Payments Leader

Flipping the Model for EBT Transactions with QR Codes by Naveen Nukala

July 5, 2018

Naveen Nukala, FIS | General Manager- Government Solutions/EBT, IFS

QR codes – those indecipherable, black and white pixel patterns that represent codes – have been the focus of jokes for years as they struggled to catch on in the United States. However, they may be the perfect solution to deliver fresh produce and other healthy foods to families using electronic benefits transfer (EBT).

The Payment Obstacle to Fresh Foods for EBT Recipients

An important goal of the Supplemental Nutritional Assistance Program (SNAP) is expanding access to fresh produce and other healthy foods, according to the USDA. Farmer’s markets help to achieve this goal, but payment is often an obstacle. Since many farmers and other small food merchants don’t have a device that accepts EBT cards, payments must be made in cash, which typically means a trip to an ATM for the cardholder. However, an ATM may charge as much as an average day’s food allowance when an EBT user wants to withdraw cash.

Lessons from Emerging Payment Technologies in India

In India, where there is a focus on moving towards an almost cashless society, QR codes have become an increasingly popular way to pay merchants, especially those who lack payment acceptance devices. That’s because QR codes flip the payment model from merchant-controlled to consumer-controlled.

India’s PayTM QR codes demonstrate how this works: PayTM QR codes enable merchants to accept PayTM, United Payments Interface (UPI) and card payments on a mobile platform. Merchants simply call or log-on to the business PayTM site, click on the “sign up for free” button, enter their name and PAN or Aadhar number and fill in business and bank details. Indian merchants typically display their printed QR code on their booths or stores near the cash wrap.

Consumers control the transaction with their mobile devices. They simply load the PayTM app onto their smartphone. When they make a purchase, they scan the QR code to identify the merchant and enter the amount of the payment, which is instantly transferred into the merchants’ bank accounts.

How QR Codes Could Reduce Friction in US EBT Payments

Popularity of QR codes is now spreading from East to West due to improved technologies – including better orientation cues for users – clear consumer benefits and the launch of Snapcodes by Snapchat to identify users.

That’s good news for EBT users who need only own a smartphone in order to scan a QR code, something almost two-thirds of households making less than even $30,000 a year already have, according to PEW. It also benefits merchants who need only to obtain approval from the USDA to be issued a QR code that identifies and authenticates the merchant’s ability to accept SNAP and other benefits.

For merchants who move around frequently – those selling at farmer’s markets, for instance – QR codes simplify transactions by allowing merchants to accept payments beyond cash. Transactions also are safer because there’s no cash to be lost or stolen, and there’s no card to potentially be skimmed.

When are QR codes for EBT payments likely to be launched? My best guess is within the next year or two – perhaps sooner – as another way to broaden access to healthy food choices and expand market potential for small food merchants and farmers.


Naveen Nukala

General Manager- Government Solutions/EBT, IFS

Naveen Nukala brings over 20 years of financial and payments industry experience to FIS through product development, implementations, operations and management roles of which most of the experience in the area of Government Benefits (EBT – SNAP, WIC, TANF, Child Care). Currently, he is responsible for Government line of business at FIS.