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Take On Payments, a blog sponsored by the Retail Payments Risk Forum of the Federal Reserve Bank of Atlanta, is intended to foster dialogue on emerging risks in retail payment systems and enhance collaborative efforts to improve risk detection and mitigation. We encourage your active participation in Take on Payments and look forward to collaborating with you.

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March 29, 2021

SNAP Continues to Pop

Over the last year, a number of our Take on Payments posts have expressed industry concerns about the impact that the major shift to digital payments propelled by the COVID-19 pandemic will have on the un- and underbanked population. While several governmental assistance programs have modified their programs to accommodate remote enrollment and ongoing participation, the actual use of these benefit funds was largely limited to in-store purchases of foods, drugs, and other items authorized by those programs. My colleague Catherine Thaliath authored a post last July reviewing how the Supplemental Nutrition Assistance Program (SNAP) had moved from a one -state, pilot program in 2019 to supporting online purchases by SNAP cardholders in six states by early 2020.

I'm excited to report that the expansion of SNAP's online ordering program has continued aggressively through the pandemic with the participation of 47 states and the District of Columbia. Only Alaska, Louisiana, and Maine are not currently participating in the digital payment program; Maine has plans to go live later this year. In most states, the major grocery retailers that were already supporting online ordering are participating. SNAP funds can be used only for the purchase of the eligible food items and not for delivery and any other convenience fees.

With the digital expansion of the assistance program, program administrators at the federal and state levels are well aware of the increased risk of fraudulent activity that comes with the buy-online-pick-up-in-store option (sometimes referred to as BOPIS). The SNAP program requires that online retailers support PIN entry, which helps to mitigate fraud risk. The retailers follow a number of traditional steps to ensure that the person picking up.

It is encouraging to see how agencies are adopting technology for social good in this challenging time.