UPDATE 1-Costco to accept food stamps at 2 NYC stores

NEW YORK, May 27 (Reuters) - Costco Wholesale Corp (COST.O) said on Wednesday it will start accepting food stamps at its two New York City locations when the necessary technology is installed, which it expects to be done by the early summer.

The news came a week after New York City's comptroller urged the warehouse club operator to accept food stamps at its outlets because of hard economic times in the United States.

The two Costco locations -- in Queens and Brooklyn -- were chosen as pilots for the test because of the high percentage of food stamp recipients in the surrounding areas, the company said in statement.

If the test meets requests by Costco members to use this form of payment and does not weigh on efficiency of front-end operations, Costco said it will open its future New York City locations with food stamp acceptance.

In a letter sent to Costco, New York Attorney General Andrew Cuomo said on Wednesday the retailer's refusal to accept food stamps at its future East Harlem store violates the community development benefits received by the project.

Cuomo also warned that he would take legal action against Costco if it did not change its policy and agree to accept food stamps when the new store opens in East Harlem.

Supplemental Nutritional Assistance Program (SNAP) payments, commonly known as food stamps, help the poor buy food.

Costco's competitor BJ's Wholesale Club (BJ.N) and discount retailer Family Dollar Stores Inc (FDO.N) accept food stamps. (Reporting by Dhanya Skariachan; Editing by Phil Berlowitz)