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Amazon is taking aim at Walmart by offering a 54 percent discount on Prime memberships for Medicaid recipients

Amazon.com founder and CEO Jeff Bezos.
Getty Images
Amazon.com founder and CEO Jeff Bezos.

Amazon is making another move in its courtship of lower-income shoppers, announcing a discount on its Amazon Prime monthly membership fee for recipients of Medicaid. The discount works out to 54 percent.

Under the offer, customers on Medicaid can get Amazon Prime for $5.99 a month, or $7 less than the new regular monthly fee of $12.99. In June, Amazon first introduced this discounted price for shoppers who receive government assistance in the form of an Electronic Benefits Transfer card.

The goal of these discounts, according to Amazon executive Aaron Perrine, is to give more people access to "aspects of the digital economy — some conveniences and benefits — that I think a lot of us take for granted."

An Amazon Prime membership includes perks such as two-day shipping on more than 100 million products, unlimited photo storage and free online streaming of thousands of movies and TV shows. Amazon Prime customers typically spend more and buy more frequently on Amazon than non-members do.

With the moves, Amazon is increasingly battling Walmart and other low-priced retailers for the wallets of those with less disposable income. But it's not altruism; Amazon Prime has been widely adopted by middle-class and well-off Americans, so if the membership program is going to continue to grow in the U.S., the company has to figure out how to attract other demographics.

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At the same time, Walmart has made moves to court bigger spenders with the acquisition of brands like Bonobos and a new service aimed at serving busy, well-off moms in New York City.

Medicaid is the government program that helps provide health coverage for many low-income families and disabled individuals. Medicare, which isn't part of this discount program, guarantees health coverage for those 65 or older.

The discounted membership price works out to about $72 for 12 months. The cheapest Prime membership for those Amazon customers who do not receive government assistance is $99 for a full year.

Those who want to qualify for the discount will be asked to apply and upload a photo of their Medicaid card. Eligible shoppers need to reapply once a year and are eligible for up to four years.