Opening a New Revenue Stream

Payment technology, online EBT and an omnichannel experience will help convenience stores weather the recession and labor shortage in 2023.
SNAP benefits

Convenience stores are navigating the post-pandemic landscape of retail. The labor shortage, a national recession and ongoing competition from e-commerce giants make it more critical than ever for convenience stores to find simple technology solutions that will both open new revenue streams and make them relevant to customers seeking retail shopping options wherever they are whether online or in person.

One of the ways to do this is for convenience stores to develop e-commerce solutions that complement their in-store experience. This e-commerce offering should offer parity to their physical stores in terms of payment types accepted, including online EBT payments.

EBT is the payment method through which government benefits recipients access their Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) and Temporary Assistance for Needy Families (TANF, commonly referred to as Cash) benefits. Among brick-and-mortar stores, 250,000 grocers accept SNAP EBT today, with 44 percent of those being convenience stores. In fact, more than 75 percent of convenience stores in the United States are authorized SNAP retailers. That’s approximately 117,000 stores. 

Through in-store transactions, convenience stores account for 5.08 percent of total SNAP spend. But c-stores are noticeably missing from the online SNAP retailer set. Online SNAP is a fast-growing space, growing by 525 percent from 2020 to 2021, and we expect triple-digit growth to continue. 

For convenience stores, the move to online EBT payments represents a significant revenue opportunity. As more convenience stores begin to operate in e-commerce to offer their customers an omnichannel experience, online EBT acceptance must be a part of their e-commerce business plan.

E-commerce makes access to convenience store selection easier for customers of all kinds, in particular those who are disabled, lack transportation or juggle challenging schedules. Enabling EBT acceptance online allows convenience stores to serve these segments of customers — and others — with the convenience of online shopping and payment with EBT. Online shopping with EBT also removes the stigma that some government benefits recipients may feel when paying with EBT in person.

Online SNAP EBT can open up a competitive solution for smaller stores that can't afford to lose these customers to large e-commerce players that already offer SNAP EBT online. And by offering it on their own site instead of through third-party delivery service providers, both retailers and consumers can avoid costly fees.

Convenience stores have been historically one of the slowest industries to adopt e-commerce, but large and small retailers alike are seeing the importance of offering their customers an omnichannel experience. When customers are in a rush, when their schedules are too busy to allow for a run to the store or when they need to stock up on staple items, an online offer can complement their in-store runs.

Retailers see more engagement (and more spend) from omnichannel customers than customers who shop only online or only in-store, and are tailoring their experiences to meet the customer wherever they are. This omnipresence is important, and the payment methods need to be consistent and inclusive across in-store and e-commerce to reduce customer confusion and encourage cross-channel engagement. For example, if a store accepts EBT in-store, customers expect the online offering to accept EBT as well.  

Unfortunately, food affordability will continue to be a problem through 2023 with food prices on the rise. According to USDA, the CPI for all food increased 0.8 percent from July 2022 to August 2022, and food prices were 11.4 percent higher than in August 2021. Government benefits are critical during periods of recession and inflation, making EBT benefits usability online even more critical to putting food on the table.

Convenience stores need to be ready to meet their customers wherever they want to shop. By bringing their stores online, accepting SNAP EBT and incorporating technologies that are inclusive of the EBT customer, they will be addressing an important need for their customers, competing with larger e-commerce businesses, and opening another revenue stream for their business.

Kristina Herrmann is chief business officer at Forage, a USDA approved third-party payment processor and a PIN provider that authenticates and processes EBT transactions.

Editor's note: The opinions expressed in this column are the author's and do not necessarily reflect the views of Convenience Store News