Payment Digitization and Retailer Fraud in Food Assistance: Evidence from Store Sanctions

We study the impact of payment digitization that transitions food assistance payments from paper vouchers to debit cards on retailer fraud. We hand-collected the rollout schedule of payment digitization for two major federal food assistance programs: Supplemental Nutrition Assistance Program (SNAP) and Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). We link these schedules to administrative data on store sanctions and compare sanction patterns between counties that implemented digitized payments and those that had not yet transitioned. We find that payment digitization increases disqualifications under SNAP but decreases them under WIC. We explore potential explanations for this divergence and discuss its implications. Our findings highlight how digital technologies can have varying effects on the administration of public programs.