Food stamp recipients lost access to most farmers’ markets during the 1990s, when USDA phased out the use of paper coupons and switched to a debit card system known as Electronic Benefit Transfer. EBT required food sellers to swipe the food stamp debit cards,but most open-air farmers’ markets weren’t able to provide the phone line and credit card terminal required.

Now, in several demonstation programs that employ wireless technology, food stamps are returning to farmers’ markets. And they’re bringing with them another great benefit for market vendors – the ability to accept credit cards.

“They have been extremely successful for me,” said John Parise, who is both a vendor and market manager at the Clinton-Bailey Farmers’ Market in Buffalo, New York. “I’ve seen a $12 flower sale turn into a $44 flower sale as a result of being able to take charge cards. And as for the EBT system, we lost the customers here for a couple of years because we did not have the technology; now we’re seeing a significant amount of people using their food stamps here.”

Parise is one of several dozen New York farmers who have received wireless credit card terminals under an EBT demonstration project funded by USDA and the state Department of Agriculture and Marketing. The terminals were first used to accept food stamps in 2001 at New York City Greenmarkets; the project was interrupted by the terrorist attacks because the data tower the wireless equipment used was on the roof of the World Trade Center. But the system was back in place the next year, and it has since expanded to farmers’ markets in four western New York cities.

“We’re really excited about it,” said Diane Eggert, director of the Farmers’ Market Federation of New York. “We’re hoping that after this year we’re going to get it mainstreamed.”

The New York project allows farmers certified to receive food stamps to use the EBT terminals to also accept credit and debit cards. The grant pays for the equipment and the wireless access, and the farmers pay transactions fees for any credit or debit card sales. Other pilot projects using wireless terminals to process food stamps are occurring at farmers’ markets in Wisconsin, Texas, Arizona and California.
“It’s another service for the customer,” said Fred Wilklow of Wilklow Orchards in Highland, New York, who sells at Greenmarket.

“When we’re selling plants in spring, if the customer wants to buy more than they planned, it gives them an option. The majority of our business is still cash, but it gives our customers another option. We’re moving in the direction of more credit card use as a society anyway.”

Certainly, credit card use has skyrocketed in recent years, for many reasons. Consumers like credit or debit cards because they don’t need to carry much cash, and credit card purchases are easier to track for tax and budgeting software programs such as Quicken. Merchants like credit cards because they can’t bounce like checks, and because people spend more with credit cards than they would with cash.

Credit card processing
In researching this article, Growing for Market found a huge number of companies that are vying for new customers in hopes of getting in at the beginning of the wireless revolution. We can’t vouch for any of these businesses, but we want you to be aware that they exist. So please shop carefully if you decide to pursue wireless credit card processing yourself.

A few years ago, handheld wireless credit card terminals like the one pictured above cost $2,000 each; now they can be found for $800. The photo was supplied by Cashflow Solutions, which can help set up merchant accounts with wireless terminals. For more information, call 800-823-7542 or email Visamccashflow@aol.com.

The latest development in wireless is even less expensive: magnetic card readers and printers that can be used with a wireless Palm or PDA-cell phone device. The company Merchant Anywhere, for example, sells a device called the Pocket Merchant which is a combination magnetic card reader and thermal printer, along with a Sprint Treo, and the software to process credit cards – all for $500. (www.merchantanywhere.com). The Sprint wireless account is a separate monthly fee.

These devices are already being used by wide range of mobile merchants, including artists who sell at craft fairs, musicians who sell CDs after concerts, taxi drivers, plumbers and electricians. There’s no reason farmers can’t use them, too, especially those who sell high-dollar items such as plants, flowers, meat and value-added products.

The simplest system requires only a cell phone; for $49 you can get a merchant account that allows you to phone a toll-free number, key in your PIN, and enter your customer’s credit card number and amount of purchase. (www.merchantseek.com)

If that sounds too time-consuming for a busy farmers’ market, you might want one of the wireless terminals that allow you to swipe the credit card. ( www.fast-merchant-account.com;www.merchantexpress.com; www.cardservice.com). Or the previously mentioned accessories for a Palm or cell phone might be best. Be aware that you need a different kind of wireless access from cell phone service for these to work; get a map of the device’s coverage from the seller.

Shop carefully for the best overall deal. Many equipment packages are tied to merchant accounts, so you’ll want to compare discount rates and transaction fees among the many credit card companies offering to process your transactions. Bear in mind that while phone-in merchant accounts don’t require an equipment purchase (other than the cell phone), the discount rate you’ll pay to the credit card company will be higher than if you use a magnetic card reader. Assume that you won’t make a lot of credit card sales the first year, because customers aren’t accustomed to using credit cards at farmers’ markets. But as word gets around, business may grow and the percentage you’ll be paying to the credit card processor can make a big difference. Some growers writing on a list serve recently mentioned they were paying rates of 3.5 to 4.5 percent of their sales to the credit card companies. But there are web-based services that are offering rates as low as 1.7 percent for merchants who swipe cards.

Return of food stamps
Currently, the use of wireless terminals to process food stamps is happening only in a few demonstration projects. Under current rules, merchants who process food stamps can get a wired EBT terminal for free if they accept more than $100 in food stamps per month. The cost of giving a wireless terminal to every farmer who wanted to accept food stamps would obviously be too expensive, so USDA does not at present allow for wireless terminals. However, if a farmer wanted to purchase his or her own wireless terminal to process both food stamps and credit cards, the device and software is available from Cardservice International (www.cardservice.com). The cost is about $1,000 for the terminal, and the map to determine if you would have coverage at your market is at www.motient.com.

While wireless EBT is still in its infancy, many farmers’ markets are working to bring food stamps back through more traditional scrip systems. Next month, we’ll tell you more about farmers’ markets that are helping their vendors get access to this huge potential market, while helping low-income people gain access to fresh, local produce.