Amazon launches a low-cost version of Prime for customers on government assistance

Amazon announced today it’s making its Prime membership program more affordable to customers on government assistance programs, including food stamps. The program, which requires that customers have a valid Electronic Benefits Transfer (EBT) card to qualify, will bring the cost of Prime down from $10.99 per month to just about half that, at $5.99 per month instead.

The program will be available to any U.S. customer with a valid EBT card – the card that’s commonly used to disburse funds for a number of government assistance programs, including¬†Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), and Women, Infants, and Children Nutrition Program (WIC).

The card will only discount the cost of using Prime – it cannot be used to make purchases on, nor can it be used to pay for membership.

The discounted membership will have all the perks associated with Prime, including free streaming video and music, free photo storage, access to the Kindle lending library, ability to shop from Amazon’s Essentials – the retailer’s low-cost line of everyday products, access to Prime Now (where available), and more.

The move will make Amazon Prime more accessible to lower-income households and families, and could help Amazon shake the reputation that shopping its site and paying for its membership program are luxuries instead of more essential services.

That’s different from the Amazon that exists today, where Prime’s growth has been fueled by upper-income shoppers.

A study from Piper Jaffray in 2016 found that Prime membership’s penetration is highest and growing the quickest among those households with more than $112,000 per year in annual income. More than 70 percent of those households have a Prime subscription, the study found.

However, there are benefits to bringing in the lower-income families online, too.

Though they may be on assistance, that doesn’t mean they don’t still need to shop for everyday items – clothing, school supplies, household goods, personal care items, etc. And in many cases, Amazon Prime may be offering the better price on a given item, compared with competitors like Walmart and others. Over time, those savings could add up making the cost of the $6 per month membership worthwhile.

This is especially true when you work other factors into the equation. For example, by shopping online, customers won’t have to spend the additional gas money going to the store and back. And, in some cases, customers don’t even have a vehicle at their disposal or are elderly, and require help with their shopping. Online shopping helps with these concerns as well.

Plus, for families with babies, a Prime membership includes a 20 percent discount on diapers and wipes subscriptions, which would also positively impact the household’s budget.

Finally, there’s the fact that Amazon, along with a number of online retailers, are working with the government on a program that will allow customers for the first time to use their food stamps (SNAP) via e-commerce websites.

Announced earlier this year, the USDA-led program is working with Amazon, Walmart, Thrive Market, FreshDirect, and other grocers to test how SNAP benefits could be used to pay for qualifying items – largely fresh goods, like those from Amazon’s Fresh grocery delivery service, as well as some packaged goods, like cereals, which are also available through Amazon Pantry. The pilot begins in early 2018.

Bringing SNAP members to Amazon Prime would be a first step in being able to attract those shoppers, who today receive the bulk (69 percent) of Federal food and nutrition assistance.

Last year, 44.2 million people per month participated in SNAP. Combined, spending for all of the USDA’s food and nutrition programs – including WIC, School Breakfast/Lunch, etc. – totaled $101.9 billion, with SNAP’s portion at $70.8 billion. That’s no small market – and worth certainly targeting, it could be argued.

But until SNAP is accepted online, Amazon has been going after lower-income households in other ways. For example, earlier this year it launched Amazon Cash – a way to shop its site with a debit or credit card. Instead, customers can add cash to their Amazon account at participating brick-and-mortar retailers.

“The ability to shop online has been limited – it’s an underserved audience,” explains an Amazon spokesperson. “E-commerce companies haven’t figured out how to help customers who may be uncomfortable paying with credit cards. The thinking at Amazon is that there’s so much value [with Amazon Prime] – there’s so much time, convenience, and savings…we felt like this was one small way to help a customer that’s temporarily in need.”

Customers can learn more about the program and sign up for a 30-day free trial at Amazon says it will consider expanding the program to others on government assistance, outside EBD card holders, in the future.