Food stamps are entering the world of technology, an innovation that may change the entire grocery industry. The U.S. Department of Agriculture is testing a pilot program that will allow 7 online grocery stores to accept food stamps, including the online retailing giant Amazon.com (AMZN). The two-year program will test online ordering and payment, with the USDA noting that online food-stamp purchases need “a higher level of security” because of the risk of fraud.
This new food stamp program has the potential to shake up the $800 billion grocery industry. About 43 million low-income Americans rely on the Supplemental Nutrition Assistance Program (SNAP), better known as food stamps, for $66.6 billion in annual grocery benefits. Amazon’s participation may seem like an unusual strategy; given that it has emphasized its $99 annual Prime program. Amazon has also been pushing into the grocery business, with plans for check-out-free stores and online delivery services.
“It’s not just that there’s an opportunity; it’s more than an opportunity, it’s an obligation,” said Larry Scott Blackmon, vice president of public affairs at FreshDirect Grocery. “We feel that this payment option should be afforded to everyone.”
The USDA’s new program will test online payment as well as ordering, and include seven retailers in urban and rural areas. Other retailers besides Amazon include ShopRite, which will test the program in Maryland, New Jersey and Pennsylvania, and Safeway, which will roll out the pilot in Maryland, Oregon and Washington. Walmart isn’t one of the retailers taking part in the pilot.
“Amazon is excited to participate in the USDA SNAP online purchasing pilot,” said Amazon. “We are committed to making food accessible through online grocery shopping, offering all customers the lowest prices possible. Amazon’s selection and competitive pricing can improve the grocery shopping experience for SNAP participants while helping them extend their benefits further.”