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Federal Reserve Bank
of Dallas

HELEN E. HOLCOMB
DALLAS, TEXAS
75265-5906

FIRST VICE PRESIDENT AND
CHIEF OPERATING OFFICER

December 24, 1999
Notice 99-113
“A Year 2000 Readiness Disclosure”

TO: The Chief Operating Officer of each
financial institution and others concerned
in the Eleventh Federal Reserve District
SUBJECT
Procedures for Accepting and
Processing Food Stamp Deposits
DETAILS
Neither the federal nor the state government anticipates any Electronic Benefit Transfer (EBT) system failures during January 2000. However, we want to remind financial institutions of the proper procedures for accepting and processing food stamp deposits. This reminder is
necessary since your state may decide to issue food coupons in place of EBT to food stamp
recipients in case of an EBT Y2K-related system failure. If such a system failure occurs, retailers
authorized to participate in the food stamp program in your area will receive instructions regarding proper redemption procedures for food coupons. Please keep in mind that any decision to use
food coupons as a contingency will be made independently and locally by each state or county
government.
Retailer Food Stamp Deposits
Financial institutions should never accept a deposit of food stamps without a completed Redemption Certificate (RC) (FNS-278B) from an authorized retailer. The food stamp
value entered by the retailer on each RC must be the same as the total value of food stamps that
accompany the RC for that deposit. The instructions on the back of the RC require that each
deposit of food stamps made by a retailer be verified by the financial institution, and the verified
total must be entered in the “Bank’s Total” block on each RC. If the retailer has made an error,
the financial institution must enter the correct amount in the “Bank’s Total” block. The correct

For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal
Reserve Bank of Dallas: Dallas Office (800) 333-4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012;
Houston Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810.

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amount must also be MICR-encoded in the proper location in the MICR band. Only the amount
of food stamps received from the specific retailer named on the RC for that individual deposit is
to be entered in the “Bank’s Total” block and the MICR band on that RC. Coupons deposited
from other authorized firms should not be included or consolidated on any other RC document.
Handling and Processing Wholesaler Redemption Certificates (RCs)
A few authorized retailers are permitted to redeem coupons through an authorized
wholesaler. The wholesaler then redeems the coupons at a financial institution. Some questions
have arisen about the proper handling of wholesaler RCs (FNS 278-4) by financial institutions.
Coupons accepted by a wholesaler from a retailer must be accompanied by the
retailer’s RC (FNS 278B). The wholesaler must fill out a wholesaler RC (FNS 278-4) listing the
amount of coupons accepted from each retailer. The wholesaler then deposits the coupons at a
financial institution.
The financial institution must MICR-encode each of the accompanying retailer’s RCs
submitted by the wholesaler with the amount entered by the retailer on the RC. Also, the financial institution must reconcile the amount of coupons in the wholesaler’s deposit with the total
amount of coupons on the retailers’ RCs and the wholesaler’s RC. It is essential that the
wholesaler’s RC is submitted to the Federal Reserve Bank along with the related retailers’ RCs
and food coupons.
Financial institutions must ensure that respondent banks follow the procedures described above in processing all food coupon deposits. Individual retailer and wholesaler redemption information is critical to Food and Nutrition Service monitoring of store compliance with
food stamp program regulations. We appreciate the cooperation of your financial institution in
complying with these food stamp redemption requirements.
MORE INFORMATION
If you need further information, please contact the local U.S. Department of Agriculture Food and Nutrition Service field office. For additional copies of this Bank’s notice, contact
the Public Affairs Department at (214) 922-5254.
Sincerely,


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102