How Forage Tackles SNAP Online For Independents

The Supplemental Nutrition Assistance Program (SNAP) is vital for many Americans, delivering funds to nearly 42 million people to buy necessary foods and move toward self-sufficiency. Independent retailers are a crucial part of this successful public-private partnership, as they represent 33% of all grocery sales.

And while many independent grocers accept SNAP in stores, it has been difficult to successfully accept SNAP payments online due to the financial and technical challenges they encounter in shifting to eCommerce. This became especially apparent early in the pandemic, which sent many shoppers online when only eight states and four retailers (Wright’s Market, ShopRite, Amazon, and Walmart) were part of a SNAP online purchasing pilot program that 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. Now, SNAP online purchasing has expanded to nearly every state in the country, and the National Grocers Association (NGA) has helped many independents to successfully accept SNAP payments online, which is key to staying competitive, according to IGA CEO John Ross.

"Even before I got on board with IGA I was working with tech partners in Congress to modernize SNAP," Ross said. "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 shopper 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."

Understanding that challenges still exist for independents wanting to accept SNAP online, Ross spoke with Forage CEO and Co-founder Ofek Lavian about the complexities and nuances of bringing SNAP EBT and WIC online and enabling POS systems to accept these benefits through digital payments. Forage is a mission-driven payments company that helps enable EBT SNAP payments online and one of only three Third-Party Processor (TPP) certified by the USDA for secure PIN-entry.

Watch the interview below to learn more.

Key Takeaways

1. Accepting EBT Is A Complex Transaction

"The U.S food stamp program has existed for nearly a century and is modernized in many ways — today it's known as EBT SNAP," Lavian explained. "Over the last few years we've been one of the only payments companies that allow this payment method to be accepted online and our mission is to expand it so that everybody can use their food benefits broadly on the internet."

Unlike simpler methods of online payments like credit and debit cards, it was very complicated to enable EBT SNAP online. "It's actually one of the core reasons why there's only roughly 200 stores accepting EBT online, while there's 250,000 retailers that accept it in their brick-and-mortar store," Lavian said. "So it has been my personal mission for the past few years to make EBT benefits as ubiquitous on the internet as credit and debit cards — and we've got a lot of work to do there."

"Enabling EBT is a a two-prong challenge," Lavian said. "It's a software and technical challenge, where it functions like a debit or a prepaid card funded by the government — there are certain restrictions." Lavian noted these examples:

• EBT-eligible items paid for with an EBT card are tax exempt
• Many transactions require a split tender or two forms of payment to pay for that basket
• Each EBT transaction requires a four-digit PIN to ensure that the individual purchasing is actually the the the person who those benefits belong to

"Other than it being a technical challenge, it's also a regulatory challenge," he continued, adding that the retailer accepting the EBT payments must meet a list of requirements to ensure they are meeting the integrity of the program. "Forage is uniquely positioned to solve those two challenges — it is much more complex than accepting traditional payments, which is why we've invested so deeply here."

2. How Does Forage Tackle The Challenges?

"You've become sort of an arbiter between the federal government standards, the retailer POS system, and the eCommerce software provider all at the same time," Ross said.

"That's exactly right," Lavian replied. "We've built out technology that allows you to do everything from checking the balance of the EBT card to charging, reversing, or refunding, so we've got all the basic functionality of a payments provider but also have tailored our technology to match the actual nuance of the EBT program."

That technology is crucial for a multipurpose transaction. For example, if there is a digital order for $75, but only some food items are SNAP-eligible, the retailer must calculate the two subtotals of what is SNAP-eligible and not. When the customer clicks "checkout," two groups must approve the transaction: the EBT system and the traditional payment system. That's where a USDA-certified TPP like Forage comes in, to make the process as seamless as possible.

3. How Can This Technology Serve Independents & SNAP Users?

"In March of 2020 there were 35,000 Americans that used their EBT benefits online," Lavian said. "Most recently the USDA published that in April of 2023 this year, 3.7 million SNAP households shopped online. You're seeing a 100x increase just over the last few years."

With so many Americans needing to access their SNAP benefits online, independent grocers accepting eCommerce orders and SNAP payments online will benefit both the shoppers and their businesses.

"Most grocers today do not accept this important payment method [online] and unfortunately many individuals that rely on EBT SNAP benefits in order to feed their families don't have the same luxury to go online and use their EBT benefits and check out as commonly as a credit card or a debit card," Lavian explained.

But Forage is determined to help independents serve these online shoppers, he said.

"We're the only company that is singularly focused on this problem. While there are a handful of other businesses that accept EBT, that is a relatively small percentage of their total business. For us, it's all we do and it's all we think about and the reason why we exist as a business."

Want to accept SNAP online but need help? The National Grocers Association Foundation Technical Assistance Center is the grocer resource for nutrition incentives, providing no-cost technical and program assistance to food retailers and their sponsoring Gus Schumacher Nutrition Incentive Program (GusNIP) or Food Insecurity Nutrition Incentive (FINI) grant partners.