• Derek Jarrett

Farmer's Markets Last Mulligan?

I love farmer’s markets. Seeing a farmer’s market on the side of the road reminds me of the simpler, younger days when I was a kid. It reminds me of my parents and the drive to visit my grandparents and all the small fruit stands along the way. Of course, back then we still hadn’t hit the full stride of a digital revolution and cash was the form of payment expected at these fruit stands. Sadly, though, the digital revolution has not been as kind to these rural markets, and seemingly each step forward is sometimes two steps back.


Let’s jump forward a few years from my early childhood and now food stamps were more commonly accepted at these markets. It still wasn’t widespread, but it was definitely much more common to have this option for payment. Not bad. And, looking back on it as an adult it seems like a natural way for these small markets and fruit stands to gain customers that may otherwise drive right by their business. The ideology behind the federal food stamp program is great, but there are always more variables to consider and fraud started to become a real issue.


In 1990 the first physical EBT cards were issued, and for many years these cards worked just fine; alongside the paper EBT vouchers the markets now had payment options for their customers, right? Well... it's not that easy. Often these markets didn't have access to a phone line at their location, so they were required to continue using paper vouchers. The downside of using paper vouchers is they took some time to clear, but at least they worked! For a while this was 'the way' for a farmer's market to take payments, then the cell phone revolution and later the prevalence of smartphones changed how the customer interacts with a merchant.


Through the 90's the program saw incremental innovations, but in the 2000's there were major legislative updates that began setting the stage for what's to come for these markets. The 2000's saw an increase in eligibility to receive federal food stamp benefits, thus increasing the potential customer base for EBT participating businesses. Which is great! But, with the increase in aid provided by the program there was an increasing rate of fraud. In an attempt to combat some of the fraud it was decided a personal identification number, or PIN, would be required for a customer to use their Snap/EBT card.


Now, the PIN requirement in of itself was a good idea to address the still widespread fraud the program experienced, and it has absolutely lowered the instances of fraud for EBT. An unforeseen issue at those small rural markets and fruit stands, however, was the limited availability of a phone or internet connection. You may be wondering how a card can be accepted offline with a PIN, doesn’t the bank need to confirm the PIN before they can approve the sale? As you may have guessed the answer to that is Yes! During the sale the PIN must be encrypted and communicated through the processing network to allow an approval. But, if there is no phone or internet option what is a business to do?


What was thought to help alleviate this strain was to have the government subsidize wireless equipment for markets. These devices would utilize the cellular network to communicate the sale rather than a phone or WiFi/internet connection. Sadly, the next unforeseen issue was these rural markets also didn’t have cell coverage. So, there was still no way for these markets to enter the PIN for their EBT/Snap program sales.


It’s been more than ten years since the subsidized wireless terminal program was available, and sadly we’re still looking for workarounds to this issue. Just in the last year or so have wireless terminals become available that can utilize the 4G cellular network; all the early terminals provided through these programs only had 3G connectivity, and that network is increasingly being turned off. In turn, many merchants have been left with little options and useless equipment.


So, what are these small markets and fruit stands to do? The transition away from 3G to 4G was happening faster than the card payments industry was responding, and it was leaving many businesses with little recourse than to utilize outdated technology to process a payment. Imagine, you've signed up for a government program that provides a subsided wireless processing terminal, but the terminal has zero connectivity at your market! On top of that, it's common for a market to be located far from the producing farm, and after a long drive and setting up for the day it's discovered you're unable to accept a card payment. These are your tax dollars at work!


It does appear we may be reaching some semblance of the light at the end the tunnel on this matter; payment technology innovations over the recent years have allowed more businesses access to payment acceptance. Further innovations in the near future like "pin-on-glass" technology will increasing become available. Pin-on-glass technology allows a smartphone or tablet application to accept a PIN. And, to increase the excitement a little more about this technology, these applications may utilize a smart device's NFC capabilities to receive a payment, so no equipment would need to be purchased. Maybe... just maybe, in the near future a small market or fruit stand will simply download an app to their smart device and be ready to accept all forms of digital payments.