Amazon has expanded this week its discounted membership program Premium, already available to EBT cardholders, to include Medicaid recipients. Eligible customers can become core members for US $ 5.99 per month, less than half of the usual monthly fee of $ 12.99.
The move – a new step in Amazon's efforts to reach underserved economic communities – increases its competition with Walmart.
Amazon provides customers with a link to authenticate their membership to eligible government assistance programs. It is unclear how the company worked with the Department of Health and Human Services to check the records.
Amazon Web Services hosted last year 68 million Medicaid records.
The expansion of the discount program followed by a few days reports that Amazon has recently initiated discussions with JP Morgan Chase and other banks regarding the possibility of establishing a program of checked accounts to provide limited bank access to customers.
Amazon previously offered services targeting the unbanked population, including a stored-value card called "Amazon Cash," which allows users to charge money to and use unrelated debit cards. for purchases with Amazon and some other retailers.
Customers can deposit funds into their stored value accounts by showing a barcode at a local retailer and presenting the money.
The expansion of Amazon is in part at least a competitive game to target the main market of its competitor Walmart, which is a preferred retailer of low-income and working-class consumers, thanks in part to its reputation for offering lower prices. goods at the grocery store.
"Yes, Amazon and Walmart are at war, and Amazon will therefore fall on the market to attract Walmart's main customer, even though Walmart is trying to get into the main Amazon market," observed Paula Rosenblum , managing partner of RSR Research.
The question of whether regulators would allow Amazon to provide banking services to its customers is debatable, she told the E-Commerce Times, given Walmart's unsuccessful plan. This effort was crushed by consumer advocates and rival banks who feared Walmart would crush competition, especially the small community banks that served working and low-income communities.
Amazon Prime has already locked up most of Amazon's high-income customers, so the company has to look elsewhere to expand its base, suggested Michael Levin, co-founder of
Consumer Intelligence Research Partners.
About 7 percent of the US population is unbanked, which represents an opportunity for Amazon to continue the Walmart and Dollar General dominated markets, said Thad Petersen, senior analyst at
"All that Amazon does to increase reach increases their chances of selling and competing more effectively with retailers in the physical world," he told the E-Commerce Times.
About 7% of the US population was unbanked in 2015, with no bank account in the household, while 20% were under-banked, meaning they had a current account, but also used other forms of treatment, says Petersen. citing FDIC data.
An exclusive control account would allow Amazon to lower its interchange costs because it would not have to go through a Visa or MasterCard payment network to process transactions with these customers, he stressed.
Access to the digital economy for underserved people has been a problem for many years, as their basic needs for food, medicine and household items are often complicated by the inability to issue checks or borrow money. ]
The USDA has announced plans to run a two-year pilot program starting this summer to see if SNAP beneficiaries can use their cards to shop, according to a government official who asked not to be identified.
The program is designed to test both online order and payment, to see if transactions can be processed safely and securely. Amazon, Walmart, Fresh Direct, ShopRite and other retailers are scheduled to participate in the pilot project.