Retail

Propel CEO Sees App As Aid to Low-Income Consumers, Beyond The Grocer’s Aisles

An app designed to make life easier for food stamp recipients is expanding the commerce-related services it offers to low-income Americans, but a new challenge related to data could hamper the ability of Propel, the company that operates the app, to gather the data upon which it depends.

New features being rolled out include grocery discounts and information tied to social services, job openings, budgeting help and even advice on healthy eating.

Jimmy Chen worked at Facebook until he left about four years ago to launch Brooklyn-based Propel, which released the app in 2016. Propel is neither charity nor foundation, but a private sector business serving the more than 40 million Americans who receive assistance through the federal government’s Supplemental Nutrition Assistance Program (SNAP).

Propel’s initial and basic purpose is to inform food stamp users via their smartphones of how much money they have left on the EBT debit cards used to buy groceries.

Those cards replaced paper food coupons — a process completed in 2004, according to the U.S. Department of Agriculture — but recipients usually have to save grocery receipts or regularly call an 800 number and wait on hold to learn how much money is left in their accounts.

Propel has raised at least $5.2 million from a variety of big-name investors, and is rapidly expanding its services as it eyes more features and partners.

“Part of the reason the EBT card was invented was to reduce the stigma of government benefits, to make it feel like a financial tool,” said Chen in an interview with PYMNTS’ Karen Webster.

Making it easy for low-income Americans who take part in SNAP to check their benefits not only can save time, he said, but can also make those recipients feel like they are part of the mainstream financial system.

The Fresh EBT app needs to move well beyond that, though. “We can do better than just showing your balance,” he told Webster.

But the company also faces a serious challenge.

Conduent is a government contractor that runs food stamp networks in 25 states, including New York and California — states that include a huge chunk of Propel clients. Conduent reportedly has been slowing access to that food stamp data, which can prevent SNAP recipients from using Fresh EBT.

“There shouldn’t be barriers in your way to find out what your balance is,” Chen said when asked by Webster about the controversy. “Our message is not a political message. We take no taxpayer money. We are a private sector company. We want to make the program more efficient.”

Part of the growth plan involves a focus on financial education. Fresh EBT includes a feature that recommends a weekly budget to users so they don’t exhaust their benefits too quickly.

“It helps people slow down their spending and stretch it throughout the month,” Chen said. That extra day or two of benefits at the end of the month can prove vital for many Propel users. Not only do low-income consumers often have to eat whatever food might remain when benefits temporarily expire, but crime tends to increase around that time in neighborhoods that depend on SNAP, he said.

The app’s budgeting feature has produced significant results. On average, SNAP benefits for Fresh EBT users are lasting an extra day per month, Chen said, citing a study from Harvard economists who analyzed the impact of the app. That translates into some three million “extra” meals per month for Fresh EBT users.

Clients who exhaust benefits can use Fresh EBT to find food banks.

The app also offers easy access to grocery discounts. In December of 2017, Propel launched a digital coupon feature on the app, a move that has saved clients about $2 million so far, Chen said. Fresh EBT users can also link their grocery store loyalty cards to the app. And the app doesn’t leave its users wondering where to shop. “We allow clients to find nearby grocery stores” through the app’s mapping tool, Chen noted.

The Propel business model does not include charging fees to its one million or so app users – nor does it include selling their data. Rather, it collects from its partners — companies also drawn to the potential profits and other advantages that come from serving SNAP recipients. “We are sort of a marketing platform for companies trying to reach low-income Americans,” Chen said.

One of Propel’s newest partners is Shipt, the Alabama-based same-day and last-mile delivery service that was recently acquired by retail chain Target. The two began working together this spring, and as of late April, the partnership has already resulted in 400 job applications from Fresh EBT clients to the delivery provider.

Job listings also come from on-demand employers. Chen estimated that Fresh EBT users have submitted some 10,000 job applications to various employers in the last six months after learning of jobs through the app.

Shipt represents a step forward for Propel.

No matter what happens with Conduent — Propel reports no problems with similar contractors involved with SNAP data — Chen is optimistic about his company’s prospects. Propel’s future will likely include more work with employers. “We see a huge opportunity that we are just beginning to scratch the surface of,” he said.

Propel also could work more closely with foundations and non-profits that serve low-income people, especially organizations that encourage healthy eating, which could make Fresh EBT even more appealing to consumers. “We’d like to be the best channel for that,” Chen said.

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