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USDA Food and Nutrition Service
Supplemental Nutrition Assistance Program
Electronic Benefits Transfer
Online Purchasing Pilot
Request for Volunteers
September 15, 2016
USDA FNS SNAP EBT Online Purchasing Pilot Request for Volunteers Page i
Table of Contents
Table of Contents ............................................................................................................. i
Tables ............................................................................................................................. v
Figures ............................................................................................................................ v
Glossary of Terms ...........................................................................................................vi
Chapter 1 Introduction .................................................................................................. 1
1.1 Overview ............................................................................................................ 1
1.2 Purpose .............................................................................................................. 1
1.3 Background ........................................................................................................ 1
1.3.1 Internet Shopping Workgroup ...................................................................... 2
1.3.2 Acculynk Solution ........................................................................................ 3
1.3.2.1 Mandatory Use of Acculynk .................................................................. 3
1.3.2.2 Routing Through Acculynk .................................................................... 4
1.3.2.3 Acculynk Commercial PIN-Debit Services ............................................ 4
1.3.3 Economic Changes ..................................................................................... 4
1.3.4 Agricultural Act of 2014 (Farm Bill) .............................................................. 5
1.4 Online Purchasing Pilot Vision ........................................................................... 5
1.4.1 Demonstration Authority and Evaluation...................................................... 5
1.4.2 Report to the Secretary................................................................................ 6
1.4.3 PIN Debit vs. Credit Transactions ................................................................ 6
1.5 Pilot Description ................................................................................................. 7
1.5.1 Pilot Participants .......................................................................................... 8
1.5.2 Integration with Acculynk ............................................................................. 8
1.5.3 Pilot Activities ............................................................................................ 10
1.5.3.1 Initial Pilot ............................................................................................ 11
1.5.3.2 Rollout to Additional Areas and Retailers ............................................ 11
1.6 Partner Responsibilities ................................................................................... 12
1.6.1 Food and Nutrition Service ........................................................................ 12
1.6.2 Participant Website .................................................................................... 12
1.6.3 Acculynk .................................................................................................... 14
1.6.4 EBT Processor .......................................................................................... 15
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Chapter 2 Detailed Requirements .............................................................................. 17
2.1 Introduction ...................................................................................................... 17
2.2 Rules and Standards Governing EBT .............................................................. 17
2.2.1 FNS SNAP Laws, Rules and Policies ........................................................ 17
2.2.2 State Laws and Regulations ...................................................................... 21
2.2.3 Quest Operating Rules .............................................................................. 21
2.2.4 Technical Standards .................................................................................. 22
2.3 Basic Requirements to Participate as an EBT Internet Retailer ....................... 22
2.3.1 Authorization by FNS as a SNAP Retailer ................................................. 23
2.3.1.1 Application for Authorization as a SNAP Retailer ................................ 23
2.3.1.2 SNAP Retailer Eligibility ...................................................................... 24
2.3.1.3 Eligibility Determination ....................................................................... 25
2.3.1.4 Special Situations................................................................................ 25
2.3.2 Acculynk Requirements ............................................................................. 28
2.3.2.1 Contract .............................................................................................. 28
2.3.2.2 Specifications ...................................................................................... 28
2.3.2.3 Coding Requirements ......................................................................... 29
2.4 Operational System Requirements .................................................................. 29
2.4.1 Mandatory Transaction Types ................................................................... 29
2.4.1.1 Online PIN Purchase ........................................................................... 30
2.4.1.2 EBT PINless Refund ........................................................................... 32
2.4.1.3 Other Mandatory Transaction Types ................................................... 34
2.4.1.4 Optional Transaction Type .................................................................. 34
2.4.1.5 Prohibited Transaction Types ............................................................. 34
2.4.2 Purchase Checkout Process for SNAP and Cash EBT ............................. 36
2.4.2.1 Order Destination and Timing ............................................................. 36
2.4.2.2 Definition of Eligible SNAP Foods ....................................................... 38
2.4.2.3 Eligible Product Identification .............................................................. 39
2.4.2.4 Ability to Accept Split Tender .............................................................. 39
2.4.2.5 Selection of EBT Payment Method ..................................................... 40
2.4.2.6 Customer Fees ................................................................................... 41
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2.4.2.7 Calculation of SNAP Payment ............................................................ 41
2.4.2.8 Authorization of SNAP Purchase Transaction ..................................... 42
2.4.2.9 Calculation and Authorization of Cash EBT ........................................ 42
2.4.2.10 Denial Responses .............................................................................. 42
2.4.3 Customer Receipt and Notification ............................................................ 43
2.4.4 Equal Treatment ........................................................................................ 44
2.4.4.1 Sales Taxes ........................................................................................ 45
2.4.4.2 Manufacturer’s Coupons ..................................................................... 47
2.4.4.3 Website Design ................................................................................... 47
2.4.5 Nonprofit Cooperatives and CSAs ............................................................. 47
2.4.6 Security and Privacy .................................................................................. 48
2.4.6.1 PCI Certification .................................................................................. 48
2.4.6.2 Use of Cookies .................................................................................... 50
2.4.6.3 Security Practices and Policies ........................................................... 50
2.4.6.4 Privacy Practices and Policies ............................................................ 51
2.5 Waivers and Conditions ................................................................................... 52
2.5.1 PINless Refund .......................................................................................... 52
2.5.1.1 Conditions ........................................................................................... 53
2.5.2 PIN-Entry Method ...................................................................................... 53
2.5.2.1 Conditions ........................................................................................... 54
2.5.3 Printed Receipt .......................................................................................... 54
2.5.3.1 Conditions ........................................................................................... 55
2.5.4 Product Display ......................................................................................... 57
2.5.4.1 Conditions ........................................................................................... 57
2.5.5 Prepayment ............................................................................................... 57
2.5.5.1 Conditions ........................................................................................... 58
2.5.6 Card Must Be Present ............................................................................... 59
2.5.6.1 Conditions ........................................................................................... 59
2.5.7 Equal Treatment ........................................................................................ 59
Chapter 3 Pilot Application, Selection and Evaluation ................................................ 60
3.1 Issuing Agency ................................................................................................. 60
USDA FNS SNAP EBT Online Purchasing Pilot Request for Volunteers Page iv
3.2 Overview .......................................................................................................... 60
3.3 Announcement ................................................................................................. 60
3.4 Points of Contact .............................................................................................. 60
3.5 RFV Timetable ................................................................................................. 61
3.6 Letter of Intent .................................................................................................. 61
3.7 Questions ......................................................................................................... 62
3.8 State and Community Partners ........................................................................ 62
3.9 Proposals ......................................................................................................... 63
3.9.1 Submission ................................................................................................ 63
3.9.2 Content ...................................................................................................... 63
3.9.2.1 RFV Participation Application Form .................................................... 63
3.9.2.2 FNS-252 SNAP Application for Stores, FNS-252-C FNS Corporate
Supplemental Application, or Chain Spreadsheet .............................................. 64
3.9.2.3 Additional Documentation for Retailer Application .............................. 65
3.9.2.4 Signatures ........................................................................................... 65
3.9.3 Proposal Format ........................................................................................ 66
3.9.4 Withdrawal of Proposal .............................................................................. 66
3.10 Participant Selection ..................................................................................... 66
3.10.1 Baseline Requirements .......................................................................... 66
3.10.2 Evaluation Process ................................................................................. 67
3.10.3 Selection Criteria .................................................................................... 68
3.10.3.1 Privacy and Data Security 30% ....................................................... 68
3.10.3.2 System Changes and Rollout Plan 30% .......................................... 68
3.10.3.3 Customer Service 20% .................................................................... 68
3.10.3.4 Website Business Model 20% ......................................................... 68
3.10.4 Selection Announcement ....................................................................... 69
3.11 Project Management ..................................................................................... 69
3.11.1 Communication ...................................................................................... 69
3.11.2 Project Plan ............................................................................................ 69
3.11.3 Joint Application Design ......................................................................... 70
3.11.4 System Design and Development .......................................................... 70
USDA FNS SNAP EBT Online Purchasing Pilot Request for Volunteers Page v
3.11.5 System Testing ....................................................................................... 70
3.11.6 Training and Marketing Materials ........................................................... 71
3.11.7 Evaluation Preparation and Planning ..................................................... 71
3.11.8 Implementation and Rollout .................................................................... 72
3.12 Online Purchasing Pilot Evaluation ............................................................... 72
3.12.1 Evaluation Contractor Responsibilities ................................................... 73
3.12.1.1 Online Purchasing Implementation Analysis ...................................... 73
3.12.1.2 Online Purchasing Impact Analysis .................................................... 73
3.12.1.3 Online Purchasing Integrity Analysis .................................................. 73
3.12.1.4 Report to the Secretary ...................................................................... 74
3.12.1.5 Data Collection Process ..................................................................... 74
3.12.2 Retailer Responsibilities ......................................................................... 74
3.12.2.1 Applicants ........................................................................................... 75
3.12.2.2 Pilot Participants ................................................................................. 76
Appendix A State Specific Information ....................................................................... 77
Appendix B Letter of Intent ......................................................................................... 78
Appendix C Statement of Support from Community Organizations ............................ 79
Appendix D Request for Volunteers (RFV) Participation Application Form ................ 80
Appendix E FNS Retailer Application Forms ............................................................ 107
Appendix F Evaluation Data Collection .................................................................... 118
Appendix G ANSI Standard X9.58 Coding ............................................................... 123
Tables
Table 2-1 FNS SNAP Policy Citations ........................................................................ 18
Table 3-1 RFV and Pilot Timeline .............................................................................. 61
Table 3-2 Documentation Requirements .................................................................... 72
Table A-1State Specific Information .......................................................................... 77
Table G-1 X9.58 Modifications for Online Transactions ........................................... 123
Table G-2 X9.58 EBT Specific Message Coding ...................................................... 124
Figures
Figure 1-1 Acculynk Sample PIN Entry Screen ............................................................... 9
Figure 1-2 Acculynk Transaction Flow .......................................................................... 10
USDA FNS SNAP EBT Online Purchasing Pilot Request for Volunteers Page vi
Glossary of Terms
Term
Acronym
Explanation
Definition
ANSI
American National
Standards Institute
Promotes United States voluntary
consensus and conformity to standards and
systems across and within various industries
and sectors of the economy
API
Application
Program Interface
Set of routines, protocols, and tools for
building software applications that specify
how software components should interact
Applicant
Entity proposing to volunteer its website for
the EBT Online Purchasing Pilot by
submitting a formal response to this
solicitation
BIN (also
known as
IIN)
Bank Identification
Number (Issuer
Identification
Number)
First six digits of the PAN which are used to
identify the card issuer and route
transactions for authorization
CVV (also
known as
CVN, CVC)
Card Verification
Value (Card
Verification
Number, Card
Verification Code)
A 3- or 4-digit code recorded on the back of
a commercial credit/debit card which allows
a retailer to verify that the person making a
purchase is actually in possession of the
card. The code is not embossed on the card
or included in the magnetic stripe. For
online transactions, this code is sometimes
referred to as CVV2 or CVN2.
DES
Data Encryption
Standard
PIN encryption method required by FNS
regulations and the EBT payment industry
current standard is DES3
Eligible
Food
Defined by the Food and Nutrition Act of
2008 as any food or food product for home
consumption and also includes seeds and
plants which produce food for consumption.
The Act prohibits the following items from
being purchased with SNAP benefits:
alcoholic beverages, tobacco products, hot
food, and any food sold for on-premises
consumption. Additional information can be
found at
http://www.fns.usda.gov/snap/eligible-food-
items.
EBT
Electronic Benefits
Transfer
Debit card system for government cash and
food assistance benefits
USDA FNS SNAP EBT Online Purchasing Pilot Request for Volunteers Page vii
Term
Acronym
Explanation
Definition
EBT
Processor
Company contracted by a State agency to
run a turnkey transaction processing system
for EBT
Farm Bill
Common name for the Agricultural Act of
2014 (PL-113-79)
FIS
Fidelity National
Information
Services, Inc.
One of the three EBT processors
participating in this pilot.
FNS
Food and Nutrition
Service
The agency within USDA that administers
domestic government food assistance
programs
Internet
Retailer
Any website specifically authorized by FNS
to accept EBT cards and redeem SNAP
benefits online
ISO
International
Organization for
Standardization
Performs the same functions as ANSI, but at
the international level
PAN
Primary Account
Number
The 16-19 digit EBT card number entered as
payment for purchases
Participant
or Selected
Site
Retailer website selected through this RFV
to participate in this pilot project
PCI
Payment Card
Industry
Credit and debit card industry and individual
organizations such as Discover, MasterCard
and VISA
PCI
Certification
Official assurance that merchant is in
compliance with the industry’s set of security
and privacy rules
PII
Personally
Identifiable
Information
Information that can be used to uniquely
identify, contact, or locate a single person or
can be used with other sources to uniquely
identify a single individual
PIN
Personal
Identification
Number
Cardholder selected four-digit identifier
required to be entered for all electronic EBT
transactions
POS
Point of Sale
Usually refers to the terminal or other device
used to generate transaction requests at the
time a purchase is made
Retailer
Entity authorized by FNS to accept EBT
cards and redeem SNAP benefits
RFV
Request for
Volunteers
Document to solicit partners to voluntarily
participate in a pilot program at no cost to
the government
USDA FNS SNAP EBT Online Purchasing Pilot Request for Volunteers Page viii
Term
Acronym
Explanation
Definition
ROD
Retailer Operations
Division
Division within FNS Regional Operations
and Support responsible for retailer
authorization, fraud detection and monitoring
RPMD
Retailer Policy and
Management
Division
Division within FNS SNAP that is
responsible for EBT, policy development,
system support and program innovation
SNAP or
Program
Supplemental
Nutrition
Assistance
Program
Formerly known as the Food Stamp
Program, SNAP is a domestic Federal
nutrition assistance program that provides a
basic safety net to ensure that low income
Americans receive adequate nutrition
State
Agency
Organization within State government
responsible for contracting with an EBT
processor and operating SNAP and cash
assistance programs
TPP
Third Party
Processor
Commercial entity contracted by merchants
to route transactions for card issuer approval
and manage settlement
UAT
User Acceptance
Testing
Testing of all functional aspects of system
changes related to EBT online purchasing
USDA
United States
Department of
Agriculture
The Federal department responsible for
agricultural production, rural services and
food assistance programs
Website
Applicant’s online purchasing system, its
owners and its development staff
USDA FNS SNAP EBT Online Purchasing Pilot Request for Volunteers Page 1
Chapter 1 – Introduction
1.1 Overview
The Agricultural Act of 2014 (PL-113-79), also known as the Farm Bill, calls upon the
Secretary of the United States Department of Agriculture (USDA) to authorize retail
food stores to accept Supplemental Nutrition Assistance Program (SNAP or Program)
benefits via online transactions, subject to the results of a multi-retailer pilot project
(pilot) conducted to test the feasibility of allowing such transactions. The USDA’s
Food and Nutrition Service (FNS) will be conducting these projects in order to collect
sufficient information to provide the Secretary with a recommendation on whether
allowing online purchases with SNAP benefits is in the best interest of the Program.
This Request for Volunteers (RFV) combines the need to conduct a pilot project with
the extensive groundwork started by an FNS industry work group in 2010-2011, and
invites retailers currently operating websites that sell SNAP-eligible foods and that
meet the inventory requirements to be authorized as a SNAP retailer, to apply for
participation in the projects.
This chapter provides information about past, present and future activities related to
authorization of Internet Retailers to accept SNAP and cash Electronic Benefits
Transfer (EBT) benefits online. Chapter 2 provides details on the requirements and
conditions for participation in the pilot, and Chapter 3 addresses the application
process and timeframes.
1.2 Purpose
Online grocery shopping has been a reality for many years. FNS sees this as an
opportunity to address the needs of the elderly and disabled, who often cannot easily
go out to shop. It will also be beneficial for those that lack consistent access to
transportation or live in areas considered to be food deserts.
The purpose of this RFV is to solicit a small number of experienced online food
retailers to test the implementation of EBT online purchasing and to prepare all
necessary parties to accept and process EBT transactions originating from websites.
FNS also plans to conduct an evaluation of the pilot as it proceeds, to determine
client usage and satisfaction.
1.3 Background
For many years it was technologically impossible to use EBT cards online due to the
requirement that every EBT electronic transaction include a customer-entered
USDA FNS SNAP EBT Online Purchasing Pilot Request for Volunteers Page 2
personal identification number (PIN). Signature transactions and purchase ‘pre-
authorization’ are not allowed in the EBT environment. The government programs
that use EBT are exempt from certain requirements of Regulation E which governs
consumer protections for credit and commercial debit cards. If someone steals a
client’s EBT benefits, they are not replaced. Therefore, the PIN is viewed as the
ultimate form of identification in the EBT world. Secure PIN-entry requires an
American National Standards Institute (ANSI) compliant device that can encrypt the
PIN using the Data Encryption Standard (DES) algorithm from the point of entry.
Computer keyboards and mobile devices are not ANSI-compliant for PIN-entry. Until
a few years ago, all secure online PIN solutions required special user hardware
and/or software and were impractical. Online purchases made with a commercial
credit or debit card typically required the customer to enter a card verification value
(CVV) to prove that they have the card in their possession. EBT cards do not have
CVVs. Most Internet Retailers still do not accept PIN-based transactions. Instead,
they handle commercial branded debit cards like signature-based credit cards for
online transactions.
Over the years we have received increasing numbers of inquiries from Internet
Retailers looking to accept EBT transactions, as well as from SNAP clients and
advocates asking why they cannot shop online. We had to explain the barriers
caused by the PIN requirement, but were not able to offer a solution.
1.3.1 Internet Shopping Workgroup
In fall of 2008, an open discussion on ways to surmount this problem was held
at an EBT industry meeting. That led to establishment of an Internet Shopping
Workgroup with representatives from FNS, State agencies, EBT processors
and other technical consultants.
This group worked diligently to identify technical and Program policy issues
that relate directly to online commerce. A technical subgroup came together to
address each technical issue and develop logical standard solutions. This was
done to ensure that EBT remains interoperable across State borders and
follows common standards applicable to all online transactions, regardless of
the retailer, State or processor. These were thoroughly documented and
shared with a group of retailers and third party processors (TPP) that had
expressed interest in online EBT or were already active in the EBT community.
FNS held a conference call with this larger group to review the changes and
field questions. As there were no significant concerns expressed, it was
agreed that the documented modifications could be used for a pilot. See
Section 2.2.4, Technical Standards and Appendix G – ANSI Standard X9.58
Coding for specific details about the changes.
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FNS also identified over 25 legislative, regulatory, policy and operations issues
and decided how to handle each. These cover a wide range of concerns and
are discussed in Sections 2.3 Basic Requirements to Participate as an EBT
Internet Retailer, 2.4 Operational System Requirements and 2.5 Waivers and
Conditions.
1.3.2 Acculynk Solution
In February 2009, a company named Acculynk announced that they had an
online PIN-entry solution that had been accepted by regional banking
networks. The Internet Shopping Workgroup contacted Acculynk and held
several meetings. They are the technology provider of PaySecure™, a
software-only service for Internet PIN debit payments that utilizes a graphical
PIN-pad for the secure entry of a consumer’s PIN online. The customer
requires no special hardware, software or security certificates; they only need
their card number and PIN. PaySecure™ is the standard for Internet PIN
debit, with 4 issued patents and over 20 pending patents; 11 Electronic Fund
Transfer (EFT) network partnerships; 6,000+ U.S. merchants live; and 9,000+
bank issuers.
After serious review and discussions with Acculynk, the Internet Shopping
Workgroup agreed that PaySecure™ would be the best solution for EBT’s
PIN-entry and security concerns. It is secure and intuitive for the user and
requires little change for EBT processors. However, the service does charge
the merchant a fee similar to other payment cards, and websites will need to
determine whether the transaction and upfront development costs are a good
business decision.
1.3.2.1 Mandatory Use of Acculynk
FNS is aware that several other companies are in the process of
developing alternative secure PIN-entry solutions. However, as of the
date of this RFV’s release PaySecure™ is the only method that is
payment card industry (PCI) certified and proven in the marketplace.
Therefore, unless the applicant is aware of another recognized, PCI-
compliant, PIN-entry solution, for this pilot, FNS will require all selected
sites to contract with Acculynk for PIN-entry services. Given that any
new method would require thorough testing and PCI certification, it is
not feasible for participating retailers to design and implement their own
methods for PIN capture for use in the pilot.
We will continue to require that Internet Retailers use an industry
recognized, PCI compliant, method for Internet PIN-entry. If the pilot
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project is successful, FNS will review any new PIN-entry solutions to
ensure that they meet minimum standards.
1.3.2.2 Routing Through Acculynk
For the demonstration, Acculynk will also act as the TPP, routing all
transactions directly to the EBT processor’s gateway. Therefore, any
Acculynk fees would be instead of, not in addition to, the fees the
retailer pays to its current credit/signature debit TPP. This service will
require a contract between Acculynk and the retailer. Acculynk has
agreed to limit the contract length to coincide with the pilot start and end
dates identified in Section 3.5, RFV Timetable.
1.3.2.3 Acculynk Commercial PIN-Debit Services
As noted above, Acculynk also provides secure PIN-entry services for
purchases made with commercial debit and bank Automated Teller
Machine (ATM) cards. Neither FNS nor Acculynk requires acceptance
of commercial PIN-debit as a condition of participation in this pilot
project. Participating retailers are permitted to negotiate with Acculynk
for these services.
Online merchants may wish to discuss the potential cost differential
between signature, PIN, and PINless debit with Acculynk in order to
make an informed decision. If they opt to do so, retailers selected for
pilot participation may implement commercial PIN or PINless debit
before, during or after EBT implementation. As part of the evaluation of
the pilot project, FNS is very interested in comparing the EBT versus
the commercial customer experiences and perceptions and, with the
retailer’s permission, would like to include the latter group for data
collection, voluntary surveys and interviews.
1.3.3 Economic Changes
Because most grocery websites charge fees for delivery, some thought that
EBT customers could not afford to shop online. Others felt that few SNAP
clients had access to personal computers. The EBT population had been
generally overlooked by most online grocery services. However, economic
changes have caused the SNAP caseload to grow. Currently there are 43
million people receiving SNAP benefits totaling $5.4 billion per month. Cellular
technology has also increased Internet access. As a result, many online sites
have come to recognize that SNAP customers represent a significant market.
More and more Internet Retailers have expressed interest in accepting EBT.
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1.3.4 Agricultural Act of 2014 (Farm Bill)
In February 2014, Congress passed the Farm Bill. Section 4011(b)
establishes additional requirements for acceptance of SNAP benefits by
Internet Retailers and calls for a pilot project to test the feasibility of allowing
certain retailers to accept SNAP benefits through online purchases if they can
meet designated criteria. Specifically, the Farm Bill requires any retailer
wanting to participate in the pilot project to submit a plan that includes, among
other things:
A method for ensuring that only eligible foods can be purchased with
SNAP benefits online; the Act prohibits the use of SNAP funds for
payment of delivery, ordering, convenience, or other fees or charges
A description of how households will be educated about the availability
and process for online purchasing
Adequate testing of the online purchasing process before launching
Provision of data requested by FNS that will allow for the evaluation of
access, ease of use and program integrity
In lieu of requiring a narrative plan, FNS has developed an application form
that addresses all of the necessary requirements. The RFV outlines the
additional legislative, regulatory and operational requirements for participation
in the Online Purchasing Pilot in Chapter 2, and addresses the application
process in Chapter 3.
1.4 Online Purchasing Pilot Vision
Eventually, FNS hopes to incorporate Internet Retailers into our regular authorization
process. But due to the nature of online purchasing, FNS must revise regulations,
develop a standard authorization process addressing unique concerns related to
Internet Retailers, and analyze and strengthen the processes for monitoring and
detecting fraud for online transactions to address the unique nature of Internet
commerce. FNS expects this pilot will provide the data needed to inform these
activities. Because this is indeed a pilot, it is being conducted within the confines of
the current EBT system, other than where waivers to existing requirements can be
granted.
1.4.1 Demonstration Authority and Evaluation
FNS has authority to waive SNAP regulations, but not the law. However,
Under Section 17 of the Food and Nutrition Act of 2008 (7 U.S.C. 2026) the
Secretary may undertake research that will help improve the administration
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and effectiveness of SNAP. This provides authority to conduct demonstration
projects that deviate from law, but requires an evaluation component.
The evaluation will involve analysis of additional transaction, user account and
customer service data and statistics submitted to FNS (or an FNS-selected
evaluation contractor) from the EBT processor, retailer website, Acculynk
and/or State agencies. It will also include interviews with PIN debit customers,
Internet Retailer representatives, State agency staff, Acculynk and EBT
processors. The process for submitting such data will include appropriate
restrictions on the exchange of personally identifiable information (PII).
FNS will use the collected information to assess the impact of online
purchasing for the various parties involved in the pilot, identify implementation
issues and analyze program integrity concerns. Evaluation requirements are
addressed in more detail in Section 3.12.
1.4.2 Report to the Secretary
The Farm Bill also requires FNS to submit a report of its findings based on the
results of the evaluation to the Secretary of Agriculture. The Secretary will
subsequently make a recommendation based on that report and other criteria
deemed appropriate by that office to Congress on whether or not online
shopping should be implemented program-wide. Should the Secretary
recommend implementation, FNS will develop the process for ongoing
authorization of Internet Retailers in SNAP, including the necessary regulatory
and policy changes that specifically address web-based merchants, their
eligibility to participate in SNAP and their responsibilities as authorized
retailers.
1.4.3 PIN Debit vs. Credit Transactions
Online PIN debit transactions differ significantly from credit and signature debit
transactions. The Fair Credit Billing Act (PL93-495), which applies only to
revolving credit accounts, prohibits retailers from actually charging the
customer until the goods are about to be delivered, shipped or picked up.
Therefore, the “purchase” transaction actually consists of a preauthorization,
where the retailer transmits the customer’s card number, billing address, CVV
and estimated amount of the sale. This estimate can be padded sometimes
by a significant amount. If approved, a hold for that amount is placed against
the customer’s remaining credit limit. When the order is ready, the retailer
transmits a second “advice” message with the final amount (which may be
higher or lower than the originally authorized amount) when the customer is no
USDA FNS SNAP EBT Online Purchasing Pilot Request for Volunteers Page 7
longer present. This finalizes the sale amount and releases the hold on any
remaining funds. Split orders can also be debited separately.
Because the EBT infrastructure requires a PIN for every purchase transaction,
and PINs may never be stored, the above dual transaction process cannot be
supported. The only way that EBT can work online is to debit the account in
real time upon approval of the online transaction. When completing the order
for an EBT transaction, the retailer must provide an immediate refund of any
overestimated value, out of stock items or substitutions. Because the
customer will not be present to enter a PIN, which is a requirement for in-store
refunds, Internet Retailers will be authorized to perform a special type of
refund transaction with no PIN for both SNAP and cash EBT. This non-PIN
refund will also be available for Internet Retailers to perform subsequent
product returns or other customer credits.
These differences require a significant change in mindset regarding system
logic and workflow for online transactions. See Section 2.4.1.1.2, EBT PIN
Purchase Process for more specific details.
1.5 Pilot Description
Due to the number of system modifications that must occur prior to SNAP recipients
actually using their EBT cards to purchase groceries online, the scope of this pilot will
be very limited. The pilot requires a commitment from States, EBT processors, and
retailers. Each State establishes a contract with a host processor to authorize EBT
transactions. Allowing online purchases will require significant system upgrades for
both the EBT processor and the State where a selected Internet Retailer is
conducting business. As of release of version 1.02 of this RFV, three EBT
processors have agreed to perform these system upgrades for the pilot in a limited
number of States. They are Fidelity National Information Systems, Inc. (FIS),
Solutran and Xerox State and Local Solutions
1
.
Our primary objective with this RFV is to identify a small number of qualified Internet
Retailers accepting transactions from customers living in States that will be actively
processed by one of the above companies for the duration of the pilot. Because they
will be in the process of reprocurement or conversion to a new processor during the
1
In January 2016, Xerox announced that they plan to split into two independent companies by 2017.
On June 16, 2016, they advised that the company that will take on their business process outsourcing,
including EBT processing services, will be called Conduent. This change is expected to occur prior to
pilot operations. In the meantime, and throughout this RFV, we continue to refer to their current name.
USDA FNS SNAP EBT Online Purchasing Pilot Request for Volunteers Page 8
pilot period, the following States will NOT be considered for the pilot: AK, CA, HI,
NC, VA, VI, WI and WV . Note, however, that many of the remaining States have
concerns about the level of effort required to support implementation of the Online
Purchasing Pilot. It will be essential for the State to approve the use of their system
for the pilot. FNS will work closely with potential participants to negotiate State
approval of their proposed pilot areas. We recommend that retailer applicants
contact the States in which they are interested to gain support prior to responding to
this RFV. See Appendix A, Table A-1 for a list of States and their EBT processors.
Our second objective is to select a variety of website types, sizes, geographical
locations, business models and distribution methods in order to ensure that any
future Program changes address the full scope of potentially eligible Internet
Retailers. This objective will be achieved by using a rigorous application evaluation
process as outlined in Section 3.10, Participant Selection.
1.5.1 Pilot Participants
In order to launch the pilot project, FNS has decided to limit the pilot to only
certain types of SNAP retailers. Group living and dining facilities, meal
delivery services and restaurants will be excluded, but may be considered in
the future if authorization of Internet Retailers is implemented nationwide. All
other types of food merchants that meet the eligibility requirements specified in
Section 2.3.1.2, SNAP Retailer Eligibility may apply.
Additionally, FNS will consider such factors as online sales expertise and track
record of the applicant, past customer satisfaction, product delivery in food
deserts or to other vulnerable populations, data security and privacy practices
and ability to make all necessary system changes to support SNAP
redemption as part of the selection process. See Section 3.10 for more
information about the participant selection process.
1.5.2 Integration with Acculynk
The requirements for calculating a SNAP transaction total and
recommendations on how to design the payment type selection screen are
discussed in detail in Section 2.4.2, Purchase Checkout Process for SNAP
and Cash EBT. When that is complete, the website will send the transaction
to Acculynk through a secure Internet connection, rather than to its regular
TPP. Then the PaySecure™ PIN-pad will be invoked and appear over the
checkout screen (see Figure 1-1 below). PaySecuredoes not allow PIN
entry via the keyboard, so the customer must use the mouse pointer or touch
screen to select the numbers. The cardholder enters the PIN and Acculynk’s
system scrambles the numbers on the pad after each digit is selected. The
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procedure has the look and feel of the POS PIN selection process and is very
intuitive for the user.
Figure 1-1 Acculynk Sample PIN Entry Screen
When the customer selects ‘SUBMIT”, Acculynk returns control to the website.
The website will then use the PaySecure™ Application Program Interface
(API) to request card authorization. Acculynk will route the transaction to the
correct State’s EBT authorization system. The message response received by
Acculynk will be returned to the retailer as a response to the API call.
Settlement will be handled directly by Acculynk for the pilot. Acculynk will
provide the website with settlement and reporting information. See the
transaction and settlement funds flow diagram on the following page.
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Figure 1-2 Acculynk Transaction Flow
1.5.3 Pilot Activities
In all, FNS expects that the Online Purchasing Pilot will involve two to three
State agency EBT systems and three to five Internet Retailer participants in
the demonstration and evaluation process. However, FNS reserves the right
to select fewer or more participants or State agencies depending on the
quantity and quality of applications received. If the early stage of the pilot is
deemed a success, FNS expects to allow selected retailers to continue
acceptance of online EBT purchases through the duration of the two-year pilot
period, and may opt to expand to additional retailer participants and/or States.
Any additional retailers would be selected from the original pool of applicants
that responds timely to this RFV. FNS will work with all of the EBT processors
and States to develop a rollout strategy to implement online transactions
nationwide.
1.
A shopper checks out at the website.
2. When prompted, the shopper enters the PIN number using the PaySecure PIN Pad, hosted by Acculynk.
3. When PIN collection is complete, the website makes an authorize request to Acculynk.
4. Acculynk routes the authorization request to the appropriate debit network or EBT processor.
5. The debit network routes the authorization request to the appropriate issuing bank, where the PIN is confirmed and funds are
verified and removed. Authorization approval goes back through the network and Acculynk to the website
6. The debit networks or EBT processors fund Acculynk and provide reporting.
7. Acculynk funds the website and provides reporting.
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Selected participants may opt to start their pilot in a single State or part of a
State. If the participant plans a statewide pilot, then customer usage can be
determined by the Bank Identification Number (BIN) assigned to that State’s
EBT card. If the selected site wishes to pilot in a smaller area, then it will be
the participant’s responsibility to manage limitation to eligible EBT cardholders
within the designated area, e.g., by ZIP code.
Once the participating retailers are selected, they, along with Acculynk, the
EBT processor and FNS will have approximately eight months to finalize
waiver agreements (see Section 2.5, Waivers and Conditions), to perform
necessary contract negotiations, and to design, develop, test and implement
changes to systems and workflow.
1.5.3.1 Initial Pilot
The initial implementation will begin with only one retailer participant,
selected at FNS discretion. This retailer must operate in a single State
for a minimum of one month, but potentially longer depending on
results, to ensure that transaction processing and all periodic and data
collection processes work as planned for the EBT processor, Acculynk
and the retailer.
1.5.3.2 Rollout to Additional Areas and Retailers
Upon successful completion of the initial pilot, that participant may
expand to additional Internet-ready States or areas at a rate that is
agreeable to the participant, EBT processor(s) and State agencies. At
that time, FNS will also allow additional selected retailers to begin their
pilots. As with the initial stage, each new participant must operate in a
single State, or part of a State, for a minimum of one month before
further expansion. In addition, each new State system added to the
pilot must run for at least one month with one selected retailer before
adding additional participants. Participants must commit to actively pilot
for a minimum of nine months in order to generate sufficient experience
and data for the proposed evaluation. In order to support this phasing
approach and ensure that selected participants have the opportunity to
operate for the minimum time period, the pilot will operate for a total of
two years.
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1.6 Partner Responsibilities
1.6.1 Food and Nutrition Service
The FNS SNAP Retailer Policy and Management Division (RPMD) is
responsible for EBT, policy development, retailer systems support and
program innovations such as this Online Purchasing Pilot. The Regional
Operations and Support’s Retailer Operations Division (ROD) is responsible
for retailer authorization, fraud detection and monitoring. For the pilot, FNS
will be responsible for the following:
1. Overall management of the pilot project
2. Issuance of RFV and responses to related inquiries
3. Evaluation and selection of participants
4. Authorization of participants as SNAP Internet Retailers
5. Notification of new Internet Retailer authorizations and deauthorizations
to EBT processor and Acculynk
6. Interpreting and making determinations about SNAP legislation,
regulations and policies applicable to participants
7. Approval of necessary waivers
8. Review and approval of all technical documentation for design and
development of EBT online purchasing system modifications
9. User acceptance testing (UAT) of all participant, EBT processor and
Acculynk systems
10. Monitoring and assessing pilot implementation
11. Approving rollout to additional States and EBT processors
12. Identifying lessons learned and making appropriate changes to near-
term process
13. Reporting to Secretary and Congress as mandated in the Farm Bill
14. Noting necessary legislation for addressing Internet Retailers in SNAP
15. Establishing regulations (including changes to current regulations) and
associated standard operating procedures for future Internet Retailer
authorization process
16. Working with industry leaders on related future changes to operating
rules and message standards
1.6.2 Participant Website
Applicants for this RFV must make a substantial commitment to carry out the
project without any form of payment from the government. To be considered
responsive, applicants must thoroughly address all mandatory requirements
detailed in Section 3.9, Proposals and in the Instructions for Completion of the
Online Purchasing Pilot RFV Participation Application Form. The applicant
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must also agree that, if selected, it will comply with all of the following
requirements:
1. Meeting all conditions for FNS retailer eligibility and authorization
2. Continuing to meet these requirements after authorization
3. Ensuring equal treatment of EBT customers except for sales tax
exclusion and other Program or pilot-specific requirements.
4. Complying with conditions of all online purchasing waivers issued by
FNS
5. Submitting all additional documentation required for SNAP licensing
based on the site’s business model that may subsequently be
requested by FNS
6. Complying with FNS rules regarding acceptance of SNAP funds only for
eligible foods and fraud prevention.
7. Reporting changes of ownership or address
8. Being reauthorized at least every five years
9. Entering into a contract with Acculynk for secure PIN-entry services
using PaySecure™ for all SNAP, and if desired, cash EBT transactions
and/or commercial PIN debit payment acceptance
10. Conforming to Acculynk specifications related to message format,
system interfaces and other technical requirements including PINless
refunds (see Section 2.3.2.2 for more information)
11. Submitting all EBT purchase transactions to Acculynk for PIN-entry and
routing
12. Identifying SNAP-eligible foods in its product database and updating as
new products are added
13. For SNAP transactions, programming the system to meet all
requirements specified in Section 2.4, Operational System
Requirements
14. If opting to accept cash EBT, programming the system to meet cash
requirements specified in Section, 2.4 Operational System
Requirements
15. Ensuring that EBT purchase and refund transactions contain additional
mandatory SNAP/cash EBT data elements
16. Providing documentation for SNAP-related website design changes to
FNS and allowing for comments and recommendations
17. Allowing FNS to perform testing of website’s EBT functionality and
interfaces with Acculynk
18. Piloting in first State for a minimum of one month to ensure that all
systems are operating properly and a minimum of nine months overall
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19. Working in good faith with FNS, the EBT processor and affected State
agencies to establish a schedule of rollout to other States from which
the website accepts sales
20. Maintaining Payment Card Industry (PCI) certification for its online
shopping site
21. Providing adequate service levels and timely delivery/pickup/shipping to
EBT customers in accordance with FNS-approved waivers
22. Prohibiting the sale or sharing of PII data belonging to EBT cardholders
without explicit consent of the EBT customer
23. Continuing to ensure that the website employs optimal security and
privacy practices
24. Working with FNS and the evaluation contractor to identify appropriate
methods to collect evaluation data from their employees, the system
and customers
25. Providing ongoing evaluation data as required by the RFV and the FNS
evaluation contractor
1.6.3 Acculynk
Acculynk has agreed to work with retailers, FNS and the EBT processor to
ensure the success of EBT online purchasing. Acculynk will be responsible for
the following:
1. Certifying to the EBT processor’s message specifications for online
purchasing
2. Developing and clearly documenting message format and interface
specifications for websites to use for all SNAP and cash EBT
transactions
3. Obtaining FNS approval of these specifications to ensure that they meet
regulatory and ANSI standards
4. Programming necessary changes for EBT
5. Allowing FNS to test EBT functionality and interfaces with websites and
EBT processor
6. Verifying that the participant is PCI-compliant
7. Testing and certifying that the selected site conforms to their standards
8. Contracting with each pilot participant for secure PIN-entry services
using PaySecure™ for all SNAP and cash EBT transactions
9. Ensuring that all websites submitting EBT transactions through them
have been authorized by FNS to accept SNAP benefits for online
transactions
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10. Using PaySecure™ to collect and process PIN data and DES encrypt
results
11. Converting data submitted by website and encrypted PIN to EBT
processor’s specified format
12. Validating completeness of data prior to transmission
13. Routing transactions to EBT processor for authorization
14. Receiving message responses and transmitting them back to the
website
15. Assigning a unique identification number to each approved transaction
that must be used for subsequent refunds
16. Validating refunds against original purchases to ensure that their total
value does not exceed the purchase amount
17. Settling funds for all online EBT transactions to the participant
18. Providing daily and monthly transaction and settlement reports to the
participant
19. Working with evaluation contractor to provide information on
implementation process and lessons learned
20. Providing other contracted services negotiated with the participant
1.6.4 EBT Processor
The EBT processor for each pilot State will work closely with FNS and
Acculynk to ensure that online EBT transactions are properly received,
processed, transmitted and settled. The EBT processor will be responsible for
the following:
1. Designing, developing and implementing changes necessary for online
purchasing
2. Making system changes and revising TPP certification specifications to
implement X9.58-2013 changes necessary for online purchasing
3. Establishing an agreement with Acculynk and certifying them as a TPP
under the updated specifications
4. Adding fields to transaction records to capture delivery/pickup/shipping
street address and ZIP
5. Submitting pilot design details and related documents for FNS review
and approval
6. Accepting online transactions only from Acculynk to ensure the integrity
of PIN-entry
7. Checking all transactions against the current list of FNS-authorized
stores to ensure that:
a. The Internet Retailer is currently authorized by FNS as an Internet
Retailer
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b. Online purchase transactions from any merchant not authorized by
FNS as an Internet Retailer are denied
c. PINless refunds from any merchant not authorized by FNS as an
Internet Retailer are denied
d. Regular POS (i.e., card present) transactions performed by an
Internet Retailer are denied
8. Validating that transactions conform to their specifications
9. Validating remaining requirements (account, card number PIN, funds,
etc.)
10. Approving or denying the transaction
11. Sending the response message back to Acculynk
12. Storing and securing transaction data and including them in existing
reports and files
13. Creating a separate, expanded daily file of transactions performed by
pilot participants for submission to FNS
14. Settling funds for all participants to Acculynk
15. Allowing FNS to test EBT functionality and interfaces with Acculynk and
retailer websites
16. Maintaining a test system to allow end to end testing for Acculynk and
retailer websites as needed
17. Reporting to State agencies and FNS
18. Working with evaluation contractor to provide information on
implementation process and lessons learned
19. Fulfilling any additional State agency requirements
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Chapter 2 Detailed Requirements
Parts of this chapter address requirements that apply equally to Internet sites and to
brick and mortar stores. Therefore, retail chains and stores that are currently
authorized to accept SNAP benefits may already be familiar with much of the content
of this section. Even so, we recommend that they read all of the requirements very
carefully.
2.1 Introduction
Large scale SNAP and cash EBT programs have been operating successfully since
the mid-1990s. Over time, various rules and standards have been developed and
issued by different organizations to bring operational order to the payment process.
These rules and standards were designed to facilitate fair and equitable treatment of
EBT customers, minimize the potential for fraud, standardize processes for retailers
and ensure interoperability among States. They work very well for face-to-face
transactions where the card is present, the customer enters a PIN to prove identity
and payment is made at the same time as goods are exchanged.
Due to the nature of Internet commerce, however, a number of changes to these
rules are required. Chapter 2 describes the necessary rule changes, requirements
for Internet sites to participate in this project, system operations, transaction flow,
waivers needed and their conditions.
2.2 Rules and Standards Governing EBT
We expect that many potential applicants for this pilot project already redeem EBT
benefits at their brick and mortar locations and thus are familiar with these rules and
standards. This section provides an overview of all of the documented requirements
that have an impact on EBT transactions, regardless of the merchant type or method
of operation. For those that have never participated in EBT, we provide links so that
you can become more familiar with the basic requirements.
2.2.1 FNS SNAP Laws, Rules and Policies
SNAP is governed by the Food and Nutrition Act of 2008 and United States
Code of Federal Regulations (CFR) Title 7 Parts 271 285. For the purposes
of this RFV, the most pertinent Parts of the SNAP regulations are 274,
Issuance and Use of Program Benefits and 278, Participation of Retail Food
Stores, Wholesale Food Concerns and Insured Financial Institutions. In
addition, a number of policy memoranda provide further interpretation of the
regulations.
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Table 2-1 lists key requirements for retailers accepting EBT.
Table 2-1 – FNS SNAP Policy Citations
Citation
Requirement
SEC 3, [7 U.S.C.
2012](k)(1)
Limits bottle or can deposit fees that can be paid for with
SNAP benefits only to the reimbursable amount and container
product types specified by State law, whether or not the
deposit fee is included in the shelf price.
2
SEC 3, [7 U.S.C.
2012](o)(1)(A)
Defines “Retail food store” as an establishment or house-to-
house trade route that sells food for home preparation and
consumption and meets one of the following criteria: offers for
sale, on a continuous basis, a variety of at least seven foods
in each of four categories of staple foods (meat/poultry/fish,
bread/cereals, vegetables/fruits, dairy), including perishable
foods in at least three of the categories (Criterion A
3
); or has
more than 50 percent of the total gross retail sales of the
establishment or route in staple foods (Criterion B);staple
foods are defined at SEC 3 [7 U.S.C. 2016] (q).
SEC 7 [7 U.S.C.
2016](b)
Benefits issued to eligible households shall be used by them
only to purchase food from retail food stores which have been
approved for participation in SNAP.
4
2
The following States currently have container deposit laws covered under the Act: California,
Connecticut, Hawaii, Iowa, Massachusetts, Maine, Michigan, New York, Oregon, and Vermont.
3
FNS is still in the process of implementing this Farm Bill requirement and it is unclear whether a final
rule will be published before the start of pilot operations or if current regulations at 7 CFR
278.1(b)(1)(i)(A) will remain in force. See Section 2.3.1.2, SNAP Retailer Eligibility for further
information.
4
The Agricultural Act of 2014 amended the Food and Nutrition Act of 2008 from the original language
requiring that SNAP benefits be used only to purchase food in retail food stores authorized for
participation in SNAP. This change was made specifically to allow SNAP benefits to be redeemed by
online retailers.
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Citation
Requirement
SEC 7 [7 U.S.C.
2016](k)(2)
A retail food store seeking to accept SNAP benefits through
online transactions shall establish recipient protections
regarding privacy, ease of use, access, and support similar to
the protections provided for transactions made in retail food
stores; ensure benefits are not used to pay delivery, ordering,
convenience, or other fees or charges; clearly notify
participating households at the time a food order is placed of
any delivery, ordering, convenience, or other fee or charge
associated with the food purchase and that any such fee
cannot be paid with benefits provided under the Act; ensure
the security of online transactions by using the most effective
technology available that FNS considers appropriate and cost-
effective and that is comparable to the security of transactions
at retail food stores; and meet other criteria as established by
FNS.
SEC 7 [7 U.S.C.
2016](k)(4)(B)
To be eligible to participate in an online purchasing
demonstration project, a retailer shall submit a plan for FNS
approval that includes a method of ensuring that benefits may
be used to purchase only eligible items under this Act; a
description of the method of educating participant households
about the availability and operation of online purchasing;
adequate testing of the online purchasing option prior to
implementation; provision of data as requested by FNS to
analyze the impact of the project on participant access, ease
of use, and program
integrity; reports on progress, challenges,
and results, as determined by FNS; and such other criteria,
including security criteria, as established by FNS.
SEC 3 [7 U.S.C.
2012](o)(4)
Adds community supported agriculture (CSA) as a retailer
type authorized to accept advance payment from SNAP
benefits for agriculture shares.
SEC 10 [7 U.S.C.
2019]
Retail food stores authorized to accept and redeem benefits
through online transactions may accept benefits prior to the
delivery of food if the delivery occurs within a reasonable time
of the purchase, as determined by FNS.
274.7(a) and
278.2(a)
SNAP benefits may be accepted by an authorized retail food
store only from eligible households or the households
authorized representative, and only in exchange for eligible
foods; eligible foods are defined at 7 CFR 271.2
274.7(c)
No minimum dollar amount per transaction or maximum limit
on the number of transactions shall be established. Nor shall
transaction fees be imposed on SNAP households using the
EBT system to access their benefits.
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Citation
Requirement
274.8(a)(2)
Transactions require primary account number (PAN), unique
terminal identification number, and retailer identification
numbers assigned by FNS, and require verification of a PIN
for all transactions (purchases, refunds, voids, and balance
inquiries) except manual vouchers.
274.7(f) and
278.2(b)
SNAP benefit shall be accepted for eligible foods at the same
prices and on the same terms and conditions applicable to
cash purchases of the same foods at the same store, except
that tax shall not be charged on eligible foods purchased with
SNAP benefits. No retail food store may single out SNAP
clients for special treatment in any way.
274.8(b)
POS terminals must meet ANSI and International
Organization for Standardization (ISO) standards where
applicable.
274.8(b)
Requires use of EBT ISO 8583 Processor Interface Technical
Specifications contained in the ANSI standard X9.58, which
delineates a standard message format for retailers and third
parties.
274.8(b)(3)(ii)(C)
and 274.8(b)(6)(iii)
PIN encryption utilizing the DES algorithm shall occur from the
point of entry in a manner which prevents the unsecured
transmission of the PIN between any points in the system.
274.8(b)(6)(i)
Balance information shall not be displayed on the screen of
the POS terminal except for balance-only inquiry terminals.
274.8(b)(7)
Households shall be provided printed receipts at the time of
transaction, with date, merchant's name and location,
truncated card number, transaction type, transaction amount,
and remaining balance for the SNAP account. The
household's name shall not appear on the receipt.
274.8(b)(9)
Minimum transaction set must include refund transactions. All
transactions involving refunds for goods originally purchased
with SNAP benefits, whether from an error in scanning or the
return of an item, must be credited to the SNAP EBT account.
The customer may not receive cash refunds or store credit.
278.2(e)
Except as provided by SEC 3 [7 U.S.C. 2012](o)(4) and SEC
10 [7 U.S.C. 2019] above, food retailers may not accept
SNAP benefits before delivering the food. The only additional
exception is for n
onprofit food buying cooperatives, which may
accept benefits up to 14 days prior to food delivery
5
Policy Memo
BRD/EBT 2001-1
Card must be present for key entered transactions.
5
Pending publication of regulations, non-profits and agricultural producers operating using a CSA
model are also authorized to accept SNAP benefits up to 14 days prior to food delivery.
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Citation
Requirement
BRD Policy Memo
2007-1
When a manufacturer’s coupon is used for an item purchased
with SNAP, the discount or amount of funds saved must be
credited to the SNAP EBT account (or only the net value
deducted). Crediting the SNAP benefit account eliminates a
potential avenue for fraud. Sales tax, if applicable, that must
be collected from the customer for the coupon savings, must
also be paid by SNAP customers, but with another type of
tender.
Please note that while the Federal government itself must comply with online
website accessibility standards under Section 508 of the Americans with
Disabilities Act, these requirements are not mandatory for retailers under this
pilot. However, FNS encourages selected participants to provide such access
to its customers. Applicants with Section 508 compliant sites will be
considered more favorably in the selection process.
2.2.2 State Laws and Regulations
Approximately 35 State agencies also issue cash benefits through EBT. The
remaining States use other methods such as prepaid branded electronic
payment cards. Cash programs are the responsibility of the States, not FNS.
States generally favor allowing Internet Retailers authorized by FNS under this
pilot to accept cash EBT as well. Funds from the cash account may be used
to pay for SNAP-ineligible products such as paper goods or for fees. While
each State has its own eligibility rules and payment levels, cash EBT accounts
and transactions are handled in a very similar manner to SNAP accounts.
Some States have features to block certain merchant type codes in order to
limit card usage to what Federal and State laws deem suitable for cash
recipients. However, SNAP-authorized food retailers do not generally fall into
those categories.
2.2.3 Quest Operating Rules
Both SNAP and cash EBT are governed by the Quest Operating Rules in most
States. The remaining States generally follow the same rules except for some
small differences in adjustment policies. The Quest Operating Rules are
published by the National Automated Clearinghouse Association (NACHA).
They outline the responsibilities of issuers, acquirers, merchants, and third
party service providers and address issues such as settlement, error
resolution, and use of the Quest mark.
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At least one provision will require modification for online purchasing. Quest
Operating Rules currently prohibit refunds to the cash account. Cash refunds
never apply to eligible items purchased using SNAP benefits. However, cash
account refunds may be needed for online transactions in which a refund is
necessary for items that were originally purchased with cash EBT benefits
because there is no other way to reimburse the customer for overpayments or
returned items. This has been brought to the attention of the committee
responsible for the rules. We do not expect that there will be any problems
making the necessary modifications once the pilot project is complete.
2.2.4 Technical Standards
As noted above, FNS rules require that the EBT transaction messages arriving
at the EBT processors for authorization must meet specifications contained in
the EBT version of the ISO 8583 transaction message standard. The name of
this standard is X9.58. For brick and mortar stores, it is the responsibility of
the merchant’s TPP to convert transaction data to this standard. The
merchant must then conform to the TPPs EBT message specifications.
A number of changes were made to X9.58 in 2013 to accommodate online
transactions. Acculynk will act as the TPP for the Online Purchasing Pilot
transactions, and will be responsible for coding them to meet X9.58
specifications for online purchases and refunds. This will not be the
responsibility of the pilot participants, who instead must code to Acculynk’s
EBT message specifications (see Section 2.3.2.2). For those desiring
additional information, Appendix G – ANSI Standard X9.58 Coding contains a
summary of changes and messaging codes applicable to online SNAP
retailers.
2.3 Basic Requirements to Participate as an EBT Internet
Retailer
Any retailer wishing to participate in the Online Purchasing Pilot should be sure that
they will be able to meet these basic requirements. Every selected site must
successfully complete the activities described in this section. Failure to do so within a
For more information click on the following:
Complete Quest Operating Rules
Appendix A State Specific Information for listing of Quest States
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reasonable time will result in the retailer being dropped from the pilot, having their
Internet Retailer SNAP authorization withdrawn, and being replaced by another
participant.
2.3.1 Authorization by FNS as a SNAP Retailer
In order to redeem SNAP benefits, food merchants must meet the eligibility
requirements outlined in Federal regulations. Once the store has been
licensed by FNS it must continue to comply with those and other FNS rules
governing EBT and interaction with SNAP customers. Retailer fraud and
collusion with customers to trade SNAP benefits for cash or ineligible products
such as alcohol and cigarettes are grounds for disqualification, in some cases,
permanently.
2.3.1.1 Application for Authorization as a SNAP Retailer
Every applicant for this RFV must complete a SNAP Retailer application
as described below, and enclose it electronically with their RFV
response (see Section 3.9.1
for proposal submission instructions). Do
NOT use the FNS online application process to apply as an Internet
Retailer for this pilot project. Please bear in mind that these forms were
designed for brick and mortar retailers, so some questions will not
apply. Copies of the application forms can be found in Appendix E
FNS Retailer Application Forms.
2.3.1.1.1 FNS-252-C Corporate Supplemental Application
For supermarket chains that have more than ten brick and mortar
locations authorized to accept SNAP, FNS assigns a corporation
ID number to link each location to the corporate level information.
Applicants that already have multiple locations authorized in this
manner should complete Appendix E – Form FNS-252-C,
Corporate Supplemental Application. As an alternative, an
applicant that already has a corporation ID may provide an
updated copy of its FNS-developed chain retailer spreadsheet
with a new row added to reflect appropriate data for its website.
If you need a copy of this spreadsheet, please contact the FNS
SNAP Retailer Service Center at (877) 823-4369.
For more information about program rules that apply to retailers please
download our FNS Retailer Training Guide.
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2.3.1.1.2 FNS-252- Supplemental Nutrition Assistance
Program Application for Stores
All other applicants must complete the full application, Appendix
E – Form FNS-252. You must also provide digitally scanned
copies of the following:
1. One current business license in your name or the name of
your business
2. Government issued photo identification for all owners,
partners, and corporate officers; and in Community
Property States, spouses of owners and partners
3. Government issued Social Security Number
documentation for all owners, partners, and corporate
officers; and in Community Property States, spouses of
owners and partners
2.3.1.2 SNAP Retailer Eligibility
To be eligible for authorization, the applicant’s website must sell food
for home preparation and consumption, normally displayed in a public
area,
6
which meets one of two criteria, briefly described below.
1. Criterion A: The website must offer for sale, on a continuous
basis, a variety of qualifying foods in each of four categories of
staple foods (meat/fish, breads/cereals, fruits/vegetables and
dairy)
2. Criterion B: More than 50 percent of the total gross retail sales of
the website must consist of staple foods
As previously noted, FNS is in the process of implementing enhanced
eligibility rules, as required by the Farm Bill. These changes may affect
the definition of staple foods and increase the minimum variety of food
types, stock keeping units and perishable products required for
eligibility.
There is a possibility that these changes will be implemented prior to
the start of pilot operations. Your website and order fulfillment site(s),
6
In an internet environment, this means that the products must be readily available on a consistent
basis (i.e. not “sold out” or otherwise out of stock or on backorder on the website or in the warehouse).
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e.g., warehouse, brick and mortar store, etc., must meet the staple food
requirements in effect at the time of FNS-authorization.
2.3.1.3 Eligibility Determination
This is normally determined by visual inspection, marketing structure,
business licenses, accessibility of food items offered for sale, tax
records, purchase and sales records, counting of stock keeping units, or
other inventory or accounting recordkeeping methods that are
customary or reasonable in the retail food industry. FNS reserves the
right to request additional documentation of food sales such as noted
above if needed.
Brick and mortar stores often receive an onsite visit prior to
authorization. Depending on the size and nature of the business
conducted on your website, we may request an onsite visual inspection
of your warehouse or other stock location.
Applicants that fail to provide the necessary information and onsite
access, or do not meet the requirements identified in Section 2.3.1.2,
SNAP Eligibility, will not be selected for this pilot.
2.3.1.4 Special Situations
There are additional issues and requirements for certain types of
retailers. These are described below.
2.3.1.4.1 Retailers Excluded from the Pilot
FNS authorizes a variety of retailer types that provide prepared
meals for SNAP clients. These include, but are not limited to
communal dining facilities, group homes, shelters, rehabilitation
centers, meals on wheels programs and restaurants. Because
this pilot project is designed to evaluate online purchasing of
food products for home preparation and consumption, meal
services and restaurants may not apply for pilot participation.
For information about the current retailer eligibility requirements go to Retail
Store Eligibility USDA Supplemental Nutrition Assistance Program.
For information on the proposed changes go to Enhancing Retailer Standards
in the Supplemental Nutrition Assistance Program (SNAP). Final regulations
may contain substantial changes from this proposed rule.
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2.3.1.4.2 Retailers Already Eligible to Charge Customers in
Advance
Nonprofit food buying cooperatives and agricultural producers
that offer community supported agriculture (CSA) shares are
currently eligible to accept SNAP benefits up to 14 days in
advance of delivery. While they are allowed to apply for pilot
participation, there are additional website design issues. These
retailers should pay special attention to Section 2.4.5, Nonprofit
Cooperatives and CSAs.
2.3.1.4.3 Sites Owned by Already Authorized Retailers
Under FNS rules, each store location is authorized individually
based on its own circumstances and inventory. The eligibility of
websites owned by already authorized, or otherwise eligible,
retailers will be based on the products actually sold on the
website and stocked at the fulfillment site(s) for online orders, not
on their in-store inventories. The website will be authorized as
an Internet Retailer store type under a separate FNS number
and be treated by FNS as a distinct retail firm.
2.3.1.4.4 Multiple Website Operations
Just as different store locations require separate FNS
authorization and receive separate FNS numbers, online
merchants that run multiple websites for different populations or
a single website that can direct different populations to different
product inventories require separate FNS authorization. This is
because the product inventory available to each of the
populations will be different, perhaps significantly, and product
inventory is what is used to determine a retailer’s eligibility to
redeem SNAP benefits.
In addition, FNS’s ability to monitor transactions and identify
potentially fraudulent activity depends on an understanding of the
geographic limitations of any retailer’s customers.
As an example, a company that provides home delivery of its full
line of products in its own local area, but also ships a more
limited inventory of products nationally will require two separate
FNS authorizations. Eligibility for each operation will be based
on the level of sales and products sold under that operation only.
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If the applicant‘s website(s) falls under this description, only one
of the operations will be selected for the pilot. The response to
the RFV must provide a description of the overall operation and
potential FNS authorizations that will be required in the future.
However, the application itself and all related answers to specific
questions must be limited to just one of the operations.
2.3.1.4.5 Delivery Services
Independent delivery services
7
that do not have their own food
inventory and only deliver/ship products obtained at other retail
establishments are not eligible to be authorized as FNS retailers
and, therefore, may not apply to be pilot participants
2.3.1.4.6 Third Party Products
Many websites serve as an aggregator or marketplace for other
businesses or individuals. The website’s purpose is to list the
products belonging to these third parties and, in many cases,
accept online payment for them. If the website owner has no
food inventory of its own and merely purveys products owned,
stored and shipped by the third parties, they do not meet the
qualifications for SNAP authorization, and may not apply for the
Online Purchasing Pilot.
However, some website owners do have their own food
inventory, but also feature products sold and shipped directly by
third parties. These sites must meet the eligibility requirements
identified in Section 2.3.1.2 based solely on their own inventory
and sales. Furthermore, at least 50% of their SNAP-eligible food
sales must come from their own inventory. Third party products
will not be considered SNAP-eligible and they may not be
purchased on the website with SNAP EBT benefits. They may,
however, be purchased with cash EBT benefits. This must be
clearly explained on the site so that SNAP clients understand the
difference between the two product sources, and know which
products are eligible and which are not.
7
The Farm Bill does identify a new retailer type: non-profit or government organizations that purchase
and deliver groceries for elderly and disabled individuals who are unable to shop for food. However,
FNS is conducting a separate evaluation of these entities, and they are not eligible to participate in the
Online Purchasing Pilot as well.
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2.3.2 Acculynk Requirements
Acculynk is the payment processor for this EBT pilot and also sets pricing for
the PaySecure™ platform. All pilot applicants must agree to work in good faith
with Acculynk to negotiate services and pricing for secure PIN-entry, refund
handling, transaction routing and settlement.
Selected participants must contract directly with Acculynk for these services,
and conform to their specifications and requirements.
2.3.2.1 Contract
It is absolutely required for a selected participant to have such a
contract in place if it wishes to participate in this pilot. We recommend
that you contact Acculynk (see Section 3.4, Points of Contact) soon
after reading this RFV, to discuss services, pricing structure, and
requirements for EBT. If a selected site fails to have a contract in place
within a reasonable time, FNS reserves the right to select another
applicant for the pilot. Without an Acculynk contract, the website will
not be authorized to accept any EBT benefits.
2.3.2.2 Specifications
Selected websites must conform to Acculynk’s message specifications
and other requirements. The following EBT specific information must
be included in the message for all purchases and refunds:
2.3.2.2.1 Static Data that May be Contained in an Acculynk
Table for the Retailer
Terminal ID
Card Acceptor ID Code
Card Acceptor Name/Location
National Point of Service Condition Code
Merchant Type
FNS Authorization Number
2.3.2.2.2 Variable Data that Must be Submitted with Each
Transaction
Card Number - PAN
Account Type (SNAP or cash)
Transaction Type (purchase, refund, balance inquiry)
Amount
Date and Time
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Delivery Address Line 1 (28 characters)
Delivery ZIP Code (9 characters)
2.3.2.2.3 Data Not Applicable to EBT Transactions
Expiration Date (default is 4912)
Card Verification Value (CVV)
2.3.2.2.4 Important Data Returned in Response
Approval/Denial Response Code
SNAP Account Balance
Cash Account Balance
2.3.2.3 Coding Requirements
The PIN-entry process requires the addition of PaySecure™ EBT code
to the checkout page. Coding can typically be done with minimal
technical resources, with implementation time of two to four weeks.
The process uses a combination of industry standard Simple Object
Access Protocol (SOAP) based application program interfaces and
JavaScript which supports a number of features (some optional).
The Acculynk technology team, including a project manager, quality
assurance specialist and web developer will be available throughout the
implementation process to assist merchants.
2.4 Operational System Requirements
This section describes the EBT-specific functionality that websites authorized as
SNAP Internet Retailers must provide.
2.4.1 Mandatory Transaction Types
The full set of face-to-face SNAP transactions that EBT processors and TPPs
for brick and mortar stores are required to provide are:
PIN POS Purchase
PIN POS Refund
PIN POS Void
PIN POS Balance Inquiry
POS Reversal
For more information about Acculynk message specifications contact the
Acculynk representative identified in Section 3.4, Points of Contact.
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Manual Voucher Authorization (signature based)
Manual Voucher Clear
Adjustment
However, retailers themselves are not required to use manual vouchers or
allow in-lane balance inquiry if they do not wish to do so (although an
alternative balance inquiry process must be available). Cash EBT transaction
requirements usually include:
PIN POS Purchase
PIN POS Purchase with Cash Back
PIN POS/ATM Cash Only Withdrawal (cash received without
purchase)
PIN POS Balance Inquiry
PIN POS Void
POS/ATM Reversal
Adjustment
Essentially, every electronic EBT transaction initiated by a customer or retailer
requires the cardholder to enter a PIN. However, the Internet environment has
additional challenges that must be considered. Therefore, the transaction
types that websites must be able to perform will be substantially different from
those done in brick and mortar locations. Internet Retailers must be able to
support the types of transactions addressed below.
2.4.1.1 Online PIN Purchase
Unlike commercial credit and debit, signature-based transactions are
not allowed under EBT. The PIN is the only form of identification that
the EBT client has. Therefore, FNS will continue to require that every
purchase or other debit to the customer account be accompanied by a
securely entered PIN. The only PIN-entry method that FNS will accept
at this time is Acculynk’s PaySecure™. Any website that wishes to
accept cash EBT must meet the same conditions for cash account
debits.
EBT PINs may never be stored for future use in subsequent
transactions, either in the website or in any other system maintained by
the retailer. The PIN must always be captured and immediately
encrypted by Acculynk for each payment transaction. Acculynk does
not store the PIN value after the transaction response is received,
either. In addition, neither Acculynk nor the EBT processors support
USDA FNS SNAP EBT Online Purchasing Pilot Request for Volunteers Page 31
preauthorization as done in the credit/signature debit environment. As
a result, SNAP and cash EBT transactions must always be performed in
real time at the time of online PIN entry, with immediate debit of funds
from the cardholder’s account and settlement to the retailer within two
business days.
For this reason, EBT also cannot support standing orders (a one-time
order for specific products to be delivered at a regular interval, such as
monthly, usually at a discount). Selected participants must prohibit the
use of EBT cards for standing orders.
2.4.1.1.1 Special Needs of Food Retailers
This creates some problems for the grocery and Internet
industries. Many supermarkets that provide home delivery, or
put together orders for pickup, deal with products that are sold by
weight (e.g., produce, meats, fish and deli items). Therefore,
prices for those items are only estimated and could be less or
more once the order is fulfilled.
There may be instances where an item is not available at the
time the order is put together. Companies have different ways of
dealing with this: substitute with a similar product which could
cost more or less, backorder, split the delivery, or remove the
product from the order total.
2.4.1.1.2 EBT PIN Purchase Process
Based on input from State and industry partners, FNS has
established the following guidelines for use during the pilot. The
website may “pad” the amount initially debited from the
customer’s EBT account by no more than 10 percent of the
calculated price of any weighed items, but must provide a
subsequent refund for any amount overcharged. For example, if
the total EBT order comes to $50, of which $15 is calculated for
weighed meat and produce, the Internet Retailer may “pad” the
debited amount by up to $1.50 (10 percent of $15), and charge
the customer up to $51.50. This must be clearly explained to the
customer before the transaction is submitted for authorization.
Once the order is fulfilled, if the final price is less than the
amount originally debited from the customer, the website must
provide an immediate refund to credit the difference back to their
account using the process described in Section 2.4.1.2, EBT
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PINless Refund. So if, in the above example, the weighed items
actually totaled $15.25, the retailer would provide a refund of
$1.25. If the final price is more than the amount originally
debited, the retailer is liable for the difference and may not
charge the EBT customer.
Because of the inherent delay built into online commerce, FNS
will provide a waiver to all pilot participants, allowing them to
collect funds up to seven (7) calendar days in advance of
customer receipt of goods. Therefore, items cannot be
backordered longer than that timeframe. This waiver and all of
its related conditions are discussed more thoroughly in Section
2.5, Waivers and Other Conditions, Prepayment.
The actual mechanics of selecting and performing a SNAP PIN
purchase are described more thoroughly in Section 2.4.2,
Purchase Checkout Process for SNAP and Cash EBT.
2.4.1.1.3 Denial for Insufficient Funds
It should be noted that if a transaction is denied for insufficient
funds, the return message will include current account balances
for both the SNAP and cash accounts. This information should
be presented on the screen to the client so that they can opt to
perform another transaction for a lesser amount or select
different tender.
2.4.1.2 EBT PINless Refund
This is a new EBT transaction type developed specifically for Internet
Retailers. Although most States do not support POS refunds for cash
EBT accounts, pilot participants will use the PINless refund process for
both SNAP and cash EBT. In almost all cases, refunds will be
performed when the customer is offline, and therefore, it will not be
possible to capture the cardholder PIN. This transaction type will only
be accepted from Internet Retailers; it may not be used by any brick
and mortar stores. The process will be used for all instances where
funds are due back to the customer. In addition to refunds for
overestimated costs, as described above, it may be used for out of
stock and returned items. At a minimum, there must be a process in
place for human entry of a PINless refund transaction (e.g., through a
customer service representative); however, websites are encouraged to
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integrate automated refund processes into their existing operations for
the issues described above.
FNS will provide a waiver to each selected site to allow PINless
refunds. In no case may shipping charges be deducted from money
refunded for items purchased with SNAP. The full value of any returned
food item purchased with SNAP must be credited back to the client’s
SNAP account. Any shipping charges due for SNAP returns must be
paid through an alternative payment method. Refunds for items
purchased with cash EBT are not subject to these restrictions. This
waiver and all of its related conditions are discussed more thoroughly in
Section 2.5.1, Waivers and Conditions, PINless Refund.
2.4.1.2.1 FNS Timeliness Requirements for Refunds
EBT refunds at brick and mortar locations are processed when
the client is present to enter the PIN, so they are immediate.
This is not the case for the online environment. FNS will expect
that refunds for overestimated weight, substitutions, and out of
stock items be made at the time the order is fulfilled or shortly
thereafter. Post-delivery refunds, such as those for returned
items or customer complaints, must be processed within two (2)
company business days after receipt of the returned item or
complaint.
2.4.1.2.2 Acculynk Refund Process
All PINless refunds must flow through Acculynk and comply with
their specifications. These transactions must contain the
authorization number of the original approval so that refunds can
be accurately traced. Acculynk maintains a database of all
approved transactions for up to 18 months. When a refund
request is submitted Acculynk matches it against their database
to ensure that it does not exceed the value of the original
purchase. The system can track multiple refunds for the same
purchase, ensuring the total of all refunds does not exceed the
original purchase amount. If the value of the refund is excessive,
Acculynk denies the transaction and sends it back to the website
without forwarding it for authorization.
2.4.1.2.3 Website Refund Process
Because refunds are sometimes needed based on emails,
telephone calls, and receipt of products returned in the mail,
every site must have a method to securely enter refund requests
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manually. The right to do so must be limited to authorized
personnel using a password protected user ID. This may be set
up in any manner that is effective for the website, as long as it
can produce a transaction message that meets Acculynk
specifications.
Websites that estimate for weighed items, or have the potential
for out of stock products or substitutions, should also consider
developing code to automatically create refund transactions at
the time the order is finalized to correct overcharges.
Automation of this process will help ensure that resulting refunds
are timely.
2.4.1.2.4 Refund Notification
EBT customers must receive a receipt or other notification for
every refund so that they have a record of the transaction and
remaining balances (see Section 2.4.3 Customer Receipt and
Notification for information on content, method and timing).
2.4.1.3 Other Mandatory Transaction Types
Websites must be prepared to handle reversals and adjustments in
accordance with Acculynk specifications. PINs are not required in
reversal messages.
2.4.1.4 Optional Transaction Type
Websites may also employ a void transaction for the last purchase
made, but if they do so, the customer must enter the PIN again. EBT
processors cannot accept PINless voids. These are usually necessary
when a clerk has miskeyed the sale amount so the need for them in the
online environment is almost non-existent. Therefore, voids will not be
a mandatory transaction type for Internet Retailers. If a situation arises
where the sale must be cancelled after it has been processed, the
website may perform a PINless refund instead.
2.4.1.5 Prohibited Transaction Types
The FNS authorization for all participants in the pilot will be as an
Internet Retailer, only (store type code IR). The valid list of Internet
Retailers will be shared with the EBT processor and Acculynk to ensure
that only approved retailers perform online transactions. In addition,
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they will be used by the EBT processor to prevent any retailer coded as
IR from doing the following types of transactions:
2.4.1.5.1 Unsupported Transactions
The follow types of transactions identified above in Section 2.4.1
for brick and mortar stores are not relevant to Internet Retailers
and, therefore, may NOT be performed by pilot participants:
SNAP Manual Voucher Authorization (signature based)
SNAP Manual Voucher Clear
PIN Purchase with Cash Back
PIN Cash Only Withdrawal (cash received without
purchase)
2.4.1.5.2 Transactions Not Allowed for Online Retailers
EBT processors will also use the IR retailer type code to ensure
that approved Internet Retailers do not use their online FNS
number to perform any face-to-face transactions involving a brick
and mortar type electronic cash register, stand beside POS
terminal or hand-held wireless device that accepts a swiped or
key-entered card.
Any currently authorized FNS retailer may continue to do these
types of transactions using their existing FNS authorization
number(s). This includes a small number of Internet Retailers
that currently have a special FNS waiver to allow for online
ordering, with subsequent SNAP payment accepted at the time
of delivery using a wireless or mobile POS device. All other
online-only retailers that apply for this pilot demonstration will be
limited only to the allowable online transaction types discussed in
the Sections 2.4.1.1 through 2.4.1.3.
2.4.1.5.3 Store and Forward
In order to keep lane traffic moving and prevent the need for
returning items to their shelves, some brick and mortar retailers
opt to do store and forward transactions when their system
cannot communicate with the EBT processor for authorization.
The retailer accepts full liability for these transactions if they are
subsequently denied for any reason, including bad PIN or
insufficient funds. Please note that store and forward
transactions will not be supported for this pilot project. FNS will
revisit this issue after successful completion of the pilot.
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2.4.2 Purchase Checkout Process for SNAP and Cash EBT
This section identifies EBT specific issues that must be considered and
addressed once the customer has filled the “cart” or “basket” and is ready to
complete the purchase.
2.4.2.1 Order Destination and Timing
Online food businesses use a variety of methods to get completed
orders into the customers’ hands. Many deliver the order, themselves,
to the customer’s home or other specified local address. Some ship the
order using the post office or a commercial service such as UPS or
FedEx. Others have the customer come to a specific location to pick up
the order. The merchant may have a single pickup location, or might
allow the customer to select from a list of designated stores or other
locations.
As previously noted, it is mandatory for Internet Retailers to provide a
delivery or pickup street address and ZIP code in every EBT
transaction.
In addition, many online sites also allow the customer to specify the
date and time that they would like to have their order delivered or ready
for pickup. Other retailers may designate a very limited timeframe that
will be available for delivery or pickup in a given area. Those that ship
orders commercially also may offer customer flexibility to specify
method and speed of delivery. EBT customers must be offered the
same destination, method and timing options given to credit/debit
customers. Except as noted below and in Section 2.4.5, Nonprofit
Cooperatives and CSAs, all EBT orders must be in the customers’
hands (or a refund provided) within seven calendar days.
2.4.2.1.1 Customer-Selected Options
When the retailer requests the customer to specify a delivery or
shipping address, they usually collect up to two address lines,
city, State and ZIP. The Address Line 1 and the ZIP code
entered by the customer (or selected from their stored
addresses) must be included in the transaction message
submitted to Acculynk.
If the merchant allows every customer the ability to designate the
date and time for local delivery/pickup, their EBT customers will
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be allowed to select a date, for their own convenience, that is
more than seven calendar days after payment.
Applicants should describe policies and maximum timeframes for
customer-scheduled orders. FNS reserves the right to set a
shorter maximum timeframe for EBT customers if we consider
that excessive.
FNS plans to examine the reasonableness of the seven day
timeframe during the formal pilot evaluation and is interested in
gathering data on these sales to determine the range of delivery
timeframes requested by EBT customers.
2.4.2.1.2 Retailer-Designated Options
If the retailer requires all customers to come to one specific site
to pick up their orders, the address and ZIP code of that site will
be the EBT delivery address for all EBT transactions submitted
to Acculynk. If the customer chooses from a menu or list of store
locations or other distribution points, or the merchant assigns a
location from such a list, the address and ZIP code for that
pickup location must be included in the transaction message.
In addition, FNS will require the retailer to provide a record of the
full pickup site address to the customer (See
Section 2.4.3
Customer Receipt and Notification). Therefore, the location
menu must be associated with a system table that also includes
the complete street address and ZIP code of each location.
If the retailer has limited delivery or pickup in certain areas or
locations (e.g., only once per month) they may not accept
payment by EBT for those deliveries until seven days before
actual delivery. The requirements for nonprofit food buying
cooperatives and CSAs (see Section 2.4.5
) include a more
detailed explanation of how limited distribution schedules must
be handled.
2.4.2.1.3 Split Orders
Some online merchants, especially those that use commercial
shipping, and/or have multiple warehouses, support split orders.
Many also allow the customer to designate that different items
from a single order be delivered to different addresses. FNS will
not prohibit the use of split orders for the online pilot as long as
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the entire order is shipped early enough to meet the required
seven-day timeframe.
However, because FNS requires that every transaction be
associated with a delivery location, the entire SNAP order must
be delivered/shipped to the same address. Therefore, the
retailer must prohibit EBT customers from selecting multiple
addresses for a single order. One alternative would be to require
the customer to submit the split order as separate SNAP
transactions that include different addresses. PIN-entry would
be required for each transaction.
2.4.2.2 Definition of Eligible SNAP Foods
Federal regulations stipulate that SNAP benefits may only be
exchanged for eligible foods. Therefore, it is essential that the checkout
process mirror, as closely as possible, that used by in-lane integrated
supermarket systems. SNAP benefits may only be used to pay for the
following:
Foods for the household to eat, such as:
o breads and cereals
o fruits and vegetables
o meats, fish and poultry
o dairy products, and
o other accessory foods such as coffee; tea; cocoa; soda;
non-carbonated beverages such as sports drinks, punches,
and flavored waters; candy; condiments and spices
Seeds and plants which produce food for the household to eat
State-mandated container deposits for eligible products (because
the products cannot be sold without the containers); any deposit
amount beyond that required by the State, such as a
manufacturer or retailer-imposed bottle deposit, may not be paid
with SNAP benefits
Households cannot use SNAP benefits to pay for:
Alcohol or tobacco products
Any nonfood items, such as:
o pet foods
o soaps, paper products, and household supplies
o vitamins and medicines
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o any product sold with a “Supplement Facts” label instead of
a “Nutrition Facts” label
Food that will be eaten in the store
Hot foods
Live animals
Fees for bags (or other delivery/pickup/shipping containers)
whether or not imposed by State or local law
Fees of any kind, regardless of when they are charged, including
those for:
o shipping and/or handling
o delivery
o processing
o membership
o registration
Although the law also allows SNAP benefits to be used by certain
Alaskan natives to purchase hunting and fishing equipment, these
products will not be allowable for the Online Purchasing Pilot.
2.4.2.3 Eligible Product Identification
If the applicant only sells eligible products as described above, product
identification will not be an issue. However, the vast majority of online
food retailers also carry products that are not SNAP-eligible. Because
there is no human intervention to perform visual identification of eligible
foods in an online purchase, it is essential that the website’s product
database be able to differentiate eligible and ineligible products
automatically. The response to the RFV must describe how SNAP-
eligibility of products will be determined, and whether this capability
already exists or requires further development.
2.4.2.4 Ability to Accept Split Tender
Since many SNAP customers will need to use a separate payment
method for part of the transaction (e.g., for ineligible items or fees),
most sites will need to accommodate split tender. It is also essential
that SNAP customers be allowed to choose the amount of SNAP
benefits that they will use for each purchase, and pay for some or all
For more information about determining SNAP-eligible foods go to:
SNAP Eligible Food Items
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SNAP-eligible products with a different method. Acceptable forms of
payment could include the cash EBT account, commercial debit/credit,
gift cards, or other forms of payment accepted by the website. Other
options acceptable to FNS would be:
1. Requiring that each order be limited to a single tender type
2. Waiving all fees for SNAP customers (but see Section 2.4.4,
Equal Treatment)
3. Allowing the customer to pay cash for necessary fees at the time
of delivery or pickup
Applicants must address the various methods that they will consider for
payment of ineligible items and fees.
2.4.2.5 Selection of EBT Payment Method
Most in-lane POS terminals have the following payment options from
which the customer chooses before or after swiping the card: Credit,
Debit, and EBT. In many cases, customers select EBTto use their
SNAP benefits and Debitor “Credit” to use their cash EBT accounts.
In other stores the customer selects EBT" for both and the POS then
prompts them to choose SNAP" or “Cash”. Either method is
acceptable, or alternatively the website could list both SNAP EBT and
Cash EBT as initial options. The retailer may also opt to display the
Quest logo as a visual identifier.
The screen for card number entry must be able to accept between 16
and 19 digits. This varies by State and the merchant may want to
validate the correct length after entry.
For a list of BIN numbers and card number lengths for each State, see
Appendix A - State Specific Information.
The Quest Logo seen below is recognized by most EBT customers as the
universal indicator of EBT acceptance, similar to a Discover, MasterCard or
VISA logo.
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In addition, please note that EBT cards do not have expiration dates
8
or
CVVs, so most SNAP customers will be confused about how to respond
if prompted for these values. Therefore, FNS recommends that the
card number entry screen of EBT cards not request these values.
Since expiration date is a required data element for track 2 of the
magnetic stripe, most EBT cards use a default value of 4912
(December 2049). It is recommended that the website automatically
pass this default value on in the transaction message forwarded to
Acculynk for all EBT cards.
2.4.2.6 Customer Fees
The Farm Bill requires the Internet Retailer to ensure that SNAP
benefits are not used to pay for delivery/pickup/shipping, ordering,
convenience, handling or other fees or charges. It also requires clear
notification to participating SNAP households at the time a food order is
placed of any delivery, ordering, convenience, or other fee or charge
associated with the food purchase and that any such fee cannot be paid
with SNAP benefits. If the retailer charges such fees, this notice must
display as soon as the customer selects SNAP EBT as the payment
method. The customer must also be given the opportunity to terminate
the purchase or select a different form of tender before the sale is
finalized.
SNAP benefits also may not be used to cover any manufacturer or
retailer-imposed food/beverage container deposit (they may only be
used for the reimbursable amount and container product types specified
by State lawsee Section 2.2.1 for allowable States). Nor can SNAP
be used for fees for bags, or other delivery/pickup/shipping containers
(regardless of State or local law).
2.4.2.7 Calculation of SNAP Payment
If SNAP EBT is selected for payment type, the site must limit the total
transaction to the subtotal of all SNAP-eligible items. The value
requested for authorization may not exceed that subtotal. However, the
SNAP customer must be given the chance to enter a lower value if they
wish, since the funds remaining in the SNAP account may not be
8
Florida recently changed their card to include a true expiration date; however, they are not one of the
States currently available for the Online Purchasing Pilot.
USDA FNS SNAP EBT Online Purchasing Pilot Request for Volunteers Page 42
sufficient to cover the full amount calculated or the customer may wish
to budget funds so that SNAP is not used too quickly.
This may be accomplished by allowing the customer to enter a specific
lower value, or they can be prompted to delete or move one or more
line items from their SNAP total, thereby reducing the total to the
desired level. The retailer applicant may also propose an alternative to
these solutions. See the last two paragraphs of Section 2.4.4.1, Sales
Taxes for further information on how the sales tax calculation process
may affect this decision.
2.4.2.8 Authorization of SNAP Purchase Transaction
When the SNAP amount has been determined and the website is ready
to request authorization for the purchase, the transaction must be
passed to Acculynk for PIN-entry using their message specifications.
The approval or denial response will come back to the website from
Acculynk. If approved, the website would automatically require the
customer to designate another payment method for the balance of the
total sale including fees, if applicable.
If the customer is unable to find a payment method with sufficient funds
to cover the balance, and the website needs to cancel the original
SNAP transaction, it would submit a forced reversal of the SNAP
transaction through Acculynk.
2.4.2.9 Calculation and Authorization of Cash EBT
Cash EBT transactions are not restricted. Cash benefits linked to the
EBT card may be used for fees and virtually any SNAP-eligible or
SNAP-ineligible product available on the website. These must also be
passed to Acculynk for PIN-entry using their message specification.
The response and reversal procedures are similar to SNAP.
2.4.2.10 Denial Responses
If the transaction is denied, Acculynk will provide a reason code. The
website must immediately provide the EBT customer with an onscreen
explanation of the denial reason in order to enable correction. If the
denial is based on insufficient funds, the retailer must also display the
remaining SNAP and cash EBT account balances that Acculynk returns
with the denial message.
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In the brick and mortar environment, many electronic cash register
systems then automatically display the appropriate remaining balance
on the POS terminal and ask the customer if they wish to do a new
transaction for that amount instead. The new submission requires
reentry of the PIN but usually does not require a new card swipe.
Applicant retailers may wish to mirror this process or offer the customer
the opportunity to delete one or more line items from their order or
movethem to the subtotal for a different payment type.
2.4.3 Customer Receipt and Notification
Federal regulations prohibit the onscreen display of balance information
except for balance-only inquiry terminals. They also require a printed paper
receipt to be provided at the time of the SNAP transaction. At a minimum this
information must include the date, merchant's name and location, transaction
type (e.g., purchase or refund), transaction amount, and remaining balance for
the SNAP account. It must also identify the SNAP customer's account number
(the PAN) using only a truncated number (last four digits) or a coded
transaction number. According to regulation, the household's name shall not
appear on the receipt except when a signature is required on a manual
transaction voucher. States also require that the remaining balance of the
cash account be printed on all receipts.
The retailer’s and customer’s information needs are very different for online
transactions than they are for in-store shopping. Receipts are generally
displayed on the screen or sent in an email or text message, which the site
cannot force the customer to print. These are not as easily lost as paper
receipts, so the danger of including the cardholder’s name is outweighed by
necessity. The delivery/pickup/shipping address and time are also critical.
Also, in lieu of, or in addition to, the website’s physical location, the notice
needs to display other website contact information such as a telephone
number and/or email address. Finally, we understand that companies that
make home deliveries may also need to obtain confirmation of receipt by
obtaining a signature.
Therefore, FNS will provide a waiver to all pilot participants, allowing screen
display of balance information, electronic receipts in place of paper, inclusion
of the customer name and, if necessary, collection of a delivery confirmation
signature. Websites must display, at a minimum, the following information on
the screen after each online transaction is approved:
USDA FNS SNAP EBT Online Purchasing Pilot Request for Volunteers Page 44
Company Name
Contact Information (physical address optional if not currently provided
for other customers)
Date of transaction
Time of transaction if included for other customers
Transaction Type
Truncated Account Number
Transaction Amount
Remaining SNAP Balance
Remaining Cash Balance
For purchases only:
o Delivery/pickup/shipping address
o Actual or estimated delivery/pickup/shipping date
o Actual or estimated delivery/pickup time if appropriate
o Itemized fees for delivery/pickup/shipping, ordering, convenience,
handling or other fees or charges
o Itemized fees for bags or other delivery/pickup/shipping containers
Furthermore, for all purchase and refund approvals, whether conducted online
or offline, the customer must be issued an electronic notification (e.g., email)
including all of the above information within 24 hours of transaction completion
or the system must securely retain the customer’s order history online so that
they (and no one else) can easily retrieve the above information. In lieu of an
electronic receipt for refunds provided at the completion of order fulfillment
(e.g., for weight overestimates or out of stock items), the retailer may provide a
paper receipt for the refund along with the order. This may be combined with
the final itemized order listing or on a separate paper receipt. This waiver and
all of its related conditions are discussed more thoroughly in Section 2.5.3,
Waivers and Conditions, Printed Receipt.
2.4.4 Equal Treatment
Federal regulations at 274.7(f) and 278.2(b) stipulate that SNAP benefits shall
be accepted for eligible foods at the same prices and on the same terms and
conditions applicable to cash purchases of the same foods at the same store,
except that tax shall not be charged on eligible foods purchased with SNAP
benefits. In addition, retailers shall not establish special checkout lanes which
are only for SNAP households.
This means that SNAP customers must be treated according to the same
policies established for all other customers, especially in the area of privacy,
USDA FNS SNAP EBT Online Purchasing Pilot Request for Volunteers Page 45
use of customer data, item returns and refunds, non-delivery, remedies for
spoilage and other customer complaints. However, FNS is very interested in
these policies and the level of service provided to all customers. Therefore, all
applicants must provide copies of or links to these policies. FNS will consider
this information when evaluating and selecting the pilot participants.
SNAP customers are subject to all of the same fees as other customers; they
just cannot use their SNAP benefits to pay these fees. Not only must SNAP
clients be given no less than the rights and levels of service given to other
customers, they may not be given any special privileges or offers that are not
available to other customers.
The only exceptions to the equal treatment rule are described below. If the
applicant proposes any other differences in treatment between SNAP
customers and those using other forms of payment, FNS will require an equal
treatment waiver as described in Section 2.5.7, Waivers and Conditions, Equal
Treatment.
2.4.4.1 Sales Taxes
State sales tax is specifically exempted by law for all products
purchased with SNAP benefits. In general, Internet sites are governed
by the laws in which the corporate office is located and by those in
which any of their retail stores or distribution warehouses are located.
They usually are only required to collect sales taxes for products
purchased by residents of those governing States or for products
delivered to addresses in those States.
It will be necessary for each website to review their own sales tax
liabilities and make appropriate programming changes to the tax
calculation processes on their website.
Many States have no sales tax on any food items. Some charge sales
tax only for certain types of goods such as soft drinks and snack foods.
Others charge sales tax on all food products. If the selected participant
is required to charge sales tax on any SNAP-eligible items, the system
must be reprogrammed to exclude sales tax for all foods purchased
with SNAP benefits. Any part of the sale paid by another tender,
including cash EBT, is subject to sales tax in accordance with
applicable State law. This is true even if some those items are SNAP-
eligible.
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For instance, if all food is taxable, and the cart contains $100 worth of
SNAP-eligible food, but the customer only has $60 left in their SNAP
account, the $60 portion covered by SNAP is not taxable, but the $40
portion covered by cash EBT or a commercial debit card is taxable.
If this occurred in a State where only some food is taxable, then the
taxable items would be the first ones covered by the SNAP benefit.
Only if the total of all taxable food exceeds the SNAP payment should
tax be charged. In the above example, if $20 of the SNAP-eligible
items were taxable, those items would be covered by the $60 SNAP
payment and no tax would be charged for food. However, if $70 of the
SNAP-eligible items were taxable, tax would be chargeable for the $10
that exceeded the SNAP payment.
New Jersey is an exception to the above generalities. According to
their tax regulations, if a customer uses SNAP to purchase any items in
the basket, then all SNAP-eligible items are non-taxable.
If a site is responsible for collecting sales tax from multiple States, the
programming process for calculating the tax amount for each State
must be examined to ensure that it is modified in accordance with the
above requirements.
Retail chains that are already authorized to accept SNAP at brick and
mortar locations may wish to consider porting the code that calculates
sales tax from their electronic cash register systems to their website.
Many websites that are required to charge sales tax in multiple States
or in States where county or local government also charge taxes at
various rates, opt to use a tax calculation service provider such as ADP,
Inc.’s Taxware. These services usually do the calculation by comparing
each line item in the basket to the tax requirements for the designated
location, and they cannot calculate tax for a partial item if the customer
does not have sufficient SNAP funds to cover the entire item and
wishes to split the cost between SNAP and another tender. This will
have an impact on how the applicant addresses the requirements of
Section 2.4.2.7, Calculation of SNAP Payment.
Websites that use a tax calculation service may opt to reprogram their
site to exclude non-taxable SNAP-eligible items, as described above,
from the list of items sent to the calculation service for processing.
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2.4.4.2 Manufacturer’s Coupons
Websites that accept manufacturer’s coupons may need to pay special
attention to how sales tax is charged for items purchased with such
coupons. Because the EBT system is capable of applying credit to a
recipients account, all transactions involving cents-off or cash-back
must be credited to the SNAP EBT account or netted out of the sale
before debiting the SNAP account.
When a manufacturer’s coupon is used, sales tax, if applicable, usually
applies to the coupon amount and must be paid by the customer,
including SNAP customers. This may appear to be punitive to a SNAP
customer as sales tax is waived on eligible food items purchased with
SNAP benefits. However, cents-off coupons are a form of payment
separate from SNAP benefits and are governed by State law (i.e. these
are not under the purview of FNS).
Using manufacturers’ coupons is completely voluntary and families that
choose to use them are able to stretch their SNAP benefits
considerably. For example, if a SNAP recipient redeems a dollar-off
coupon and pays five cents in sales tax the recipient ultimately has an
extra dollar in SNAP benefits to use to purchase additional eligible food
items.
Crediting the SNAP benefit account also improves Program integrity by
eliminating a potential avenue for fraud, and eliminates the perception
that recipients can exchange or get cash in return for SNAP benefits.
2.4.4.3 Website Design
Although Internet Retailers may not charge EBT customers different
prices for products, they may identify SNAP-eligible items as such on
the website, and may create pages that list only SNAP-eligible items for
customer convenience.
2.4.5 Nonprofit Cooperatives and CSAs
Most nonprofit food buying cooperatives (co-ops) depend on the services of
members or volunteers to collect orders and distribute the purchased foods to
customers at reduced prices. Because of the financial savings that can be
gained by SNAP clients through this purchasing model, nonprofit co-ops are
allowed by law to collect funds for payment in advance. Co-ops must make
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the food available within 14 days from the date they receive the SNAP
benefits.
In addition, the 2014 Farm Bill added CSA as a business model authorized to
accept advance payment and FNS has established a 14 day time limit for them
as well.
FNS will not extend this time limit for online sales made through any co-op or
CSA websites. As a result, there are special website design requirements for
these business models.
Retailers that distribute orders at multiple pickup sites must have a system
table containing the address of each site, as described in Section 2.4.2.1.2. In
addition, the website must be set up so that SNAP clients are not allowed to
pay more than 14 days in advance of the scheduled delivery for the specified
distribution location. Thus, if a customer attempts to use SNAP benefits for a
purchase prior to that timeframe, the system must advise the customer that it
is too early to accept payment, and identify the earliest date that they can use
SNAP benefits for the purchase
If the co-op/CSA has a single delivery date for every distribution site, this can
be greatly simplified by blocking all SNAP transactions attempted more than
14 days prior to delivery. In this case, the site can contain a general
announcement of the next date when SNAP purchases will be accepted.
However, if there are different dates for different sites, FNS recommends that
this information also be incorporated into the system table so that the specific
date for that location can be calculated and displayed.
If desired, the website may allow the SNAP customer to select the items they
wish to purchase in advance and store them until they are allowed to return
and complete the sale.
2.4.6 Security and Privacy
It is imperative to ensure that every Internet Retailer that FNS authorizes to
redeem SNAP benefits is secure, has adequate measures to prevent fraud, is
compliant with credit/debit card industry security standards and protects their
customers’ privacy.
2.4.6.1 PCI Certification
Our preeminent requirement is that the Internet Retailer’s website be
compliant with the PCI Data Security Standard. Before a merchant can
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be authorized to accept MasterCard or VISA, they must be certified as
PCI-compliant by their acquiring institution. This certification is
performed annually and covers a wide spectrum of security and privacy
issues. FNS requires that every website authorized for SNAP be PCI-
certified and maintain that certification for the life of the pilot. To be
approved for this pilot, applicants must currently accept, at a minimum,
Discover, MasterCard, and/or VISA. Acculynk will verify that the
certification is v