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Amazon discounts Prime fee for low-income Americans

The company introduces a cheaper Prime membership price for people in government-assistance programs.

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Amazon wants to attract more low-income people to Prime.

Amazon

Amazon is keeping up its effort to attract more low-income customers to its Prime membership program.

The e-commerce giant said Tuesday it cut the price for a Prime subscription to $5.99 a month for people with an Electronic Benefit Transfer (EBT) card. These cards are used to disburse funds for food assistance and other government-aid programs. At that rate, Prime would cost $71.88 annually, a 27 percent reduction from the typical $99 Prime fee.

With the company already reaching just about every middle- and high-income Prime customer it can, the only big way Amazon can grow Prime in the US is to bring in more low-income households. 

Once customers join Prime, they tend to spend twice as much on Amazon than non-Prime customers. Nearly 75 percent of households making over $112,000 annually have joined Prime, while less than 50 percent of households making $21,000 to $41,000 have, according to a study last year from Piper Jaffray.

Amazon has been trying to find ways to make its Prime fee a little easier to swallow so it can convince more customers to join. The company last year started letting people pay for Prime for $10.99 a month, though the total cost at the end of a year would actually be $131.88. (The least-expensive Prime membership is Prime Student for college students, at $49 annually.)

Amazon in April also introduced a new service called Amazon Cash, which lets people without credit or debit cards instantly add money to their Amazon accounts when visiting retail locations, including CVS pharmacies and Sheetz convenience stores.

This new strategy doubles as a way for Amazon to fight Walmart. The rival retailer has catered to lower-income customers for years and has been aggressively pushing into e-commerce, Amazon's home turf.