(Bloomberg) -- The U.S. government is testing a plan to allow food-stamp purchases through grocers online, potentially opening a $61 billion annual market to companies such as Amazon.com Inc (NASDAQ:AMZN)., Walmart (NYSE:WMT) Inc. and Instacart Inc.
Agriculture Secretary Sonny Perdue announced the start of a two-year pilot in New York testing online purchases of groceries by beneficiaries of the Supplemental Nutrition Assistance Program, known colloquially by its former name, food stamps.
“People who receive SNAP benefits should have the opportunity to shop for food the same way more and more Americans shop for food -- by ordering and paying for groceries online,” Perdue said in the statement Thursday.
Initially, Amazon will provide the service in the New York City area, with ShopRite joining early next week, the U.S. Department of Agriculture said in a statement. Walmart will handle the service in parts of upstate New York. Additional online retailers will be added in the coming months and the pilot will eventually expand to other areas of New York along with Alabama, Iowa, Maryland, Nebraska, New Jersey, Oregon and Washington state.
National Roll-out
The pilot will monitor electronic grocers’ performance in processing food-stamp transactions securely. Participants will be allowed to use their benefits to pay for eligible foods but not for service or delivery fees, according to the statement.
Walmart has been working with the USDA on the pilot for more than a year, company spokeswoman Molly Blakeman said in an email. The company has nearly 275 pickup locations in the nine states that are eligible for the test, she said. She declined to answer questions about how this will affect Walmart’s sales.
Amazon said New York SNAP beneficiaries can shop on AmazonFresh and Prime Pantry without paying the membership fee. “The ultimate goal of this pilot is to pave the way for a national roll-out once the USDA identifies the best path to large-scale implementation,” the Seattle-based company said in a blog post.
Congress authorized evaluation of online grocery purchases through SNAP benefits in the 2014 farm bill, according to the department. The program paid out $61 billion in benefits in 2018, according to the USDA data.