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Case Study: Forage

How Unit helps Forage offer swift and secure online EBT payments

What Bridge built with Unit:
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Opportunity

Forage saw an opportunity to help online grocers accept payment from government food-assistance programs.

Solution

With Unit and its bank partners, Forage is able to swiftly and securely process online EBT payments.

Forage helps online grocers accept food-assistance benefits

Forage is a payment processor that enables online grocers to accept funds from the Supplemental Nutrition Assistance Program (SNAP), a government food-assistance program, via Electronic Benefits Transfer (EBT).

It’s a timely technology. Today, one in eight Americans receives government assistance to buy their groceries. That’s more than 42 million people who, together, receive more than $120B in food assistance every year. They can use these funds at more than 250,000 brick-and-mortar stores, but the number of online grocers that accept EBT is less than 100.

For retailers, it’s a sizable, untapped opportunity. Online grocery sales have quadrupled during the pandemic, and they are projected to double again by 2025, to 21.5% of total grocery sales in the US. But building this functionality in-house doesn’t make sense for most online retailers. Launching it can take over a year, a process that requires considerable expertise in both payments and technology. By contrast, Forage offers the necessary expertise and a streamlined project plan that simplifies the process and takes most of the burden away from retailers.

For families, buying groceries online isn’t just a matter of convenience. A quarter of food-assistance recipients are disabled, and two thirds live in a household with children. Many others are elderly, homebound, lack transportation, work multiple jobs, or live in food deserts. It can be difficult or impossible for them to travel to a grocery store.

"My co-founder and I know firsthand how important SNAP and EBT are in helping American families put food on the table,” says Victor Fimbres, CTO of Forage, “and how impactful this program can be for upward mobility."

But making food-assistance funds available for online purchases is harder that it sounds. It requires a seamlessly choreographed set of interactions between Forage, online grocers, end-customers, EBT state systems, credit-card processors, and a bank. To make it all work, Forage partners with Unit.

What Forage built with Unit:

  • FDIC-insured business bank accounts to process online EBT payments

How Unit enables Forage’s online EBT payments

To understand how Forage partners with Unit, let’s follow an example transaction. Imagine that a SNAP recipient fills up their cart at an online grocer. At checkout, they tap a button that says “Pay with EBT.” That takes them to Forage’s website.

Once there, the end-customer decides how much of the transaction they’d like to pay for with EBT vs. other payment methods (e.g., credit card, debit card); then the transaction is routed through for authorization in the State’s EBT system. The State EBT system returns a message to Forage indicating whether the transaction was successful. If so, the end-customer goes on to pay for any non-EBT-eligible items, delivery fees, and tips using their secondary payment method (SNAP funds cannot be used for non-food items).

From the end-customer’s point of view, that’s the end of the story. They receive their groceries and start cooking. But Forage still has to settle the funds from the EBT transaction with the online grocer, as well as collect their fee. That’s where Unit comes in.

At the end of every business day, the State’s EBT system adds up the total dollar value of all transactions that Forage’s end-customers have conducted with them that day, then sends Forage a lump sum via ACH. From there, Forage sends the appropriate amounts to each online grocer. Each grocer has an FDIC-insured bank account, powered by Unit and its bank partner, where the funds are deposited.

“Our use case is complex and extremely detail-oriented,” says Ofek Lavian, COO of Forage. “Unit has been an incredible partner; they helped us figure out the nuts and bolts, then customized their platform to suit our needs.”

Built-in compliance led Forage to partner with Unit

When selecting a banking-as-a-service partner, Forage evaluated all the major players in the space. Ultimately, they chose to partner with Unit for two reasons.

  1. Compliance
  2. Customer success

From a compliance perspective, Forage needed to launch a bank partnership and become compliant with dozens of relevant regulations. Most other banking-as-a-service providers would have required Forage to hire their own compliance team and spend 6-12 months building systems and processes around KYC, fraud prevention, manual account reviews, disputes, and anti-money laundering—just to name a few.

By contrast, Unit shoulders the burden of compliance so that Forage can focus on other priorities. They launched their banking features in just over three months.

The second reason Forage partnered with Unit was the quality of customer success and support. Fimbres cites the responsiveness of Unit’s team, detailed technical docs and guides, and a dedicated Slack channel among his favorite attributes.

“We liked the structure of Unit’s customer-success playbook so much that we actually borrowed it when building our own,” recalls Fimbres. “Everything about onboarding was extremely approachable and well-documented. All we had to do was show up to the meetings.”

Looking ahead, Forage plans to support additional benefits

Forage aims to become the leading provider of online EBT payments—but their ambitions don’t stop there. Looking ahead, they plan to help e-retailers accept additional types of government benefits.

One example is the Supplemental Nutrition Program for Women, Infants, and Children (WIC), which serves pregnant, postpartum, and breastfeeding women at nutritional risk, as well as children up to age five. In fact, 53 percent of infants in the United States receive some form of assistance through the program. However, there is currently no way for people to use these funds online.

It’s important work, and Fimbres says that Unit will continue to be a vital partner.

“Unit has been amazing from the very beginning,” says Fimbres. “They’ve taken the time to understand our goals, help us build a custom solution, and iterate quickly with us. We're excited to continue the partnership."

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Forage is a financial technology company and not a bank. Banking services provided by Blue Ridge Bank N.A.; Member FDIC.

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