SNAP Online: What Independents Need to Know

Feb 10, 2021

SNAP—the Supplemental Nutrition Assistance Program—is a vital federal safety net for many Americans, providing funds to buy necessary foods and move toward self-sufficiency. Independent retailers are the linchpin of this successful public-private partnership, with some seeing an increased level of SNAP shoppers during the pandemic, especially as many states issue emergency allotments to increase recipients' funding.

When the threat of COVID sent many shoppers online, that option was not widely available to SNAP participants in the beginning of the pandemic. In March of 2020, only eight states and four retailers (Wright’s Market, ShopRite, Amazon, and Walmart) were part of the SNAP online purchasing pilot program that originally launched in 2019. The USDA Food and Nutrition Service (FNS) quickly responded to the situation by allowing additional states and retailers to apply to participate in SNAP online.

Although SNAP online purchasing has expanded to nearly every state in the country, independent grocers still must overcome a number of barriers to participate in the program. The process is lengthy and takes time for retailers to complete, and there can be financial burdens for smaller retailers to make the shift to eCommerce, as well as technical challenges experienced along the way.

But with the help of the National Grocers Association (NGA) and an experienced eCommerce partner, independents are beginning to successfully accept SNAP payments online, helping them further level the playing field against large chain early adopters of SNAP online, and giving customers another reason to shop local.

"Even before I got on board with IGA I was working with tech partners in Congress to modernize SNAP," IGA CEO John Ross says. "Our research suggested that digitizing the process was the best solution to take costs out of SNAP rather than reducing benefits. The pandemic accelerated the need for digital, and being one of the early adopters is key for staying competitive. Once a shoppers starts using a retailer's eCommerce website, they are 10 times more likely to stay with that retailer. A lot of IGA customers depend heavily on SNAP, so if we're not able to process SNAP dollars online, we risk permanently losing shoppers to those retailers who can."

Keep reading to learn more about eligibility, the setup process, challenges to expect, and tips for success. 

How did we get here? The history

The 2014 Farm Bill required the development of a pilot program to test the viability of retail food stores accepting SNAP benefits through online transactions. Just as is necessary for in-store SNAP transactions, those payments must be secure, private, and easy to use, and benefits can’t be used for fees like delivery or convenience fees. 

The SNAP Online Purchasing Pilot launched in April 2019 in New York, and by April 2020, Washington, Alabama, Iowa, Nebraska, and Oregon had retailers participating in the pilot program. Eight retailers were selected for the pilot programs, and only one of those retailers was a single-store independent operator: Wright’s Market in Opelika, Alabama.

While the pilot program was intended to last a few years to evaluate how it works and gradually add more states, the pandemic led the USDA to accept more applications from states and retailers. As of press time, 46 states and the District of Columbia have launched SNAP online purchasing (Missing from the list? Alaska, Louisiana, Maine, and Montana). Because of that rapid expansion, the combined application and testing process can take months, which means independent retailers who are eager to accept SNAP payments online will need to start the application process as soon as possible. 

What is the set-up process like now?

Before considering implementing the SNAP online program, retailers will want to determine their eligibility. “The retailer must be an eligible SNAP retailer, have an eCommerce presence, and have a website that is capable of being updated to meet requirements to operate online purchasing,” NGA’s Senior Director of Government Relations Molly Pfaffenroth explains.

Step 1: Ensure eCommerce website is ready for multiple transactions

That means the store's website must be able to process multiple transactions, since most SNAP shoppers won’t just be ordering SNAP eligible items. In one basket, there may be multiple payment methods. Jimmy Wright, owner of Wright's Market, recommends working with an eCommerce partner who has experience with SNAP online to make the process easier. While other eCommerce platforms are gaining experience with the process, Wright worked with Freshop, who is also IGA’s eCommerce program partner. 

"Once we saw the requirements from FNS to accept SNAP, we knew we'd have to move our eCommerce to a platform that could handle those requirements," Wright says. He chose Freshop in part because a former retailer who had been involved in the pilot program joined their team. "It was a tremendous help to have someone who was familiar with the program from the retail side." 

That former retailer is Colleen Griffin-Underhill, who is now the director of customer experience at Freshop. Her team leads retailers on the Freshop platform through the SNAP online process. "We really are going to be their partner and hold their hand through the whole process, including doing all the testing that is required," Griffin-Underhill says.

Step 2: Submit a letter of intent to FNS

Once a retailer’s eCommerce website is capable of processing multiple transactions, they can submit a letter of intent to the USDA FNS that they want to participate in SNAP online, which puts the retailer on the list for approval. "The sooner they get on the list the better," says Griffin-Underhill. "If they are very early in the eCommerce process, they should get on the list."

Pfaffenroth recommends reaching out to her for help with any questions on the FNS application process.

Step 3: Connect with third party payment processor recommended by FNS

Another key component to getting set up for the program is the third party payment processor, which works on the backend technology process. Until early February 2021, there was only one third party processing company approved to work with retailers on SNAP online purchasing, but now there are two options: FISERV and WorldPay. Pfaffenroth sees this as a positive step to provide retailers with more choice and drive competition in the marketplace.

Step 4: Enter the testing phase

Once the above requirements are met and systems are in place, the store enters a testing phase with FNS to ensure the system functions appropriately and securely. If it does, the store can begin accepting SNAP payments online. 

“The retailer and eCommerce company need to go through a testing phase,” says Pfaffenroth. “NGA has been working on a best practices toolkit to help guide independents throughout the process. We hope to launch this toolkit by Q1 of this year.”

Wright recommends retailers prepare their customer service teams to coach online shoppers through the payment process during this testing phase. "The pandemic sent people online who had never shopped online ever before,” he notes. "And navigating that whole process, for someone who has never done it before, can be difficult." Wright says his team has had to talk shoppers through the payment process to help them get used to it, but after a few times they get the hang of it. 

What challenges can retailers expect?

Now that we've outlined the setup process for offering SNAP online, let's discuss the challenges independent retailers have seen so far. 

Many independent grocers have applied to FNS to participate, but there remain some burdensome requirements and several barriers that are uniquely faced by small retailers. These barriers include technical challenges, financial constraints to launch and continuously operate the program, and a lengthy application and testing process.

While Wright was part of the early pilot program and recognizes that his experience may be different from what retailers starting the process today experience, he says, "What I understand today from retailers is that it is still a lengthy process to get through." Pfaffenroth echoes that statement. "There are delays across the board, not just with independents," she says, elaborating that retailers can reduce delays by reading the instructions carefully and gather all of the information FNS needs ahead of time.

Griffin-Underhill is confident that all parties are getting more efficient in the process, and by working with the right eCommerce provider like Freshop, retailers will have a smoother experience. "We are trying to remove as many barriers as possible," she says. "The relationship, at the end of the day, is between the retailer and FNS. We are there to support the retailer."

NGA Senior Vice President of Communications and External Affairs Laura Strange points to the work that NGA has done to expand the SNAP online purchasing program and make it more accessible to independent community grocers. "Molly and the team have led the effort on Capitol Hill and at USDA FNS to elevate the issue, find solutions and expand the program," Strange says.

The NGA Government Relations Committee, which includes a number of IGA retailers, had a virtual meeting with U.S. Senator John Boozman, ranking member of the Senate Agriculture, Nutrition, and Forestry Committee to further discuss the program and the need for additional funding for FNS to address the current backlog in applications. Also, this week, U.S. Sens. Dick Durbin and Tammy Duckworth introduced the Expanding SNAP Options Act, and the House Agriculture Committee advanced its budget reconciliation bill. Pfaffenroth, who worked directly with Capitol Hill staffers on both pieces of legislation, said she was pleased to see that each bill provided significant funding for the SNAP online purchasing program in the form of technical assistance for small and mid-size retailers.

Why Independents Should Do It

While there are challenges for independent retailers to accept SNAP online, Wright sees it as an important investment in both the future of retailing and in his community.

I wanted all my shoppers to be able to shop and pay no matter what platform they use, whether it's coming inside my physical store or shopping online. With Amazons and Walmart offering [SNAP online], I think if you don't get into eCommerce and accepting all forms of tender, you're going to have a competitive disadvantage going forward. eCommerce sales for some independents are off the charts and for some they're very little, but I think offering the program is something that everybody needs to do."

Griffin-Underhill agrees. "This really matters and we've put the resources to it," she says, adding that the Freshop team is getting more efficient every day in helping retailers get up and running. 

As shopper behavior continues to shift online, Pfaffenroth says SNAP is just the beginning of government programs moving toward online payments. She expects WIC will be next, presenting a new set of challenges, so retailers investing in accepting SNAP online will be a step ahead. 

Pfaffenroth is encouraged that the process will continue to be easier and NGA continues its work to provide additional federal funding for FNS to allow for more resources for the program. "With food and security being such a prevalent topic during the pandemic and the new administration focused on combating hunger and food insecurity, there is a lot of interest in getting independents on SNAP online.”

"This is a way to solve some of the issues with food access, especially in rural America," says Jimmy Wright, owner of Wright's Market in Opelika, Alabama, which has been accepting SNAP online since February 2020.

Ready to get started? Visit the FNS website to determine your eligibility and talk to your eCommerce provider about the next steps for your website. 

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