A lifeline for SNAP payments at farmers’ markets

An Austin-based payments company whose pending shutdown last summer threatened the ability of thousands of farmers markets to accept food stamps has received a $2 million lifeline.

Square, the financial technology company known best for its slick iPad transactions, said Thursday it provided the funds to Austin’s Novo Dia Group to ensure that recipients of the Supplemental Nutrition Assistance Program (SNAP) can use their benefits at farmers markets without interruption. The investment also gives Square a window into the lucrative market for SNAP benefits, worth $63 billion annually.

The cash infusion is Novo Dia’s third since last July, when it abruptly announced it would end its service, touching off a panic in the local agriculture and farmers market community. At the time, the company’s software platform Mobile Market + was in use at 1,700 markets across the country and accounted for 40 percent of all SNAP transactions at farmers markets. Its shutdown also would have compromised a range of incentive programs that match or supplement SNAP benefits at farmers markets and have emerged over the past decade to improve low-income shoppers’ access to healthful food.

Before Square, Novo Dia received undisclosed sums from two other organizations. In July, the National Association of Farmer’s Market Nutrition Programs provided a month’s worth of operating expenses to keep the platform afloat through the busy summer season. Next, the New York state government in partnership with the New York Farmers Market Federation provided an additional six months funding.

“This is a permanent solution,” said Josh Wiles, president of Novo Dia Group. “This investment removes questions about our long-term viability and ability to serve markets.”

The use of SNAP took off at farmers markets in 2012, when the U.S. Department of Agriculture set up a free equipment program. Since then, more than 2,500 markets have received card readers, tablets or smartphones to process electronic benefits, known as EBT. But markets still needed software. That’s where Novo Dia and others came in. With their various platforms in place, SNAP benefits redeemed at farmers markets increased by 35 percent, to $22.4 million in 2017, from $16.6 million in 2012, meaning more fresh produce for low-income people in both rural areas and cities.

That Square, a Silicon Valley “disrupter,” is the latest white knight is significant. In addition to cash, Square plans to offer behind-the-scenes technical guidance to Novo Dia and look at ways to collaborate and accelerate EBT mobile technology.

“Novo Dia has significant expertise in the EBT payments space, which Square doesn’t currently serve,” said James Loftus, Square’s corporate development lead. “With this investment, we’ll be able to learn more about how their technology supports transactions between SNAP and WIC [Women Infants and Children] benefits recipients and farmers markets across the country.”

Farmers market advocates were elated to hear of Square’s investment. “The more traditional payment services are available to small producers, the stronger their markets and opportunities become,” said Phil Blalock, executive director of the National Association of Farmer’s Market Nutrition Programs.

Some hope the deal may have larger implications. After all, in 2017 less than 1 percent of SNAP transactions took place at farmers markets or directly with farmers. But as mobile payments increasingly become the norm, the $63 billion SNAP benefits market — heavily regulated and controlled by large, entrenched players — is ripe for innovation.

For example, it was big news when start-up Propel in 2016 began offering an app to let SNAP recipients view their account balance on a smartphone, rather than have to call a toll-free number or keep paper receipts. The USDA, which oversees SNAP technology, is only beginning to experiment with how to use mobile payments to offer grocery delivery to homebound seniors.

“It’s exciting that some new players, like Square and Propel, are investing to challenge the existing system and innovate on the kinds of systems that SNAP participants can have access to,” said Stacy Dean, vice president for food assistance policy at the Center on Budget and Policy Priorities, a progressive think tank in Washington. “The traditional players are typically offering what states are asking them for, rather than providing clients with the latest customer-service options in electronic payment technology.”

Lead image: Vegetables at farmers market. Photo by Simona Pilolla/Shutterstock.

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