SNAP online payment expansion poses hurdles for independent grocers

Dive Brief:

Independent grocers consider Supplemental Nutrition Assistance Program (SNAP) online purchasing a “top priority,” but implementation is still tricky for them, according to the National Grocers Association.
The U.S. Department of Agriculture launched the SNAP online payment pilot in April 2019. Despite the pilot's expansion from eight to 47 states in March, the NGA says SNAP participants have “very limited” store options because unique obstacles like financial and technological constraints and a lengthy approval process saddle independent grocers.
The trade association supports proposed legislation that would provide the funding to create an online portal connecting retailers with SNAP participants. The legislators sponsoring the bill say it would tackle the barriers restricting independent grocers from participating in the pilot program.

Dive Insight:

Walmart and Amazon are still the main providers of online access to SNAP as the USDA pilot program, which kicked off last year and ramped up during the pandemic, looks to attract more participation from small grocers.

The NGA said that only the pilot’s initial retailers offer SNAP online purchasing even though several independent grocers have applied to the USDA's Food and Nutrition Service (FNS) to participate. The trade association explained in a press release that the biggest challenges for independent grocers interested in the pilot are technical hurdles, financial burdens, a long application and approval process, and an individualized testing process for each store location.

The USDA’s Food and Nutrition Service selected eight retailers for the pilot in 2017, and when it launched last spring, Amazon and Walmart both quickly rolled out SNAP online ordering. Currently, Amazon offers SNAP online payments in all 44 states operating the pilot, followed by Walmart in 44 states, according to the FNS website.

Jim Dudlicek, communications director for NGA, said in an email that Amazon, Walmart, Wright’s Market, ShopRite and The Fresh Grocer currently have SNAP online purchasing services enabled, adding that NGA is working with independent grocers to increase their participation but does not know how many have applied for the USDA pilot.

“Walmart and Amazon possess enormous scale, resources and infrastructure for e-commerce, making the burdensome requirements far less of a problem for them,” Dudlicek said.

Wright’s Market in Opelika, Alabama, teamed up with e-commerce platform Freshop to become the first independent grocer to launch the SNAP EBT program, according to the Alabama Grocers Association.

“Many independent grocers already offer grocery pickup as part of their e-commerce program,” Dudlicek said. “Availability of SNAP online would allow them to serve their customers in need at a higher level and put them on a more level playing field with retailers that are able to offer this convenience.”

The USDA's FNS recommends that retailers allow SNAP participants to shop online and pay with their EBT card at pickup as an alternative to online purchasing. Some grocers have pushed ahead with pickup service that utilizes payment technology at the pickup point, which is less cumbersome to initiate than online processing. Kroger recently expanded SNAP payment, allowing customers to use their EBT card to pay for items at 2,000 pickup locations, and Hy-Vee announced it will accept SNAP and EBT to buy items through the Aisles Online grocery pickup service.

During a virtual meeting hosted by the NGA and USDA FNS in mid-September, Jimmy Wright, the owner of Wright’s Market joined roughly 25 independent grocers and e-commerce representatives in sharing why SNAP online purchasing is difficult to offer.

“A challenge for many small towns and rural areas is that they do not have the population density to support a profitable full-service brick-and-mortar grocery store, and in turn those communities become food deserts,” Wright said, according to a press release from NGA.

The NGA has three suggestions for USDA FNS to help independent grocers offer online SNAP purchasing:

Find ways to increase third-party payment provider options and lessen retailers’ onboarding costs
Approve retailers quickly and efficiently and expedite the process when possible
Decide if more funding and resources from Congress can speed up the process

Additionally, the NGA has thrown support behind the “Expanding SNAP Options Act,” saying that the proposed legislation from senators Dick Durbin and Tammy Duckworth of Illinois would help more independent grocers enable online SNAP payments. The House and Senate versions of the bill, which were introduced this summer, are currently awaiting consideration in committees.