As grocery slowly catches up to other retail categories in digital adoption, Thrive Market is seeing mobile gain share.
In an interview with PYMNTS following the online grocer’s recent launch of Supplemental Nutrition Assistance Program (SNAP) Electronic Benefits Transfer (EBT) acceptance, Thrive Market Co-founder and Chief Technology Officer Sasha Siddhartha spoke to how online grocery payments are evolving.
“Online [grocery] purchases have increased both on our platform and others at accelerated rates,” Siddhartha noted. “PayPal has become a bigger part of our business over the years as we’ve scaled. … The trends are moving toward increasing use of mobile devices to purchase groceries online. So native payment methods and digital wallets that are associated with native have also increased in usage.”
PYMNTS Intelligence’s study last April, “Tracking the Digital Payments Takeover: Catching the Coming eCommerce Wave,” created in collaboration with Amazon Web Services (AWS), which drew from a survey of nearly 2,700 U.S. consumers, found that 6% of grocery transactions occur via mobile devices and 6% via computers, with the rest primarily occurring in stores. Now, it seems, mobile is poised to outpace computer purchasing.
With Thrive Market describing itself as the “first online-only retailer” to accept SNAP EBT — a process that took 10 years — Siddhartha highlighted the multibillion-dollar opportunity these benefits present.
“For the EBT case, specifically, online SNAP redemptions went up 63% in 2022, so all the way up to $8 billion, and still represents a really small portion of the overall pool of funds,” he explained, noting that this is the “fastest-growing” area in online grocery.
As far as digital payments, Siddhartha highlighted the importance of catering to evolving consumer preferences. Thrive Market currently accepts standard online tenders such as credit/debit cards, PayPal, Apple Pay and Google Pay.
Of course, digital payments come with challenges.
“This is an area of continuous investment for us,” Siddartha said. “Everything from working closely with our payment gateways and processors to optimize our authorization rates, continuing to monitor fraud or misuse on these platforms, improving our customer experience when it comes to failed payments, continuing to monitor the landscape in terms of subscription billing, best practices. There’s a lot happening there.”
Indeed, merchants that collaborate with payment service providers (PSPs) are the most likely to deploy effective fraud prevention strategies, according to the report “The Role of Fraud Screening in Minimizing Failed Payments,” a PYMNTS Intelligence and Nuvei collaboration.
The study found that 85% of merchants with high levels of collaboration with PSPs encourage customers to purchase a encourage customers to reattempt purchases using the same payment method when a given failed payment is flagged as potentially fraudulent. Meanwhile, just 70% of those with minimal or no PSP collaboration do the same.
Addressing emerging payment capabilities like buy now, pay later (BNPL), Siddhartha expressed openness but noted that such platforms might be more suited for less frequent, higher-ticket sales rather than the frequent, lower-ticket purchases typical of online grocery transactions.
Notably, the PYMNTS Intelligence study “Tracking the Digital Payments Takeover: What BNPL Needs to Win Wider Adoption,” created in collaboration with Amazon Web Services, found that of the 20% of consumers surveyed who used BNPL, 56% leveraged the payment method to buy groceries.
Looking ahead, SNAP EBT payments are not the only benefit that could open up new revenue streams for online grocers. One significant trend Siddhartha mentioned is the shift toward businesses and government viewing food as medicine, leading to the possible expansion of payment options like HSA and FSA dollars for online grocery purchases.
“We’re continuing to monitor landscape and looking for where the consumer’s going, looking for opportunities to ensure that, if there is a particular payment instrument that’s taking off in usage, that we’re in a position to offer to our members that at Thrive,” Siddhartha said.
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