By Siddharth Cavale
NEW YORK (Reuters) -Walmart is reinstating a minimum basket fee for customers who qualify for U.S. government assistance and those subscribed to its Walmart+ Assist program, according to a memo seen by Reuters and confirmed by Walmart (NYSE:WMT).
The move to reinstate the fee, which was waived during the COVID-19 pandemic, comes as the largest U.S. retailer is bracing for a tough year ahead as its customers, who typically skew low income, temper spending.
Recipients of government assistance programs like the Supplemental Nutrition Assistance Program (SNAP) who use Electronic Benefits Transfer (EBT) payments will now pay a minimum basket fee of $6.99 for pick up and delivery of grocery purchases from a store if they do not meet a $35 threshold. Previously, this fee was waived for those on SNAP.
EBT is a system used by the U.S. government to deliver government assistance benefits, commonly known as food stamps, and works like a prepaid debit card.
"We’re reinstating minimum basket fees for customers with EBT cards saved to their Walmart account," an internal guidance memo sent to its customer service staff on Monday read.
A minimum basket fee covers the costs of picking and packing an order from a store, which can be more expensive than shipping from a warehouse and does not include delivery charges.
"If an EBT customer asks why we charged them a minimum basket fee, explain this is the correct fee for orders under $35," the memo said.
Walmart+ Assist is a membership plan offered by Walmart that gives shoppers on government assistance a 50% discount on the standard Walmart+ membership, reducing the annual cost to $49 compared with the regular $98 fee.
Walmart said it had previously removed the minimum basket fee due to social distancing restrictions.
"Moving forward, the standard $35 minimum basket fee will be in place for all orders," a Walmart spokesperson said on Wednesday.
Research from data analytics firm Numerator shows Walmart accounts for nearly 26% of spending by SNAP recipients.
The retailer has been trying to rein in costs by closing offices and asking staff to relocate to its Bentonville, Arkansas headquarters, or asking some of its suppliers to absorb price hikes caused by tariffs.
The retailer issued disappointing guidance for 2025 in part due to the uncertainty surrounding tariffs, but it also posted a 10% rise in quarterly income boosted by its advertising and Walmart+ business, which are more profitable than its core business of selling low-margin groceries.
Walmart+ has been a strong driver of loyalty and sales with growth coming from both lower and higher income households, Seth Dallaire, Walmart’s chief growth officer, said at an April investor conference.
Subscribers visit Walmart’s stores twice as much and spend three times as much as non-members, he said, adding that membership income rose nearly 40% in its most recent quarter ended January. Lower-income households "love" Walmart+ because of grocery delivery, Dallaire said.
"The delivery saves you the cost of public transportation or fuel costs, or you using a ride-sharing app, for instance, like a Lyft (NASDAQ:LYFT) or Uber (NYSE:UBER). They tell us they really value it that way."