Testimony of Jacki Snyder, Manager, Electronic Payments, SUPERVALU INC., on behalf of the Food Marketing Institute before the Subcommittee on Department Operations, Oversight, Nutrition and Forestry Chairman Goodlatte, Congresswoman Clayton and Members of the Committee: Good Morning. My name is Jacki Snyder and I am the Manager of Electronic Payments for SUPERVALU INC. I also chair the Food Marketing Institute's (FMI) Electronic Payment Systems Committee and am a Representative Board Member of the National Automated Clearinghouse Association's EBT Council. I want to thank you for the opportunity to testify on behalf of the 21,000 retail food stores represented by FMI regarding legislation to achieve interoperability and portability of EBT benefits. We very much appreciate the work this Committee has done on EBT and the Interoperability/Portability issue. Before I proceed, I would like to take a moment to tell you about my company, SUPERVALU INC. SUPERVALU is based in Minneapolis, MN and is one of nation's largest food distributors and the largest wholesaler for independent food retailers in the United States, supplying 3,100 supermarkets and 700 limited-assortment food stores in 48 states. We also own over 300 supermarkets operating under a variety of names and formats, making us the eleventh largest food retailer in the United States. A large part of my time and that of my colleagues in the industry is spent working to ensure that recipients of our nation's food assistance programs are able to access their benefits without difficulty in our stores. The conversion from paper food coupons to EBT can make this a challenge at times. Under the old paper food coupon system, recipients could redeem their food coupons in any authorized food store anywhere in the country. For example, a food stamp recipient living in Moorhead, MN could use their food stamps in Fargo, ND. Similarly, a recipient living in Colorado could visit their Mother in Illinois and purchase food for their children while away from home. Unfortunately, as we move to electronic delivery of benefits, this is currently not the case. The legislation we are discussing today would once again, provide for the portability of food assistance benefits and allow food stamp recipients the flexibility of shopping at locations that they choose. Supermarkets service food stamp recipients in numerous locations across the country that are similar to Fargo/Moorhead where people live in one state and shop in another. This cross border shopping is conducted for a variety of reasons. One of them is convenience, another is the cost of goods. The supermarket industry is a very competitive industry. Every week our stores advertise specials in newspaper ads across the country. I am a mother with 3 children including a 14-year-old son who knows how to eat and a three year old that still requires a great deal of time and attention. I not only shop at locations convenient to me but I also shop around for the best prices. While I am lucky enough to live in a location that offers a variety of stores within my state borders, a lot of people are not. There are many people who may live in an area like Washington, DC but find they drive to a store in Maryland or Virginia for a particular product or special sale price. Customers paying with every type of tender except EBT have the flexibility to shop where they choose. Why shouldn't recipients of food assistance benefits be allowed to stretch their dollars in the same way that other consumers do, without regard to state borders? EBT portability is simply allowing recipients of benefits under the food stamp program to redeem those benefits without regard to state borders at the stores they choose. In addition to portability, the legislation we are discussing today allows for the interoperability of EBT transactions. Interoperability can be simply defined as the ability of various computers involved in authorizing, routing and settling an EBT transaction to talk to each other. Interoperability works well today with ATM/Debit cards, the type of cards that EBT was modeled after. Consumers and merchants are confident that when a MAC card issued by a bank in Pittsburgh is presented, authorization and settlement of that transaction will work the same as when a Star card, issued by Bank of America in California is presented. This occurs regardless of where the merchant is located. Unfortunately, this is currently not the case with EBT cards. If every state operated their EBT program under a standard set of operating rules as this legislation requires, companies like mine, operating in 48 states, could be more efficient, resolve any discrepancies in customer accounts more quickly and ultimately hold down the price of groceries for all of our customers. When a customer comes in to our store and their EBT card does not work, they blame the store and our equipment, not the lack of interoperability. Not approving the legislation in discussion today would be no different than authorizing individual states to print their own currency. Hundreds of years ago, states (or colonies) had the flexibility to do this. We converted to a common currency to eliminate the confusion and uncertainty that was the result of the lack of interoperability. Imagine the situation today if a resident of Stillwater, Minnesota arrived at a store in Hudson, Wisconsin with purple $20 bills with our governor's picture on them. This is not acceptable in the cash environment and should not be acceptable in the food stamp environment either. Currently, the National Automated Clearinghouse Association's EBT Council is sponsoring an interoperability pilot. This pilot facilitates interoperability for EBT transactions issued under the QUEST operating rules that have been adopted by 31 states, 23 of which participated in the pilot. The purpose of this pilot has been to measure the quantity of interoperable EBT transactions and to project the costs for nationwide interoperability of EBT transactions. While this pilot is due to terminate in September, the results from an interim report that was prepared by Benton International were reviewed by Chairman Goodlatte's staff prior to drafting the legislation being discussed today. This legislation Chairman Goodlatte has introduced is very straightforward. It would solve both the portability and interoperability problems that I have mentioned here today. Specifically, the legislation introduced by Chairman Goodlatte: requires interoperability by October 1, 2002, with a few exceptions needing a waiver; requires USDA to "adopt" the national standard used by the majority of the States; requires USDA to pay for all interoperability costs (currently estimated by Benton International to be no more than a maximum of $500,000 annually when all states are on EBT systems or $160,000 for the current year); these figures are based on the above mentioned study conducted on behalf of the National Automated Clearing House EBT Council (This is significantly less than the $20 million USDA pays annually to the Federal Reserve to redeem coupons); requires contracts entered into after the date when the national standard is adopted to use the standard, and for USDA to pay 100 percent of the interoperability costs; includes transitional funding for states currently using a national standard. Upon enactment, FNS will pay 100 percent of the costs of interoperability fees for current states using a national standard (While the interoperability pilot sponsored by NACHA is due to expire in September, this would allow those states and beneficiaries in states participating in the pilot to continue to have interoperable transactions beyond the pilot period without interruption.); requires current contracts that are not using the national standard to convert at the point of a new contract; includes a waiver process for current states with significant technological challenges to provide time to convert to the national standard (This is intended to cover current smart card states). To summarize, the current interoperability pilot project continues through the end of September. It would be very helpful to retailers, states and recipients to pass this legislation prior to the expiration of the pilot so that consumers' transactions are not interrupted. It is easy to see the potential for confusion when a recipient walks into a store where they purchased groceries last week and can no longer use their EBT card because the interoperability project sponsored by the National Automated Clearinghouse Association has ended. This reduction in service would be quite difficult to explain to clerks or beneficiaries. Again, Chairman Goodlatte, Congresswoman Clayton and members of this Committee I would like to thank you for the opportunity to testify on this important topic. I am glad to answer any of your questions.
Testimony of Jacki Snyder, Manager, Electronic Payments, SUPERVALU INC., on behalf of the Food Marketing Institute before the Subcommittee on Department Operations, Oversight, Nutrition and Forestry
Chairman Goodlatte, Congresswoman Clayton and Members of the Committee:
Good Morning. My name is Jacki Snyder and I am the Manager of Electronic Payments for SUPERVALU INC. I also chair the Food Marketing Institute's (FMI) Electronic Payment Systems Committee and am a Representative Board Member of the National Automated Clearinghouse Association's EBT Council.
I want to thank you for the opportunity to testify on behalf of the 21,000 retail food stores represented by FMI regarding legislation to achieve interoperability and portability of EBT benefits. We very much appreciate the work this Committee has done on EBT and the Interoperability/Portability issue.
Before I proceed, I would like to take a moment to tell you about my company, SUPERVALU INC. SUPERVALU is based in Minneapolis, MN and is one of nation's largest food distributors and the largest wholesaler for independent food retailers in the United States, supplying 3,100 supermarkets and 700 limited-assortment food stores in 48 states. We also own over 300 supermarkets operating under a variety of names and formats, making us the eleventh largest food retailer in the United States.
A large part of my time and that of my colleagues in the industry is spent working to ensure that recipients of our nation's food assistance programs are able to access their benefits without difficulty in our stores. The conversion from paper food coupons to EBT can make this a challenge at times.
Under the old paper food coupon system, recipients could redeem their food coupons in any authorized food store anywhere in the country. For example, a food stamp recipient living in Moorhead, MN could use their food stamps in Fargo, ND. Similarly, a recipient living in Colorado could visit their Mother in Illinois and purchase food for their children while away from home. Unfortunately, as we move to electronic delivery of benefits, this is currently not the case. The legislation we are discussing today would once again, provide for the portability of food assistance benefits and allow food stamp recipients the flexibility of shopping at locations that they choose.
Supermarkets service food stamp recipients in numerous locations across the country that are similar to Fargo/Moorhead where people live in one state and shop in another. This cross border shopping is conducted for a variety of reasons. One of them is convenience, another is the cost of goods. The supermarket industry is a very competitive industry.
Every week our stores advertise specials in newspaper ads across the country. I am a mother with 3 children including a 14-year-old son who knows how to eat and a three year old that still requires a great deal of time and attention. I not only shop at locations convenient to me but I also shop around for the best prices. While I am lucky enough to live in a location that offers a variety of stores within my state borders, a lot of people are not. There are many people who may live in an area like Washington, DC but find they drive to a store in Maryland or Virginia for a particular product or special sale price.
Customers paying with every type of tender except EBT have the flexibility to shop where they choose. Why shouldn't recipients of food assistance benefits be allowed to stretch their dollars in the same way that other consumers do, without regard to state borders?
EBT portability is simply allowing recipients of benefits under the food stamp program to redeem those benefits without regard to state borders at the stores they choose.
In addition to portability, the legislation we are discussing today allows for the interoperability of EBT transactions. Interoperability can be simply defined as the ability of various computers involved in authorizing, routing and settling an EBT transaction to talk to each other.
Interoperability works well today with ATM/Debit cards, the type of cards that EBT was modeled after. Consumers and merchants are confident that when a MAC card issued by a bank in Pittsburgh is presented, authorization and settlement of that transaction will work the same as when a Star card, issued by Bank of America in California is presented. This occurs regardless of where the merchant is located.
Unfortunately, this is currently not the case with EBT cards. If every state operated their EBT program under a standard set of operating rules as this legislation requires, companies like mine, operating in 48 states, could be more efficient, resolve any discrepancies in customer accounts more quickly and ultimately hold down the price of groceries for all of our customers. When a customer comes in to our store and their EBT card does not work, they blame the store and our equipment, not the lack of interoperability.
Not approving the legislation in discussion today would be no different than authorizing individual states to print their own currency. Hundreds of years ago, states (or colonies) had the flexibility to do this. We converted to a common currency to eliminate the confusion and uncertainty that was the result of the lack of interoperability. Imagine the situation today if a resident of Stillwater, Minnesota arrived at a store in Hudson, Wisconsin with purple $20 bills with our governor's picture on them. This is not acceptable in the cash environment and should not be acceptable in the food stamp environment either.
Currently, the National Automated Clearinghouse Association's EBT Council is sponsoring an interoperability pilot. This pilot facilitates interoperability for EBT transactions issued under the QUEST operating rules that have been adopted by 31 states, 23 of which participated in the pilot. The purpose of this pilot has been to measure the quantity of interoperable EBT transactions and to project the costs for nationwide interoperability of EBT transactions. While this pilot is due to terminate in September, the results from an interim report that was prepared by Benton International were reviewed by Chairman Goodlatte's staff prior to drafting the legislation being discussed today.
This legislation Chairman Goodlatte has introduced is very straightforward. It would solve both the portability and interoperability problems that I have mentioned here today.
Specifically, the legislation introduced by Chairman Goodlatte:
It is easy to see the potential for confusion when a recipient walks into a store where they purchased groceries last week and can no longer use their EBT card because the interoperability project sponsored by the National Automated Clearinghouse Association has ended. This reduction in service would be quite difficult to explain to clerks or beneficiaries.
Again, Chairman Goodlatte, Congresswoman Clayton and members of this Committee I would like to thank you for the opportunity to testify on this important topic. I am glad to answer any of your questions.
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