Iowa-based Hy-Vee is one of seven retailers chosen to test a new program that would allow Americans who receive food stamps to use those benefits to buy groceries online.
The U.S. Department of Agriculture said the goal is to expand access to healthy foods for people who receive benefits under the Supplemental Nutrition Assistance Program, or SNAP.
“Online purchasing is a potential lifeline for SNAP participants living in urban neighborhoods and rural communities where access to healthy food choices can be limited,” USDA Secretary Tom Vilsack said Thursday.
The two-year pilot program, starting this summer, will develop a way for Americans to use Electronic Benefit Transfer cards to buy food online without technical problems, fraud or security breaches. The cards now can be used only at the point of purchase and require a personal identification number.
Food stamp recipients would not be able to use the benefits to pay for service or delivery charges. The benefits can be used only for the same grocery items that recipients already are allowed to buy. Food stamps can be used for most food and beverages, but not alcohol or hot, prepared foods.
Online shopping is an increasingly popular way for Americans to buy groceries, but food stamp users so far have largely been excluded from shopping online with their benefits because of technical limitations and concerns about security and fraud.
USDA said it has authorized online ordering for food stamp users in a few locations, but this pilot will test both online ordering and payment. The agency’s goal is to eventually roll out access to online shopping nationally.
A Hy-Vee spokeswoman said the company is pleased to be selected to participate. The first step is to determine what infrastructure and system enhancements are required to meet the USDA’s requirements and timeline, she said. The test program would run only in Iowa, not other states where Hy-Vee operates stores.
Hy-Vee did not respond to questions about the details of how a SNAP recipient would place an order, whether the store will charge a delivery fee, what Hy-Vee hopes to learn from the test and the challenges that have prevented supermarkets from allowing EBT transactions online in the past.
Hy-Vee has expanded its Aisles Online ordering and delivery service in the past few years, as some of its competitors rolled out similar programs.
The opportunity to market to food stamp users could be lucrative for these retailers and could extend their reach into “food deserts” without requiring them to build new stores.
The government authorized $67 billion in benefits in the 2016 fiscal year ending in September, down from a high of $76 billion in 2013. More than 43 million people receive benefits, including 381,000 Iowans on average each month in the fiscal year ending in September 2016.
Slightly more than half of all SNAP dollars are spent at superstores like Walmart, which is not part of the pilot program. Supermarkets like Hy-Vee take in another 30 percent, while convenience stores and neighborhood grocery stores see a smaller share of spending.
SNAP users can, of course, use other sources of income to shop for groceries online; food stamps aren’t intended to be a user’s sole source of food dollars. And some stores may find ways to create exceptions. Safeway has already made its home delivery services available to people with disabilities who use food stamp benefits, but not to food stamp recipients universally.
The other retailers participating in the test program with Hy-Vee represent different store types and settings. They include online giant Amazon, testing the program in New York, New Jersey and Maryland; national supermarket Safeway, testing it in Maryland, Oregon and Washington; delivery service FreshDirect, testing in New York; and other regional and local grocers testing the program in New York and other East Coast states.
FreshDirect said it will waive delivery fees and tax for deliveries to ZIP codes in the Bronx, where it is testing the program.