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Food Stamps & System Outages: A New Option For Retailers

From FMI:

On April 11, 2005, USDA published interim final rules revising the EBT food stamp rules to allow for store-and-forward processing with re-presentment. States were able to implement the provisions anytime after May 11, 2005 but no later than October 11, 2005.  Retailers will need to make programming changes to be able to correctly utilize this new option.  It has come to our attention that some states may have implemented the changes without talking with their retail partners about changes that may be needed in programming.  Is your state currently allowing this provision?  Are retailers utilizing it with the necessary software change?

Background

With electronic delivery of food stamp benefits, there are times when the electronic system is not operational and stores must either refuse a customer or store the transaction to be forwarded for payment when the computerized systems are once again functioning properly. This process is referred to as “store and forward processing.”

The problem is that when retailers resubmit a transaction when the computerized systems are once again functioning and the customer’s account balance is anything less than the amount requested for payment by the retailer, the retailer gets no compensation

For example, if the order total was $20.00 and the customer’s Food Stamp account balance was $19.75, the customer would have already left the store with the groceries and the retailer would not get paid for that transaction under the current system.

FMI worked with USDA to allow for nationwide re-presentment of the transaction, providing a means for the retailer to collect the remaining balance in the account. In the instance described above, the retailer would collect $19.75 under the new proposal instead of $0. Pathmark has been piloting this approach with much success in New Jersey, New York and Pennsylvania and we expect other retailers to also begin implementation.

Obviously any period of time when customers cannot access their account to purchase groceries is a huge inconvenience to the customer and to the retailer and needs to be eliminated. FMI continues to work with state and federal officials and EBT providers to identify the cause of and eliminate reoccurrence of outages.

 One-Step Processing

The final rule allows for a “one-step process” in that it only requires one transaction to be sent by the retailer to the host to collect the money owed by the EBT recipient to the retailer. This requires programming and it is unclear how much time or money will be necessary. In this “one-step process,” a message coded to indicate it is a store-and-forward message is sent to the contractor/host. In the response message from the contractor/host, the retailer is told that there are insufficient funds in the customer’s account and that the retailer is being sent the available balance in the customer’s account for payment.

The interim final rule says, “In States that elect not to give retailers this option, all store-and-forward transactions with insufficient funds will be denied in full.” FMI’s stance has always been that retailers should not have to bear the risk for the entire costs of the grocery order if some funds can be made available to mitigate the potential loss.

 USDA will issue a final rule on store and forward. To see a copy of the interim final rule, go to: http://www.fns.usda.gov/fsp/ebt/pdfs/2005-04-11.pdf

 For more information, contact FMI’s Jennifer Hatcher, Senior Director, Federal Government Affairs, jhatcher@fmi.org; or Elizabeth Tansing, Director, State Government Relations, etansing@fmi.org.

 

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