Earlier this year, when the USDA changed the vendor that runs its program that allows farmers markets to take SNAP benefits, it set off a chain reaction that could soon prevent thousands of poor people from using those benefits at the markets, reports FERN’s latest piece, published with The Washington Post.
Financial Transaction Management, the Reston, Virginia-based company now running the agency’s Free SNAP Wireless Equipment Program, announced it would be working with electronic-payment giant First Data, among other companies, to process farmers market payments.
This left The Novo Dia Group, an Austin-based company that processes some 40 percent of SNAP transactions at farmers markets nationwide, in the lurch. As a result, the company “said it will end its service by July 31, leaving about 1,700 of the more than 7,000 markets that offer SNAP with no way to serve low-income customers,” write Jane Black and FERN staff writer Leah Douglas.
“Without Novo Dia, many SNAP recipients will no longer be able to redeem their benefits at farmers markets,” they write. “Markets can’t simply choose a new app, like Lyft instead of Uber. Novo Dia’s Mobile Market Plus software is the only one that works on Apple products and that also processes SNAP incentives.”
Josh Wiles, Novo Dia’s president, cited the cost of additional security measures needed to process SNAP transactions as a contributing factor in the decision to shut down. Those costs, coupled with the micropayment nature of farmers market transactions, meant profit margins were always thin.
However, Wiles called FTM’s decision to go with First Data the “tipping point.” “Without continuing to gain new customers and economies of scale, Wiles said, Novo Dia could not remain financially viable,” write Black and Douglas.
After the USDA set up the Free SNAP Wireless Equipment Program in 2012, SNAP benefits redeemed at farmers markets increased 35 percent, to $22.4 million in 2017.