USDA Piloting Contactless SNAP Payments

In an effort to modernize its systems, the U.S. Department of Agriculture Food and Nutrition Service (FNS) will begin a five state pilot utilizing contactless mobile payments for recipients in the Supplemental Nutrition Assistance Program (SNAP). Emily Crowe of Progressive Grocer adds details on the program launching in Illinois, Louisiana, Massachusetts, Missouri, and Oklahoma:

“The FNS will work with state agencies and electronic benefit transfer (EBT) processors, mobile wallet providers, retailers and others to roll out the pilot program. Retailers and households receiving SNAP benefits can decide whether to use the new technology. Shoppers can continue to use their EBT card as preferred.”

This move is a massive step forward in modernizing payment systems for government benefits and represents a positive shift to meet both customers and retailers at established and growing points of technology. Previous research from the North American PaymentsInsights study shows that 53% of Apple iOS users and 41% of Google Pay consumers used a digital wallet in a 12-month period to make an in-store purchase.

By allowing contactless and mobile-driven payments, the FNS is creating a more flexible program that accounts for the changing behaviors of consumers at all income levels. As covered in a recent Javelin Strategy report on the prepaid mobile ecosystem, prepaid mobile plans are attractive to underbanked and underserved consumers who can use the easy entry points to gain access to the now ubiquitous service delivered through smartphones, including mobile and contactless payments. The prepaid mobile market, while easily transferable from one service to another, currently serves approximately 65 million U.S. consumers utilizing just the three most prominent carriers: AT&T, T-Mobile, and Verizon.

The strategic advances of FNS also support the market growth of the Nutritional Assistance category, which Javelin predicts will reach $141 Billion by 2026, even after the temporary COVID-related benefits expired recently. The impact of inflation and relate adjustments to food costs will drive much of that growth to ensure that impacted families can continue to afford basic necessities.

The next step for FNS will be to work to accelerate the pilot and ensure a full national rollout in a timely manner that allows all impacted consumers to realize the benefits of contactless payments within the program. The major concern would be a protracted pilot program that misses out on continued product evolution within the contactless payment, mobile payment, and point-of-sale ecosystems.

Overview by Jordan Hirschfield, Director of the Prepaid Advisory Service at Javelin Strategy and Research.

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