Food Stamps to Be Accepted by Amazon
The Department of Agriculture in the U.S. is testing a new pilot program that will allow 7 online grocery stores to accept payment using food stamps, including Amazon.com the online retailing behemoth.
This two-year test program will follow the results of online ordering as well as payment with the USDA saying that online purchases of food stamps need a higher security level because of fraud risks involved. The governmental agency said the program would launch nationwide and more retailers would be added.
The program will be modest at the start but has a potential to shake up the grocery industry, which annually has sales of more than $800 billion.
Close to 43 million Americans who have low income rely on receiving food stamps, officially known as SNAP or Supplemental Nutrition Assistance Program, for annual benefits to buy groceries of more than $66.6 nationwide.
The participation by Amazon might seem to be an unusual form of strategy given it has emphasized its Prime program that costs $99 per year, which is focused at consumers in the middle class.
However, Amazon has also pushed into the grocery industry in a big way and is planning for stores that are checkout free and online delivery.
Amazon is taking steps as well to give more flexibility to consumers that have low incomes such as monthly payments of just $10.99 for membership in Prime.
Meanwhile, Walmart has focused on the reinvention of its grocery service, through things such as its curbside pickup, which has been popular with millennial parents that have younger children.
The giant in retailing receives over 56% of its revenue in the U.S. from groceries.
To be sure, the online pilot program for SNAP by the USDA will likely begin small and it is still debatable to whether food stamp recipients will order online for groceries.
Yet Americans are turning more and more to their computer for stocking up on groceries and ordering online for groceries is reaching its inflection point, with four of 10 consumers having made a purchase of groceries online, according to one online research firm.
Expanding the online services for grocery purchases by food stamps might help to eliminate the “food deserts” or the neighborhoods that do not have grocery stores that offer healthy, fresh food.