USDA Moves Forward in Allowing SNAP Internet Purchases

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USDA Moves Forward in Allowing SNAP Internet Purchases

By Jennifer Hatcher, Senior Vice President, Government and Public Affairs, FMI - 09/28/2016

In recent years, more and more American grocers have invested in growing their online presence and home delivery services. This investment reflects the increased demand from consumers to be able to shop online and either pick up their groceries curbside without ever leaving their car, or have them delivered directly to their home. The growth in this area benefits busy consumers who want the convenience of having their groceries delivered to their houses.

However, there is also the potential for a great social benefit for the elderly, disabled and even new mothers, where leaving the house to go to the grocery store can be very challenging and sometimes even impossible. Home delivery of internet purchases is particularly important for seniors living in rural areas, because America's rural population is older than the nation overall, and rural seniors experience higher poverty than seniors nationwide.

Acknowledging the growth of online grocery services and the potential to benefit our most vulnerable populations, Congress included a provision in the 2014 Farm Bill directing the U.S. Department of Agriculture (USDA) to pilot online Supplemental Nutrition Assistance Program (SNAP) transactions. The idea seems simple on its face: Customers pay for their groceries online with their SNAP benefits as they would with a credit or debit card. However, those in the payments realm knew the solution would not be that easy. Over the past couple of years, FMI, grocers, online solution providers and others have collaborated with the USDA to address all the nuances of a SNAP transaction and how to solve them online.

Some of the challenges were relatively obvious. For example, all SNAP purchases require the customer to enter a personal identification number (PIN) that ensures process integrity. Fortunately, there was already an online PIN solution provider who could be used to authenticate the transactions. Other challenges, such as how to perform a pre-authorization on a SNAP card and the need to be able to do split-tender, allowing customers to use another form of payment for items like delivery charges or paper products not eligible for purchase with SNAP, proved more complex and required some strategic thinking and input from all parties. All of these unique requirements of SNAP had to be addressed before USDA could move forward with piloting online SNAP in the field.

Now, after all of this pre-work completed, this fall USDA will solicit voluntary applications from interested grocers who would like to participate in an online SNAP pilot demonstration. USDA will analyze the results from the online pilots, identify unanticipated challenges, and weigh them against the successes, and these will be used as policy discussions begin for the 2018 Farm Bill. This is an important step in the broader and more universal rollout of SNAP online sales. The success of this demonstration could help pave the way for other programs, such as the Special Supplemental Nutrition Program for Women, Infants and Children (WIC), to allow online order and delivery.

USDA's thought, along with that of other lawmakers and grocers, was that as online grocery shopping becomes more widely available, it may offer important options for SNAP recipients who are homebound or facing transportation challenges.