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Amazon, Walmart and the low-income grocery-shopping divide exposed by the coronavirus

Alyssa Jackson, CNBC newsroom intern
Key Points
  • SNAP program restrictions for online grocery shopping and delivery contribute to public health threats faced by as many as 35 million low-income Americans during the coronavirus.
  • Major sources of groceries, like Amazon and Walmart, offer online grocery shopping for SNAP benefits through a preexisting USDA pilot program, but only in a handful of states.
  • The incomplete access is another example of social inequity and internet divide exposed by the pandemic.
  • Companies are trying to increase access, and advocates on Capitol Hill and at nonprofits are pushing for more action. 
People wearing masks and gloves wait to checkout at Walmart on April 03, 2020 in Uniondale, New York.
Al Bello | Getty Images

As more Americans are forced to stay at home and practice social distancing, the income and internet divide is becoming clear in new ways for those who rely on food-assistance programs. And their ranks are likely to skyrocket due to the sharp rise in unemployment during this coronavirus-led economic downturn.

While many adults can access groceries and food-delivery services, food stamp recipients are limited in these options. Recipients of the Supplemental Nutrition Assistance Program, as well as advocates for low-income Americans, are questioning why most states still lack a critical internet-based service for food delivery when the U.S. Department of Agriculture, which oversees the SNAP program, has piloted an online program for years.

SNAP is available to households that meet income requirements related to the U.S. federal poverty line (about $28,000 for a family of three) and have less than $2,250 in cash or a bank account.

Shawna Hinson is one of at least 35 million Americans who receive SNAP benefits. As a disabled, severely immunocompromised leukemia survivor, Hinson tries to avoid direct contact with people to reduce her risk of exposure. She is also a single parent to three children diagnosed with autism spectrum disorder.

When Hinson finished online grocery shopping from Hy-Vee, she went as far as the checkout page before realizing they do not accept food stamps as a method of payment. Only one grocery delivery service in her area accepts that form of payment online, but they require a $50 minimum purchase and have higher prices for essential groceries (USDA says SNAP benefits cannot be used to cover delivery fees specifically).

"I've called Hy-Vee, and they said that if it was a matter of just a click of a button, that they would change it, but they don't make the rules," Hinson said. "They said that the reason why they can't do it that way is because EBT requires a pin, and credit and debit does not."

The SNAP program, which once used paper-based coupons, has transitioned to an electronic benefits transfer (EBT) card. The pin is required for the SNAP online program, and third-party payments processors are able to complete transactions for retailers already up and running in the pilot.

Low-income Americans lack political power

Joel Berg, CEO of Hunger Free America, a national nonprofit organization focused on hunger and nutrition, is pushing for a seamless way for everyone to get and use their benefits digitally.

"The fact that this hasn't occurred for most low-income people has nothing to do with the technology and everything to do with the fact that they have less political power," Berg said.

Since Hinson could not use her EBT card online, she ordered groceries with curbside pickup at Walmart, but the lack of options for immunocompromised and disabled people frustrates her. If more businesses do not start to accommodate people on food-assistance programs by implementing systems that accept food stamps, immunocompromised people will continue to pose a higher risk to themselves and close family members.

SNAP restrictions are major barriers to the health and well-being of families when it is meant to help people get access to food, a fundamental human right and basic human need, says Dr. Mariana Chilton, director of the Center for Hunger-Free Communities at Drexel University.

"Fifty percent of people who are on SNAP are children," Chilton said. "The vast majority of adults who are on SNAP are adults with children, and the vast majority of adults on SNAP either have been working or are continuing to work in front-line essential services."

Payment restrictions to the nation's most vulnerable are why the 2014 Farm Bill authorized the USDA to evaluate the feasibility and implications of the SNAP Online Purchasing Pilot in January 2017. Under the pilot, authorized retail stores can accept EBT cards online as a method of payment. The Food and Nutrition Service announced the selection of eight retailers for the initial launch of the SNAP Online Purchasing Pilot in 2017, but online purchasing was not available until April 2019.

We all have to eat. We all need groceries. There's no distinction. SNAP should not be used as a tool to separate ourselves, separate our communities, separate our families or separate our society from each other.
Dr. Mariana Chilton
director of the Center for Hunger-Free Communities at Drexel University

Currently, the retailers accepting SNAP payments online include Amazon, Walmart, ShopRite and Wright's Market. While the pilot is limited to retailers authorized by the USDA's Food and Nutrition Service, the other four authorized retailers — Dash's Market, FreshDirect, Safeway and Hy-Vee — have not implemented online purchasing using SNAP EBT on their sites. 

The only states that have agreements in place so far with the USDA and where retailers are currently offering online delivery for SNAP benefits are Alabama, Iowa, Nebraska (which was just added this month), New York, Oregon and Washington. The state systems and processes for SNAP benefits, specific to each state, have to be able to handle these online transactions. Arizona and California just became the most recent states to join the program and are planning to have the online purchase option up and running later in April.

Amazon and Walmart accept food stamps for grocery products in all of the pilot program statesShopRite is working with the pilot program in New York, and Wright's Markets in Alabama, which is a local family-owned business in Auburn and surrounding rural areas. Amazon offers SNAP recipients free delivery on Amazon Pantry and Amazon Fresh with a minimum purchase of $35 (over $50 in select regions). The company also allows free access to Amazon Pantry without an Amazon Prime membership.

Should we be concerned over the food supply?

"Amazon is committed to making food accessible through online shopping, offering all customers access to low prices, selection and convenience," said Kristina Herrmann, director of underserved populations at Amazon, in a statement sent to CNBC. "This is especially important as millions of Americans are being encouraged to stay at home. We continue to work closely with the USDA as the SNAP Online Purchasing Pilot grows to expand our capabilities in supporting underserved customers."

While retailers are making an effort to expand their services, there are no online delivery options for Amanda Wesley, who lives in Marshall, Missouri. As an in-home health-care provider, she tries to avoid shopping inside of grocery stores because she cares for an elderly patient with a weak immune system. Wesley attempted to order groceries from Aldi through Instacart, but like every other local grocery store in the area, Instacart does not accept food stamps online. Two weeks later Wesley was able to order groceries with curbside pickup because a friend reached out to help.

Since the USDA pilot program is limited to select retailers and Instacart is not a retailer itself, the company was not eligible for the pilot. However, Instacart is in discussions with the USDA as well as participating pilot retailers to include online marketplaces, according to an Instacart spokeswoman.

A USDA spokesperson said the key components of implementing an online purchasing plan are a retailer, a third-party processor, the state, and USDA. Delivery services such as Instacart and Shipt can work with authorized SNAP retailers to provide delivery services as part of this arrangement. However, per the criteria outlined in the Food and Nutrition Act, delivery services do not meet the criteria to be an authorized retailer.   

USDA plans and challenges

A USDA study indicated that the reason some authorized retailers are not using the program is because of high expenses and lack of existing technology.

"Nearly two-thirds (63%) do not have the equipment to identify SNAP-eligible items. Forty-two percent lack a scanning system while 21% have a system that cannot identify SNAP-eligible products. However, meeting the Farm Bill requirement would be costly, averaging between $7,000 to $10,500 per retailer, depending on the store type."

According to the USDA, the major impediment to use of SNAP online has been lack of a secure method for PIN entry. Since use of a PIN is the sole method of SNAP customer identification, and therefore, a basic requirement of the Electronic Benefit Transfer (EBT) system infrastructure, every internet-based SNAP transaction must come through an approved payment card industry provider. 

Retailers also need to complete website and system development work on their websites to account for SNAP requirements, such as the fact that SNAP does not allow sales tax to be charged on eligible food items purchased with SNAP benefits.

The authorized retailers that have not yet started online EBT shopping could not be reached by press time.

The USDA stated at the launch of the pilot phase that it was intended to ensure online transactions are safe and secure, and eventually, USDA anticipates that more retailers who can meet the requirements to process online SNAP transactions will be able to participate, but timing remains indefinite and state regulatory requirements could be an issue. States must also update their state EBT systems to be able to process, track, and store the data associated with online SNAP transactions.

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In light of the current situation, the Food Nutrition Service is working with states that are interested in implementing the online purchasing option, said a USDA spokesperson.

There are not yet national statistics on SNAP applications received as a result of the coronavirus. The Food and Nutrition Service publishes monthly data on SNAP participation nationwide and at the state level, but the latest data is for December 2019. However, states are reporting that they are seeing increases in SNAP applications.

During this crisis, some legislators say SNAP recipients, especially those with weakened immune systems, need the pilot program to become universal. Democratic Senator Robert Casey, Jr. of Pennsylvania recently wrote a letter to the USDA urging the department to immediately address the food gap for families that cannot safely travel to grocery stores.

"USDA's SNAP Online Purchasing Pilot makes it possible for SNAP participants to purchase grocery deliveries, but its availability is limited to only a few states. While this streamlined option cannot be immediately made available to all states, I urge the USDA to notify retailers of the flexibilities that do currently exist to make grocery delivery possible for all SNAP recipients who need it."

The USDA has relaxed several SNAP program requirements due to COVID-19. The recent $2 trillion stimulus package did include additional money for SNAP to ensure it can meet its obligations, but not a 15% increase in benefits that some legislators had been in favor of adding was not included, though debate over it will continue in any subsequent stimulus package.

Chilton said poor people are not a priority for members of Congress and that was reflected in the stimulus package that did not include any improvements or increases to SNAP benefits.

"People on SNAP benefits are somehow considered to be different than those who are not on SNAP benefits," she said. "We all have to eat. We all need groceries. There's no distinction. SNAP should not be used as a tool to separate ourselves, separate our communities, separate our families or separate our society from each other."

By Alyssa Jackson, CNBC Newsroom Intern

Update: Since this article was published, Arizona and California joined the online purchasing pilot program.

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Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.