In April 2019, the USDA launched the Supplemental Nutrition Assistance Program (SNAP) online purchasing pilot program
, which allows participants to purchase groceries online. What began as a two-year pilot program in one state with a gradual rollout to additional states is now available in 40 states (with five additional states granted approval and in the planning phase). The COVID-19 public health emergency, which has made access to online grocery shopping critical, expedited the program's deployment. The USDA also rolled out the Pandemic Electronic Benefits Transfer (P-EBT) program as a SNAP extension. With P-EBT, children in low-income households continued to receive the free or reduced-priced meals that they would normally have received in school during the 2019–20 school year.
This is certainly a positive move toward advancing ecommerce inclusion. However, more ecommerce transactions present more fraud risks and opportunities for criminals. (My colleague Doug King blogged a few years ago about fraud risks SNAP was already experiencing, including trafficking.) To mitigate some of these ecommerce risks, the Department of Agriculture's (USDA) Food and Nutrition Service (FNS), which administers SNAP, has increased security for online EBT card use. SNAP benefits and P-EBT benefits are both delivered on PIN-enabled EBT cards that function like prepaid debit cards. Retailers must use a USDA-approved, third-party processor that offers secure PIN-on-glass entry for online purchases. When customers transact online using their EBT card, they must enter their EBT PIN to complete their purchase. In addition, retailers must successfully meet the FNS's stringent technology and testing requirements.
Unfortunately, these technology and testing requirements to integrate a secure online purchasing environment with the grocer's EBT benefits system are extensive and cannot be done overnight. As a workaround until retailers can fully integrate their systems, the USDA recommends that SNAP customers take advantage of existing services like "pay at pickup," where customers place grocery orders online and pay with their SNAP EBT card when they get their groceries—which allows them to follow both social distancing and ecommerce fraud-prevention guidelines.
The USDA's SNAP Fraud Framework offers states resources to help them proactively identify potential fraud and suggests best practices on fraud prevention and mitigation. You can learn more about the USDA's efforts to manage fraud risk by visiting their website
By Catherine Thaliath, project management expert in the Retail Payments Risk Forum at the Atlanta Fed