Wednesday, July 18, 2018

When the old meets the new, something has to give

When the old (farmers markets) meets the new (electronic commerce) something has to give. Recently, a major supplier of mobile EBT technology (which allows farmers markets to accept SNAP EBT cards as a payment for for food covered by the SNAP program informed the federal government that it will no longer provide this technology.

As a result, thousands of SNAP cardholders have been unable to use their cards at these remote, unwires sites around the country and farmers markets, farm stands and route sellers will be deprived of a significant portion of their revenue until the problem is resolved.

The US Agriculture Department in a statement acknowledged the role that farmers markets plays in providing nutritious food for Americans as well as economic opportunities for farmers.

Brandon Lipps, the administrator for USDA’s Food and Nutrition Service which manages the SNAP program, explained that the agency’s focus is mitigating the impact of losing the technology provider on SNAP beneficiaries and farmers.

Administrator Lipps points out that current law requirers states to provide no-cost options for farmers markets to accept SNAP benefit cards. But the law doesn’t requirer that the mechanism be a wireless connection although the Food and Nutrition Service strongly encourages states to support wireless technology.

Because of the costs involved in providing wireless technology to farmers markets and the fact neither that farmers nor markets can be charged for the cost of the wireless equipment, Congress approves 4 million dollars every year to subsidized the use of wireless at farmers markets. With this funding, FNS since 2012 has enabled the purchase of wireless equipment for use by eligible farmers and markets.

Still, the economics of equipping thousands of farm markets with cutting edge technology may not work. Only a couple of companies are willing to provide this service.

FNS is continuing to look at ways to work through this economic conundrum by modernize the delivery of SNAP benefits at Farmers Markets.

Monday, July 2, 2018

The Relationship between Local Community Banking and Small Business Lending

The Relationship between Local Community Banking and Small Business Lending

The Federal Reserve Bank of Philadelphia has recently published a working paper on the importance of local community banks to small business lending.

The paper looks at the effect that a reduction in community banking can have on lending to small business.

The authors examined this issue in the context of mergers that involved community banks and the effects those mergers had on small business lending. Among the findings, local small business lending “declined significantly” in counties where only only the acquired institution operated prior to the merger, relative to counties where the acquiring bank had operations before the merger.

In reaching this conclusion the authors controlled for the general SBL market and local economic trends.

The authors call their findings “consistent” with an argument that after such mergers small business funds have been diverted to the markets of the acquiring institution. They say they have found “even stronger evidence” during and following the financial crisis that SML was directed away from the markets of acquired community banks.

Nevertheless, their overall finding is that local community banks still are important players in small business lending.

To read the working paper, visit

The authors of the working paper are Julapa Jagtiani and Raman Quinn Maingi, of the Bank.

To contact the authors directly, email

Thursday, June 14, 2018

The Financial Industry can do more to help elders avoid becoming victims of financial fraud

The Financial Industry can do more to help elders avoid becoming victims of financial fraud.

Combining Forces to Combat Elder Financial Victimization, a discussion paper recently released by the Payment Card Center of the Federal Reserve Bank of Philadelphia, provided a roadmap of what consumers and the financial industry can do to help elders to avoid the “financial pitfalls” that may occur as consumers, after years of financial independence, age and may no longer be able to manage their own financial affairs.

The paper notes that crimes that prey on seniors are “vastly underreported” which is why we believe the paper merits a post by The Lobster. Since The Lobster often covers financial industry issues and is well-read by members of the financial industry, this post will focus on what the industry, including banks, security firms, regulators, and policy makers can do to address the problem.

The authors outline six questions that financial institutions should be able to answer for consumers. They are:

Is the institution’s staff trained to recognize financial vulnerability
Does the institution use software to monitor potential vulnerably
Whether the institution has monitoring tools for account holders and their financial caregivers
Does the institution offer a emergency contact form and have guidelines for when to use the form to reach out to the emergency contact
Does the institution have a way to prevent power-of-attorney abuse
When it suspects financial fraud is the institution’s policy to report that fraud to law enforcement.

Although the industry has done much to combat fraud, there is much more that can be done. The authors point out that regulators and policy makers have not been proactive in regulating protections against senior financial abuse.

Several factors contribute to the problem. Among these are that seniors are taking on more debt. According to the paper, during one recent 12-year period, borrowing by seniors increased by 60 percent. Seniors may have trouble managing all that debt.The paper cites a 2012 study saying that bankruptcy filing grew fastest among consumers 65 and older. All that debt creates opportunity for late fees, foreclosure and bankruptcy.

 Secondly, the shift from defined benefit plans for retirement to defined contribution plans, such as 401(k) plans places the burden of determining how much to save for retirement on the shoulders of the senior consumers, which creates more chances of debt accumulation with its attendant problems such as foreclosure or bankruptcy.

Medical researchers have found a nexus between age-related decline in cognitive abilities even without the presence of disease and financial vulnerability. According to the authors, a first sign of cognitive aging is diminished financial capacity. Evidence of this diminution may be infrequent at first but become more noticeable through time. Eventually the bank may detect a suspicious transaction.

A 1981 report by the House Select Committee on Aging concluded that financial abuse was the second most prevalent form of elder abuse. The report also concluded that financial abuse often was paired with another type of abuse like psychological pressure.

Seniors can be prepared to mitigate the effects of financial abuse that is abetted by age-induced cognitive impairment.

The authors provide seven actions that seniors can take to help prevent financial abuse. They are:

Assign a trusted advisor to all financial accounts.
Have a durable financial power-of-attorney
Draw up a will
Be aware of current financial scams preying on the elderly.
Monitor your credit and identity
Hire a money manager
Think about hiring a financial account monitoring service.

You can find the complete paper on the website of the Federal Reserve Bank of Philadelphia’ Payment Card Center.

The authors of the discussion paper are Jeanne Rantezelas and Larry Santucci

Wednesday, June 13, 2018

Social services beneficiaries in California are being advised that their EBT cards may not work for a 24-hour period in late June, because of a planned service interruption in order to work on the system.

Social services beneficiaries in California are being advised that their EBT cards may not work for a 24-hour period in late June, because of a planned service interruption in order to work on the system.

California counties are advising beneficiaries of the CalFresh and CalWorks programs to prepare for the fact that their EBT access cards may not work for a 24-hour period from 11 pm June 23 through 11 pm on June 24 due to a planned service outage.

EBT debit card, which replaced food stamps, are used in the CalFresh program to purchase authorized food at retailers that have been permitted  by the government to accept the cards for payment. The cards are also used by participants of the CalWorks program to make cash withdrawals.

Because of the temporary service disruption, the customer service number listed on each EBT card will also be inoperable during the same 24-hour period as will be the state EBT website,

Beneficiaries of the two assistance programs are advised to food shop in advance of the system shutdown and to make any necessary cash withdrawals in advance.

Friday, May 25, 2018

A smart device app solution for merchant processing of government nutrition payments, such as WIC

A smart device app solution for merchant processing of government nutrition payments, such as WIC. 

Nova Dia Group, a Texas-based developer of mobile-payment solutions, has announced that its Mobile Market family of products has been certified for electronic WIC transactions by Conduent, a leading EBT transaction processor.

The upshot of this certification is that retailers that use merchant processor WorldPay for their point-of-sale transaction processing and use the Mobile Market products wIll now be able to support electronic WIC as a tender type.

Mobile Market+ Select is billed as an mPOS solution for merchants who want a smart device solution as well as the ability to accept both types of EBT tender: SNAP and WIC.

According to NDG, its Mobile Market products can now provide merchants with a single POS solution to process the following types of tender: WIC, SNAP, credit, loyalty. The company claims the Mobile Market solution is the only smart device app that can process WIC, SNAP, and credit across all state lines for multi-state merchants.

Thursday, May 17, 2018

A Great Program Badly in Need of Disruption

Disruption is a good thing in technology because it is how we grow and evolve. The last significant disruption in Federal food distribution was the Agriculture Department’s final rule mandating that all states adopt EBT for the distribution of Woman, Infants and Children benefits. This occurred in 2016. It is also worth noting that the Rule incorporates provisions of the Healthy, Hunger-Free Kids Act of 2010. HHFKA passed Congress 6 years prior to the Final Rule.

Prior to WIC EBT, the last significant disruption in EBT was the Congressional mandate that all state EBT systems be interoperable with each other. Congress issued this directive in 1999, 16 years after the dawn of EBT technology

The use of electronic benefits transfer for the distribution of government benefits dates back to 1983. EBT has been one of the most successful public-private partnerships in American government history. But it is clearly an industry that at times rests on its laurels.

In February of 2018 the Agriculture Department which manages the SNAP program, formerly known as the Food Stamp program, announced plans to convert a portion of each eligible household’s monthly benefit to what it dubbed a America’s Harvest Box pending the approval of Congress. The box would contain shelf-stable food staples.

The Harvest Box idea was previewed in President Trump’s 2019 budget message to Congress in February 2018. It is part of the Administration’s plan to cut federal SNAP spending by 200 billion dollars or 30 percent. 

Opposition to the plan was emotional, overwrought and largely along party lines.

In a statement Eloise Anderson, the Secretary of the Wisconsin Department on children and Families and Chair of the Secretaries’ Innovation Group comprised of 22 state human services and workforce leaders from 22 states covering 52 percent of the country, wrote that she likes the idea that the Harvest Box proposal helps assure that recipient families…have a ready supply of healthy and nutritious food.

Agriculture Secretary Sonny Perdue, according to a published report, admitted that the Harvest Box idea surprised members of Congress but also said that Department staff had consulted with experts while formulating the concept. He also reportedly called the plan a work in progress as the Department starts taking public comment.

According to one report, Secretary Perdue is looking for Congressional permission to develop a Harvest Box pilot program.

Thursday, May 10, 2018

3 Simple Steps for Crafting a Winning Pitch for Government Business

3 Simple Steps for Crafting a Winning Pitch  for Government Business

Know Your Customer. In government sales, there are several parties you will have to deal with. They are the buyers who work for the procurement agency,  the program officials who will actually manage how your produce or service will be used, the government employees who will actually put your produce or service into play. In the government sales cycle, the buyers are the people you will have to negotiate with. They are the gatekeepers. Regardless of the merits of your offering, unless you please the buyer, you won’t get to the program official who will be responsible for the use of your offering. Once you are tendered a contract, the program manager will be responsible for the use of your offering. Screw up at this point and you’re out, Tom. The program officials rely for counsel on the field employees who will be responsible for the deployment of your offering.

Plan in Advance. Understand that a government customer can differ from a commercial customer. A commercial customer is answerable to the company’s shareholders. This is the dynamic that ultimately drives all decisions. A government customer answered ultimately to the taxpayers. So, government customers generally choose the “lowest, best offer” Understanding the differences between the two customers will allow you to battle plan a successful proposal to a government agency. Whatever you do, don’t try to get by on the cheap by recycling an old prop to a commercial customer. We serve both commercial and government customers. We know the differences and why a commercial proposal won’t work with a government prospect.

Tailor your proposal to a government prospect. Your prop should always focus on why your offering is the “lowest, best” offer in the solicitation. Understanding the differences between the commercial and government customers, make the proposal more about the government prospect and less about your company. Avoid chest-thumping praise of your own offering. Be aware of what your prospect’s issues are and in your proposal very concisely focus on how your offering solves those issues. Make the case by citing other government customers that have benefitted by your offering, if you have any.  

Tuesday, May 8, 2018

The electronic message that drives EBT transactions is about to change

EBT electronic transaction messaging to get a rework

The Retail Payments Subcommittee of electronic financial message standards group X9 is soon to begin revising the financial transaction message for EBT.

Standardization of the electronic processing of SNAP (nee Food Stamps) purchase transactions “provides cost efficiency, ease on conversion, data and reporting consistency for the SNAP program.

Parties affected by the change include The Department of Agriculture, which is responsible for managing the SNAP program, state and territorial agencies that manage SNAP on a local level, the handful of companies that process SNAP electronic transactions, third-party processors of SNAP transactions, software developers, point-of-sale terminal manufactures, authorized food retailers that vend the food which SNAP EBT cardholders purchase, as well as software developers who build the retail POS systems.

The subcommittee is seeking subject-matter experts among these stakeholder groups who would be interested in participating in the rewrite of the SNAP EBT message.

Thursday, May 3, 2018

Yet another state goes live with EBT payment technology

Yet another state goes live with EBT payment technology for the WIC program

In April of 2018 the State of Arkansas began converting its Woman, Infants and Children nutrition program away from paper benefits checks in favor of electronic benefits transfer, or EBT, technology. 

This is a project that Chaddsford Planning work on in the planning phase, assisting the EBT planning contractor, Burger Carroll and Associates. It is gratifying to see the State and its EBT processing contractor, Solutran, get the EBT system off the ground.

EBT is more efficient for the state, beneficiaries, and food retailers  who vend the food to the EBT cardholders. Shopping with a pile of WIC checks is inefficient and stigmatizing for program beneficiaries. Retailers incur the labor and banking costs to handle and account for thousands of WiIC checks each month. States also incur the costs of printing, issuing and accounting for the checks. Under EBT these check processing costs go away for taxpayers.

To support its WIC beneficiaries, Arkansas has chosen online “smart card” EBT technology. When states migrate their WIC benefit distribution from paper checks to EBT they can choose either of two technologies: online EBT (similar to a banking debit card) or offline EBT (the beneficiary cards carry a microcomputer chip which holds the large amount of data required for the WIC program) The microcomputer chip may also be more secure than the magnetic strip on an offline card.

There are advantages and drawbacks to each technology. However, experience has shown that both EBT technologies are far superior to the traditional benefit distribution method of printing, distributing, negotiating, and settling thousands of checks every month.

Congress has mandated that by 2020 all states must replace their WIC check operations with an EBT system. As of April 2018, about half of all states, territories, and tribal authorities, have, like Arkansas,  already complied with the Congressional mandate. Another handful are in the process of implementing EBT. Several others are in the process of rolling out or piloting a WIC EBT system. A few are still planning for EBT. 

Tuesday, April 17, 2018

The recently released Farm Bill mandates modernization of the Electronic Benefits Transfer system used to distributed SNAP (nee food stamps) benefits to eligible households

Congress’ recently released Farm Bill mandates modernization of the  Electronic-Benefits Transfer system, the specialized debit-card technology by which SNAP (nee Food-Stamp) benefits are transacted by cardholders. 

With over 40 million cardholders using their EBT cards an average of10 times per months, EBT is one of the largest stand-alone electronic-payment systems in the US.
Congress has identified several specific targets for EBT technology modernization. These are.

1) Adding the ability for SNAP recipients to access their benefits through mobile technology

2) Online acceptance of EBT

3) A national gateway to facilitate the use of benefits beyond the state that issued them to a particular recipient.

4) Addressing access to state EBT systems.

5) Incentivizing the modernization of EBT technology.

The bill also addresses public-private partnerships for improving EBT technology. 

It is important to note that EBT leaders in the private, Federal, and state sectors have for some time already been working on implementing these improvements.

It is also worth noting that the bill mandates certain back office changes to improve SNAP integrity. These include procedures for the replacement of EBT cards, data reporting, tolerance levels for payment errors, state performance indicators. 

Monday, March 12, 2018

Marketing Technology to Government

Marketing Technology to Government

I have seen a number of sellers and marketers crash and burn trying to market their technology products to government agencies. Often, the problem is a failure on the part of the seller or marketer to realize quickly enough that he or she and the agency rep are or should be on the same side of the table.

All too often, the seller or the marketer will approach the agency rep antagonistically because of pricing. The seller’s job is to sell his company’s products or services at the greatest possible margin. The agency’s rep’s job is to secure the seller’s wares at the best possible value. This value is a combination of price and technology.

So, if your technology is not the freshest on the market don’t be surprised if the buyer asked you to take a haircut as the buyer is willing to trade a newer technological iteration for some cost savings.

Once you both move past the money issues both parties should be working toward the same goal, a sale.

Both sides need to recognize that the agency has a problem to solve and that the seller may very well have the solution to that problem. Since the seller is proposing the solution, it is incumbent on him or her to avoid a stand-off or shouting match in order to get the deal done. Prideful reluctance to give in to the buyer should not stand in the way of a good deal.

The technical aspects of the produce being sold and bought may present another barrier since the agency rep may not be versed in the nuances of the product. Similarly, the seller may not be familiar with how government agencies operate and how decisions are made.

If a seller approached the sale as if the agency’s problem is his own and recognizes that he and his counterpart are playing on the same team to solve the same problem, the sale will be made at a price that is fair to both teammates.

Tuesday, February 27, 2018

Getting Started Contracting with Government

Getting Started Contracting with Government 

By one estimate, there are 80,000 government agencies, federal, state and local, that purchase a variety of goods and services from the private sector. The aggregate value of these purchases is in the billions of dollars.

Your first move in the government sector should be to settle on exactly which of your many goods or services you plan on selling to government. At this point, you should become familiar with the NIGP, or the National Institute of Government Purchasing index. This is a listing of all the goods and services that government agencies typically buy. This will be your first indication if there is a government market for your company’s offering. You should also visit the website of any agency to which you wish to sell and click on the procurement tab to find what things that particular agency buys. This will tell you if that potential buyer needs your company’s offering.

You also need to determine where you wish to sell: nationally, regionally, only in the state in which your company is domiciled, or locally. There are advantages and disadvantages to each of these. for example, selling nationally opens up a huge market for you but could entail a great deal of travel the expense that will cut into your margin. If your company doesn't already have regional operations you could actually realize more profit selling locally. 

You next should locate specific bidding opportunities. 

There are several ways to go about this. One way is to contract with an aggregator. This is a company that will report to you periodically on which agencies have issued tenders for the goods or services that your company supplies. The drawback to this approach is expense. These reports are costly and most bidding companies will not have the bandwidth to respond to more that a fraction of the opportunities in the report. In addition, much of the information is repeated from report to report to report. So, you will be paying repeatedly for the same data and you will be paying for information that your can’t use or which is stale. 

An alternative to an aggregation service is to retain a consultant. Make sure your consultant has hand-on experience selling to government not just other contractors. Experience selling in your vertical would be a bonus. This is a much more personal approach than using an aggregator. In the interest of full discloser, Chaddsford Planning provides this service.

A  third approach, if you have the time and/or resources is to go it alone and contact thousands of government agencies yourself to determine if they purchase what you are selling and then to continue dialing for dollars until you find the right person who has purchasing authority and can buy from you.

The next step is to identify the requirement of the job. in order to for your potential customer to do business with you you will be required to submit a formal written proposal that accomplishes three things. 1) specifies exactly what you are offering, 2) specifies exactly what you expect in return, 3) shows precisely how your offer solves the agency’s problem.

It is a lot of work, but there is a lot of reward.