IRS reporting
  • Other “hidden” fees

Compare Pricing from Different Companies

The following example applies only to EBT expenses. Commercial (non-SNAP) credit and debit card transactions also include interchange fees, which represent a percentage of the total amount charged by the customer. Those would also have to be factored in to get an accurate value.

  • Determine your average monthly transaction numbers (based on past experience or estimates)
  • Multiply that estimate by the transaction fee or tiered fees, e.g. using the earlier example and estimate of 650 transactions per month
    • 100 transactions at 15 cents each - $15.00
    • 400 transactions at 13 cents each - $52.00
    • 150 transactions at 10 cents each - $15.00
  • Itemize all monthly charges, e.g.:
    • equipment lease and maintenance - $12.00
    • processing, customer service, and direct deposit - $15.00
    • monthly statement - $2.00
  • Average out monthly value of all other charges, e.g.:
    • set-up fee ($120 for 24 month contract) - $5.00
    • annual PCI fee ($30 per year) - $2.50
  • Add up total monthly cost - $118.50
  • Repeat for each terminal provider and compare

Consider Company Performance and Reputation

This is often difficult to judge and requires some research on your part. Here are a number of websites that can be used – click on the link and enter the company’s name in the search box.

Additional Considerations

  • Do not believe any terminal provider that insists that EBT must be PCI- or EMV-compliant. These requirements only apply to commercial credit and debit, not EBT.
  • Until you decide which company you want to contract with for EBT services, do not provide any of the following information:
    • Your tax identification number (Employer Identification Number or Social Security Number)
    • Your bank account number, including scans or photocopies of one of your checks

The above items will be required for the final contract, but you should only give them to a valid company representative who you recognize. Never provide them to unsolicited callers.

  • Once you select a new terminal service provider and they install their new terminal, do not allow them to remove your existing equipment
    • In most cases (unless you purchased the hardware yourself) this terminal belongs to your previous service provider
    • You are still responsible for the return of the equipment to your previous provider as soon as you contract with a new company for EBT services
    • Your contract with the previous provider may include financial penalties for failure to return the equipment
    • They may automatically debit your account for the cost of the terminal if you do not return it to them
Page updated: October 11, 2024