Magazine article American Banker

FNS Rule on Glitch Processing

Magazine article American Banker

FNS Rule on Glitch Processing

Article excerpt

Food and Nutrition Services, the Agriculture Department division that handles the food stamp program, wants to change how electronic benefits transfers are processed if its payment system goes down during a transaction for which a customer has insufficient funds.

Standard credit and debit card issuers have rules in place about storing transactions in the event of a glitch and forwarding them when the network is functioning again. But FNS has never defined how merchants should handle food stamp purchases -- which use electronic payment cards -- under those circumstances.

Historically, merchants have been able to accept an EBT store-and-forward transaction for such purchases -- and if they do, they carry the risk. If the individual's account has insufficient funds to cover the purchase, the retailer does not get paid, because the transaction is rejected completely, Suanne Buggy, an FNS spokeswoman, said in an e-mail.

Merchants that do not accept EBT cards when the payment network is down can complete vouchers to submit to the agency, call for a voice authorization, or refuse to accept the purchase.

Under an interim rule published in April, which states decide whether to implement, merchants store the transaction and collect whatever funds are available to cover it once the system comes back up, Ms. Buggy said.

The retail food industry has been lobbying FNS to let states offer merchants this type of reimbursement, and some states have been offering it on a trial basis since May 11. The comment period will end Friday.

The interim rule requires merchants to submit stored transactions within 24 hours of the system's recovery; most commercial point of sale terminals are programmed to automatically forward transactions when the network becomes available. …

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