Small Wins Prove Advantageous

By Hannah Walker, Senior Director, Technology and Nutrition Policy, Food Marketing Institute 

Not every legislative win garners a front-page headline, but journalist Charles Duhigg once said that “small wins are a steady application of a small advantage.”  In lobbying and in life, these small victories can lead to transformational change – if I may riff on Mr. Duhigg’s broader analysis of human nature as a loose analogy to Capitol Hill.

On March 23, when President Trump signed the $1.3 trillion fiscal 2018 spending bill, he also signed into law an important provision in the bill that will save FMI members millions of dollars in SNAP processing fees every year. With the simple stroke of the President’s pen, SNAP retailers can once again accept Electronic Benefit Transfer (EBT) transactions without incurring fees by the state contracted processors. Not only were these fees costly for retailers, they threatened competition in a market currently in great need of it. 

The world of EBT processing rarely garners much public attention, and is really only followed by “industry insiders” like FMI members and their respective third party processors (TPP). So when a state-contracted EBT processor found a loophole in the 2014 Farm Bill that allowed it to start charging retailers a processing or “gateway” fee, they jumped on the opportunity. Late in 2017, FMI heard from several members about the impending gateway fee. In addition to the costs levied on retailers, a contractor could drive out competition by underbidding their state contracts knowing they could still profit by charging retailers the difference.  

FMI utilized its Government Relations and Electronic Payments Committees as well as its SNAP Working Group to develop a strategy to find a legislative fix to the fees. The facts were clear; if allowed to continue these fees could quickly top $15,000,000 a year paid by the grocery industry. Just as concerning, FMI has been working to find ways to encourage more processors and therefore increased competition into the space. If a contractor were able to charge retailers processing fees, they could underbid any competition within a state, recognizing it could make up the difference in retailer fees. This kind of manipulation threatens the fragile EBT processing market and could very quickly drive out competition.

While FMI was working to ensure a permanent fix to the loophole in the upcoming Farm Bill, we also knew time was of the essence. Many FMI members began paying the processing fees in December, and the longer the fees were in the market, the more damage they would do to competition and to our members. FMI successfully won a temporary fix in the large Omnibus bill after gathering support from both House and Senate authorizers and appropriators. It was quick work that we were able to do by providing real data, and the clear legislative history that these fees were never intended by Congress. In the end, we were successful: the language was included in the Omnibus and is effective through fiscal year 2019. 

We know we face opposition with the Farm Bill, and our continued success relies on our cumulative voice representing the nation’s grocers. We are ready to let the facts speak for themselves. In the meantime, this small victory is a greater testament to the strength of the grocery industry to drive and create good sound policy in Washington, D.C.