SECTION: CAPITOL HILL HEARING TESTIMONY

LENGTH: 955 words

COMMITTEE: SENATE AGRICULTURE, NUTRITION AND FORESTRY

HEADLINE: 2002 FARM BILL

TESTIMONY-BY: MR. DEAN M. LEAVITT, CHAIRMAN AND CEO

AFFILIATION: U.S. WIRELESS DATA, INC.

BODY:
July 19, 2001

Testimony of

Mr. Dean M. Leavitt Chairman and CEO, U.S. Wireless Data, Inc.

Wireless EBT Card Acceptance at Farmers Markets

Before the U.S. Senate Committee on Agriculture, Nutrition and Forestry

Good morning Mr. Chairman and Members of the Committee.

My name is Dean Leavitt and I am Chairman and Chief Executive Officer of U.S. Wireless Data, a New York City-based company specializing in the processing of wireless payment transactions.

I thank you for the opportunity today to discuss the benefits of a new technology my company has developed which provides farmers with the ability to wirelessly accept EBT (Food Stamp) cards, credit cards and other forms of "plastic" payment instruments at farmers market locations throughout the United States. As you are well aware, the Food Stamp Fraud Reduction Act of 1993, as proposed by Senator Leahy of Vermont, mandated the migration of the Food Stamp entitlement program from what had historically been a paper coupon-based system to one that would utilize electronic benefit transfer (EBT) technology. As part of the implementation of that Act, grocery store owners were provided with electronic point of sale systems which would allow them to accept the newly issued EBT cards to program beneficiaries. The point-of-sale equipment was provided to the storeowners at no cost to them. In addition, in most cases, the costs associated with the phone line required for the authorization of such electronic transactions, was also provided at no cost to the storeowner. The cost of the point-of-sale equipment was approximately $500. The cost of the phone lines, depending on the geographical area ranged from approximately $50.00 to $200.00 for the initial installation and from approximately $10.00 to $50.00 per month for basic services.

The Problem

By all measures, the implementation of the Act has been a tremendous success in terms of both the reduction in Food Stamp related fraud as well as the convenience and efficiency the system offers the program beneficiaries and store owners.

However, one of the unintended consequences of the Act was that the farmers markets, once a source of well priced, fresh fruit and vegetables for Food Stamp beneficiaries, were, by virtue of this implementation, immediately foreclosed out of EBT card acceptance due to the unavailability of electrical outlets and telephone lines for electronic point-of-sale systems.

As such, over the seven years since the implementation of the Act, there has been a dramatic fall-off in the visitation of farmers markets by EBT program beneficiaries for the purposes of purchasing fruit and vegetables. Instead, program beneficiaries have had little choice but to either purchase their produce at commercial supermarkets and grocery stores or to cut back on such purchases completely.

The Solution

Starting in September of last year, U.S. Wireless Data has been working closely with the USDA and the State of New York in a rollout of a wireless transaction processing solution for farmers participating in the farmers market program in the New York metropolitan area.

The initial pilot program, which extended from September to December, included approximately forty-five farmers in the New York City area.

Under the pilot program, farmers were provided with wireless devices (housing U.S. Wireless Data's proprietary software) that wirelessly submit transactional data to U.S. Wireless Data's host facility. The transactions are then "switched" out to the appropriate authorization facilities that either approve or decline the transaction. If the transaction is approved, the terminal prints out a receipt, which is handed to the EBT card user for their records. As with the landline based EBT program, the funds are then directly deposited in to the farmer's account.

In addition to EBT cards, the point-of-sale terminals were also programmed to accept commercial credit cards (MasterCard, Visa, American Express, Discover) and debit cards (ATM cards).

The program ended in December with the end of New York's farming season.

As the pilot program was a success, starting in June of this year, U.S. Wireless Data, again in concert with the USDA and New York State, started an actual commercial rollout of the program. As of this date, two farmers are participating in the program, which, by all counts, is running without incident.

In Conclusion

Offering wireless EBT card acceptance to farmers participating in the farmers market program not only offers EBT beneficiaries the opportunity to expand their choices and return back to their favorite venues for the purchase of well priced fresh fruit and vegetables, but it also helps to "level the playing field" between the larger supermarkets and grocery stores who have had the benefit of EBT card acceptance for seven years and those farmers that have been unable to realize an important component of their revenue stream that they enjoyed prior to implementation of the Act.

We at U.S. Wireless Data wish to commend Congress and the Department of Agriculture for realizing the importance of both the EBT and farmers market programs and the need to make such programs available to the widest possible audience.

To that end, Mr. Chairman, my staff and I are eager to work with you, your Committee and the USDA in a concerted effort to find a way to rollout a nationwide wireless EBT card acceptance program.

I am confident that U.S. Wireless Data is well positioned to continue its role as both the provider of the required state-of- the-art technology and the implementer of the EBT wireless program to the farmers.

I thank you again for this opportunity.



LOAD-DATE: July 23, 2001