The USDA deploys SNAP dollars to the states and each state selects what items can be purchased by recipients of SNAP payment using a local Electronic Benefits Program (EBT). Restrictions are enforced by EBT suppliers by using specialized Point of Sale technology at each merchant location. This technology validates each item in the shopper’s basket (using UPC Code) is approved by the state. As a result, every state has its own unique EBT solution.
This fragmented approach makes investment in technology difficult for EBT suppliers as the suppliers must design, build, and sell custom solutions to each state independently. As a result, suppliers focus their investments on the few states that have the largest SNAP/EBT programs, which are currently California, Texas, Florida, and New York. To have new technology deployed more rapidly and to make the market more competitive, either purchase restrictions need to be eliminated or those restrictions need to be standardized across all the states. This complexity is apparent in this USDA request:
“The U.S. Department of Agriculture is seeking state agencies to volunteer as partners on pilot programs to test the payment of Supplemental Nutrition Assistance Program benefits via mobile technology.
In a request for volunteers issued last month, USDA said it is looking to partner with state agencies on up to five pilot programs that could allow SNAP recipients to pay for transactions with cell phones, tablets or smart watches, instead of with a physical card. In time, USDA said it “hopes” to incorporate mobile payments as a transaction method for all SNAP recipients through the state agencies it partners with to administer the program to recipients.
The state agencies that apply to participate will be required to submit a detailed plan that includes how they would work with their vendors to implement mobile payments, written agreements with stakeholders and an implementation timeline that includes a strategy on how they will educate and recruit SNAP participants for the pilot.
Vendors and retailers that accept SNAP will be required to work with the state agency to scope the project and determine any technological changes needed to make it a reality.
USDA said there are two predominant payment methods that could be used for pilot programs: near field communication and QR codes. The agency noted that the former method is preferred due to “customer convenience.” The security of recipients’ personal information is paramount, USDA said, as well as ensuring that multiple members from the same household can access the program.”
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
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August 11, 2022 at 01:25AM
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USDA Wants a Mobile Enabled SNAP Payment, But Purchase Restrictions Will Likely Get in the Way - PaymentsJournal
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