Why Doesn't Costco Accept Food Stamps?
The New York Times City Room blog asks an interesting question. Why doesn't Costco accept food stamps? Even farmers markets accept them! What's the deal, Costco?
From the NYT:
According to Mr. Gioia’s office, executives at Costco told the office that they declined to accept food stamps for three reasons.
They did not think they would qualify based on the federal government requirements.
It was too expensive to adapt their equipment to accept food stamps.
With their annual fee/bulk-purchase model, people on food stamps probably could not shop there anyway.Are these valid concerns? If the corner bodega could qualify to accept food stamps, why would Costco, a publicly traded company with $71 billion in annual revenue, not qualify?
The article goes on to examine each concern -- and none of them were particularly compelling. For example-- the "too expensive" excuse: "...stores that average more than $100 a month in food stamp transactions per customer can receive devices from their state governments that accept the debit cards free of charge," says the NYT.
The NYT also says that the government reimburses retailers 100% for food stamp purchases. And what about the argument that people who use food stamps wouldn't want to shop at Costco?
While some food stamps recipients are destitute and could not come up with the $50, many surely would pay the fee if they knew that it would save them far more money over time, said Joel Berg, executive director of the New York City Coalition Against Hunger.
Mr. Gioia added, “Not only does it amount to 14 cents a day, but you’ll find that people who are on a fixed income and trying to feed their children become amazingly sophisticated at making smart economic choices.”
Mr. Berg noted that the Agriculture Department recently did a survey that found that food stamps recipients spent an average of $6 to travel for their food shopping, which probably means that many poor people are savvy enough to pay for car services and taxis to travel longer distances to buy food at discount stores that do accept food stamps.
“I am sure that many food stamp recipients would scrimp and save and borrow and do what it takes to get into a discount program — particularly since there are about 30,000 public housing residents near the Astoria Costco,” Mr. Berg argued.
Why Doesn’t Costco Accept Food Stamps? [NYT] (Thanks, Joanne!)
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Comments:
Costco doesn't take credit cards either, except their personally branded AmEx card. At what point is a business obligated to accept a method of payment, other than cash--which as we know is valid for all debts, public and private?
Reduce Government involvement and complexity. Keep distance from entitlement recipients. Remain profitable. This is why Southwest Airlines doesn't accept foodstamps either.
@Paladin_11: They accept debit cards.
And I think due to their membership fee, it puts them in a different category.
@Bahnburner: Your attitude sucks. We need to regulate the @$#$ out of them, and then in a few years bail them out.
@Paladin_11: technically they have no obligation to accept cash either.
While valid there is no legalese that says its mandatory, which is why places can deny you service for paying in pennies.
While some food stamps recipients are destitute and could not come up with the $50, many surely would pay the fee if they knew that it would save them far more money over time
Well, I don't know about that one. Here in Chicago our CTA cards save us 25c per trip, according to the CTA the cards are for the most part used in more affluent zip codes while the poorer areas of the city still use the one-off, pay as you go cards.
If you ride the train every day that's a yearly savings of over triple the cost of an annual CostCo membership.
Apparently Sam's Club does not accept food stamps either, and only some BJ's locations do. I wonder what percentage of folks on food stamps have huge freezers?
@Bladefist: Wait, wait, wait. I hope your not implying that regulation caused this economic downward spiral.
They don't want to - Is that a correct answer?
Besides, I don't think there are too many Asian convenience store owners that are on foodstamps.
The only places that seem to like poor people are pawn shops and payday loan shops.
I'm hoping the financiapocalypse ends the widespread "GOTTA MOVE UPMARKET" trend forever.
@melloncollie128: Well, that is a debate for another day.
But I am implying that our government (which handles regulation and bail outs) are incompetent. And it would be wise to stay away from Government as much as humanly possible.
@Paladin_11: A company is only legally required to accept cash as a form of payment. Anything else is optional. Credit cards charge fees to the company so if they can avoid paying the fees they will. Since credit cards are shown to make consumers spend more money on average and the fee is less than the additional money spent retailers except credit cards. Most wholesalers and suppliers will not accept a credit card for the same reason and they cut checks to each other.
@melloncollie128: If, by regulation, you mean that black hole of a sucking sound vortex of absymal absorption to every dollar it touches Government...no, not that.
Costco doesn't even accept credit cards, unless it's an AMEX or a debit card.
If I were a Costco rep, I would reply with four simple words: "None Of Your Business"
Costco doesn't have to accept food stamps, nor do they have to explain in flowery language on why they don't. And, good for them for not. It would just increase prices for the normal, working consumers who somehow don't need government assistance.
Yeah, Costco gets reimbursed for it, but how about the extra man-hours it takes to get reimbursed? If it's like any other government agency, I'm sure there's lots of paperwork and red-tape to get the money they deserve.
@Paladin_11: Costco accepts all American Express cards - not just their branded ones.
At least they do in Minnesota, and Toronto.
Why not allow food stamp users to sign up for a free membership when they present their food stamps ID? Costco would be doing their part and they could possibly write off the membership fees as a donation to the needy.
C'mon. Food stamps at Costco? Are Costco stores located in areas that have food stamps recipients? Sounds like a plan to turn it into a Sam's Club.
It's a higher end warehouse store and I would like for it to stay that way. I enjoy not having to deal with the regular crowd during the executive hours.
It would be a major downgrade if Costco were to accept such a payment method.
Dear Mr. Gioia -
Why don't you go out out and build your own fantastically successful warehouse club, and then you can make the decision to take other forms of payment.
Until then, it isn't yours to do with as you please.
how about cost of compliance? that's certainly a great reason not to accept money from federal or state programs if you can help it.
i would also imagine that they're trying to protect their membership fee income. i wouldn't be surprised if government officials worked toward some sort of legislation that would limit/eliminate the fee when membership clubs start to receive a significant portion of revenue from a food stamp program.
@Hate_Brian_Club: While there are some exceptions, I don't think most poor people remain poor because they are smart and disciplined.
@sonneillon:
Not exactly... I can setup a business that
only accepts beaver pelts for services.
See [www.snopes.com]
@Hate_Brian_Club: Assuming your CTA cards are monthly, many working poor folks can't buy them because they need to spread that cost over several weekly paychecks.
This is the only logical conclusion.
What's the point of the article? That Costco has some secret nefarious reason for not accepting food stamps *other* than the ones they provided?
If they're going to give a BS reason, I don't think "it's too expensive" would be the reason.
Never?
Maybe because poor people don't have the money to buy that latest gadget, overly priced thingy with all the buttons, etc like the people they are trying to get to shop there? They just buy the more affordable things (aka less profit)
Yes remember, if it's your business, you're free to be crummy and lacking in any compassion. And people like Roy Hobbs will defend your right to be crummy and lacking in any compassion because...
Because...
Um, why do you defend, Roy?
Maybe I could pay my COSTCO with a drawing of a food stamp (card.)
This is actually foolish on Costco's part from a business perspective. Unlike credit cards, the food stamp program charges merchants no fees and pays them dollar for dollar what the customer purchases.
Money is money.
If food stamp customers want to be pay the membership fee, let them shop. It's more business, pure and simple. Target accepts food stamps; Wal-Mart does, too. There have been no reports of these businesses suffering the "food stamp cooties."
Go Costco! Free market is at work. I've shopped there for 20 years, and have been thrilled with the company. Why change?
WRONG.
A company does NOT have to accept cash.
Case in point - before they merged with Kinkos, if you brought a package to a Fedex office to ship, you could ONLY pay with credit card.
Cash is legal tender for all DEBTS, public and private.
If you are buying something, you do not have a debt.
For instance, at Del Taco, they will not accpet bills over $20. I had a $50 bill on me, and nothing smaller. I was unable to purchase food from them.
Howerver, if I was at a resataurant, ate a meal, and then, when presented with a "check" (shouldn't it be called a bill?) and I give them a $50 bill, they MUST take it. I ate the food, and I now have a debt -- I owe them money.
@twophrasebark: Costco sells too many non-food items... the lines at that place are already insane, do you really want to be 3rd in line behind some heifer with 100+ items which are 50% food stamp and 50% not food stamp, but 100% mixed together? Even they manage to integrate the check out, I've been in line at the grocery and had to watch the idiots put back piles of non-edible stuff that they suddenly realized is not covered and that they have no way to pay for.
@twophrasebark: Not all money is the same. What extra paperwork/training/equipment/timelag would be involved in accepted foodstamps? Gov't programs always add headaches. I'm assuming your doctor would much prefer you pay in cash instead of going through Medicare too. Costco probably did a cost/benefit and made a decision based on that.
Ms. Marco, it appears that your attempt to turn the readers against CostCo has backfired. Whether or not you find their reasons compelling doesn't matter. Your readers realize that CostCo has a right to make their own business decisions, despite what the NYT might think.
Also, why is this tagged "Recession Watch"?
I am not trying to be a hard ass here but what business does someone drawing government assistance (READ: OUR TAX DOLLARS) have shopping at a pay-to-shop membership club?
Just sayin'....
@Paladin_11: "All debts, public and private." Isn't that a bit redundant? Besides public and private, what other kind could there be?
@Luckwouldhaveit: I think that's his point. They wouldn't be able to pay for the Costco membership for the same reason--they couldn't come up with the $50 membership all at once.
It seems like anyone on food stamps smart enough to stretch a dollar, find the best deals, figure out if cost's fee is worth it, etc. Would be smart enough not to be on food stamps.
@twophrasebark: It isn't about compassion. It is about a business that has made a decision on which forms of payment it will and will not accept. They get to make those decisions, because they own it. Others, whether they be private citizens or public entities, do not get to make those decisions.
Don't like the decision? Then don't shop there. But respect that they get to make the decision.
As for why they choose not to, I'm going to hazard a couple of guesses:
- As someone mentioned before, the cost of compliance is potentially high. You would need to keep up to date on every item that is and is not food-stamp eligible.
- The cost of installing additional equipment or programming to handle the food stamp cards at the checkout
- The likelihood that the cost of the first two items is higher than the return they would receive from serving a very low-potential segment of the market.
@bobpence:
I work for Sam's Club. (waiting for the boos and hisses to die...)
We just started to accept Food Stamp EFT cards. There are a lot more restricts on what can be purchased at a warehouse store as compared to a regular grocery store, due to the small business aspect of our products.
@Dooley: A restaurant doesn't have to take cash even if you already ate. You should know their payment policy before you eat.
My dry cleaner won't take cash. You pay once the items are clean and you are picking them up so you are in debt to them. That doesn't require them to take cash.
They take all American Express cards. I use my AMEX Blue Cash there all the time.
Costco is no different than Sam's Club who also only allowed Discover cards for years and just recently started accepting Mastercard.
These warehouse clubs usually sign agreements with a card company for exclusivity, most likely in exchange for lower processing costs.
@NTC-Brendan: Thats what I was thinking, if it is a membership store then they should only accept what they want to accept. You don't have to be a member and I am pretty sure they can deny your membership if they wanted.
Costco hates poor people.