Paying for a farmer’s fruits or vegetables with a wooden token might seem like a throwback to Colonial America, but it works for lower-income individuals or families eligible for government food-subsidy programs–and for farmers setting up summer markets.
As part of its push to fight obesity the past seven years, the U.S. Department of Agriculture has encouraged consumers eligible for the national Supplemental Nutrition Assistance Program to eat healthier foods, but it had to provide a way to access what might arguably be the healthiest food–fresh produce available at farmers markets. The federal agency also had mandated that all states change from paper food stamps to an electronic benefits transfer debit card system by October 2002, but that had an undesirable result for those seeking healthier food at farmers markets.
Vendors at farmers markets generally could not afford to purchase the terminals needed to process card payments, so consumers using their EBT cards, such as the Quest card in Wisconsin or the Link card in Illinois, to access their food subsidies had no way to purchase fresh food from those locations, Layne Cozzolino, Wood County health educator for Wisconsin’s Get Active Campaign, tells PaymentsSource.
A wireless payment card terminal might cost $1,200, so it would be too expensive for every farmer to use his own, Cozzolino says. “So we got to thinking, what if each market had one place with a terminal that could accept an EBT card, or a debit or credit card?”
The Agricultural Department pursued that idea and provided grant money to Wisconsin so it could offer a free EBT-only terminal, an older VeriFone Systems Inc. model used to accept PIN-debit cards. That terminal now enables market patrons to swipe their EBT cards and enter their PINs to pay. They then receive $1 tokens to bring to the specific food stand to receive their purchased produce. Some markets also may provide tokens in $2 and $5 denominations.
When the market closes, the farmers bring the wooden tokens to where the EBT terminal is displayed to receive their payments via check or cash, says Cozzolino, who works the terminal under a tent at the Main Street Farmers Market in Marshfield, Wis. Sometimes the farmers wait a few days until they have more than just a few tokens before turning them in.
“The wooden-tokens process just makes a lot of sense,” Cozzolino says. “It would take years for a farmer to recoup his costs at the market if he had to buy the payment terminal on his own for just his stand.”
The free terminals need telephone lines and electricity to operate. Markets lacking access to phone lines or electricity would have to pool money from the vendors to purchase a $1,200 VeriFone V610 Wireless POS terminal that would accept debit and credit cards. The price of the terminal includes a three-year warranty, battery and AC power supplies, training and activation, a carrying case, and shipping and handling.
Vendors also would share a $45 monthly service charge and pay 15 cents per transaction to run EBT cards, 40 cents for other debit cards and 22 cents plus 1.86% of the sale for credit cards, whereas the state pays for all fees associated with the free terminal, Cozzolino explains.
At some Wisconsin markets, organizers can ask a nearby business to provide telephone lines and electricity needed for the EBT-only terminals on the days the market is open, Cozzolino says. In those cases, the farmers market can set up one terminal in a parking lot near the market to process orders and distribute wooden tokens, she says.
Creating access to farmers markets with a Quest card is part of Wisconsin’s Get Active Campaign, with its tie-in to Food Share Supplemental Nutrition Assistance Program benefits made possible through funding from the American Reinvestment Act.
Alan Shannon, a spokesperson for USDA/Food and Nutrition Service-Midwest, tells PaymentsSource his agency makes access to farmers markets for those receiving food aid a priority.
“Our agency has expended a great deal of effort in the past year or so to enroll more markets in [the Supplemental Nutrition Assistance Program], and we’ve had great success,” Shannon says.
In Illinois, the work of Experimental Station, a nonprofit organization that administers the Supplemental Nutrition Assistance Program and the EBT system at farmers markets in Chicago, has been instrumental in getting more markets involved and alerting Link cardholders of the opportunity to purchase fresh food, Shannon says.
Dennis Ryan, Experimental Station’s program manager of Link Up Illinois, says the number of farmers markets in Chicago accepting Link cards has grown to 21, up 62% from 13 in 2010.
The number of farmers markets or individual farmers with roadside stands in Illinois authorized to accept the Link card grew to 48 as of July 11, up 220% from 15 in December 2009.
Not all farmers markets in Chicago and its suburbs use wooden tokens for payment; some instead use a paper-receipt system in which the consumer chooses products at the market stands and takes receipts to the terminal accepting Link card orders. After those receipts are processed through the Link card, the consumer takes paid receipts back to the vendor to pick up the food.
Fidelity Information Services provides the VeriFone EBT-only payment terminals in Wisconsin. Northrop Grumman Corp. subcontracts with Affiliated Computer Services Inc., and Illinois uses Affiliated’s Electronic Payment Processing and Information Control system with a VeriFone terminal to accept Link cards, according to the USDA Midwest office.
No specific financial institution issues the Link cards in Illinois, though Affiliated has an account at PNC Bank NA to process daily settlement payments to third-party processors and direct-connect retailers, the USDA Midwest office reports.
More than 45 million consumers and 21.6 million households receive funds for food, with an average monthly benefit of $283 per family, according to May nationwide data from the Supplemental Nutrition Assistance Program.
Whether through tokens or paper receipts, an electronic-payments system for low-income families has helped bring them access to healthy food at farmers markets.
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