Michigan is preparing to test a system that lets merchants accept government benefit payment cards with mobile phones.

Novo Dia Group Inc., an Austin, Texas, software vendor that developed the app for Apple Inc.'s iPhones, said that letting small merchants at Michigan farmers' markets accept electronic benefits transfer cards is part of the state's efforts to make fresh produce more readily available to participants in the Special Supplemental Nutrition program for Women, Infants and Children.

"WIC EBT is still a fairly immature market," said Josh Wiles, a Novo Dia senior partner. "If this takes off, it can open up the farmers' markets to accept WIC."

Novo Dia's app is compatible with VeriFone Holdings Inc.'s PayWare Mobile device, a card reader that slips around an iPhone.

Most states deliver WIC benefits on paper vouchers that can be redeemed at participating food stores; Michigan, Kentucky and Nevada are the only ones that use cards.

Novo Dia, which already provides back-end support for Michigan's WIC cards, believes more states might consider switching from WIC vouchers to magnetic stripe cards if mobile payments become an option at such places as farmers' markets.

Novo Dia expects the trial to last through July, and it will use what is called the harvest season (August and September) for a live rollout. Farmers' market vendors who want to use VeriFone's PayWare may purchase the device at a reduced rate if they accept WIC EBT, Wiles said, though the cost structure has not been finalized.

Michigan's WIC office would not provide further details about the trial, which was announced last week.

Novo Dia worked with VeriFone, of San Jose, to develop the application. "We were able to code the software to their specifications so that we can interface with that device," Wiles said.

Novo Dia plans to make the application available on any smart phone and to make it compatible with other mobile card readers, such as the device being developed by HomeATM ePayment Solutions.

WIC cards have faced many challenges, especially funding, in recent years, said Bob Bucceri, a general partner for the West Chester, Pa., consulting firm Chaddsford Planning Associates LLC.

Some states that have experimented with WIC cards later returned to paper vouchers.

In June 2005, Ohio WIC officials converted back to vouchers because "they did not believe they could afford EBT within their nutrition services and administration grant," the food and nutrition service, a division of the U.S. Department of Agriculture, said last year. States receive federal grants to administer the WIC program, which provides health care and nutrition assistance for low-income pregnant women, infants and children younger than 5.

Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont also tested WIC cards but returned to vouchers in 2006 because of funding problems.

Adopting commercial payment structures such as mobile payments may give WIC cards a boost, Bucceri said. "When the EBT concept was envisioned years ago, it was thought [states] would adopt commercial payment structures," he said. "As mobile payments become more mainstream, we're going to see more developments like" Novo Dia's.

Bucceri estimates about 25 to 30 states are planning or thinking about switching to WIC cards.

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