This Start-Up Says It Wants to Fight Poverty. A Food Stamp Giant Is Blocking It.

This Start-Up Says It Wants to Fight Poverty. A Food Stamp Giant Is Blocking It.

The fight over the app is now affecting people like Brianna LaBelle, 25, of Augusta, Me., who has two young sons. She has used Propel’s app to create shopping lists, track food purchases and budget. “I love it,” she said. “It’s very handy.”

But in February, when Ms. LaBelle tried to check her food stamps balance, she got a message that access to her information was “currently unavailable to the residents of Maine.” That interruption, she said, lasted for nearly a month, in which she also lost the timesaving and meal-planning convenience of the app.

Propel, Mr. Chen insisted, has tried to explain its business to state governments and to food stamp contractors. The Propel app is a digital “skin” that works on top of the websites of food stamp contractors, like Conduent. A user taps the app, which is known as FreshEBT, to look up the amount left in the account. On average, users check their balances seven times a month.

Conduent, in another twist, has begun competing with the start-up. The business services outsourcer, which has $6 billion in yearly revenue, introduced its own smartphone app last year. Conduent’s entry, ConnectEBT, has significantly fewer reviews and lower ratings on the Google and Apple app stores than Propel’s FreshEBT.

Conduent’s app is available in Utah, South Carolina and Oklahoma, and offers only basic information on account balances and purchases. But the company said it was beginning a broader rollout this year, and would provide “more features and functions” as it gets states’ approval as a regulated contractor, unlike Propel.

Propel’s predicament is magnified because the food-stamp system’s technology, like many government tech services, is outsourced to a relatively small number of companies.

“It’s an oligopoly game, so there’s often not much choice, competition or innovation,” said Josh Miller, who oversaw the development of digital products in the Obama White House. He added that the volume of data requests from Propel is “tiny” in internet terms.

Propel’s early success suggests there is opportunity for innovation in the low-income market, no matter how the start-up’s wrangling with Conduent turns out.

Propel is a fledgling company, with only 11 employees, two of them former food-stamp recipients. Mr. Chen, 30, is not one of them. His family emigrated from China when he was 4, and he attended Stanford University on a full scholarship, based on need. Propel has raised $5.2 million from investors like Andreessen Horowitz, a Silicon Valley venture capital firm, and Omidyar Network, which funds start-ups focused on social goals.

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