Dive Brief:

• Amazon announced Tuesday that its Amazon Prime Rewards Visa Card will give Prime members 5% back on Whole Foods purchases.
• Cardholders who are not Prime members will earn 3% back on Whole Foods purchases.
• These perks, which cover the entire range of Whole Foods products, come in addition to other discounts for cardholders, including 5% back on Prime purchases; 2% back at restaurants, gas stations and drugstores; and 1% back on all other purchases. There is no fee for the card with Prime membership and no cap on rewards earned, which do not expire as long as the account is open. 

Dive Insight:

This offer makes the Prime card one of the most attractive cash-back offers around. Most importantly, it gives Prime members another reason to shop Whole Foods, and helps Amazon strengthen its industry-leading loyalty program.

When the e-tailer took over Whole Foods last year, it made lowering prices a main goal. And while the retailer has selectively cut prices since then, it's clear Amazon wants to address the value equation from multiple angles. Recently, Amazon rolled out same-day shipping from Whole Foods stores for Prime members in four markets. With a cash rewards credit card offer, shoppers will have a reason to buy more at Whole Foods and within the broader Prime ecosystem.

With each new promotion, Amazon wants to sweeten both Whole Foods shopping and its Prime membership. Prime costs $99 a year or $12.99 a month, with many other benefits, including two-day free shipping and streaming video and music. Upon approval for the Prime credit card, customers get a $70 Amazon gift card.

The card also becomes the first Prime-branded card available to Whole Foods customers. Amazon has said Prime is becoming the loyalty program for the chain which it acquired last year, although how exactly that would work remains unclear. For example, to use the recent Prime Valentine’s Day rose promotion, Whole Foods customers had to present a printed bar code. This credit card offer is another step in implementing the frequent shopper plan.

Competing retailers also offer cash back rewards, though Amazon's seems to offer the best value. Target’s Redcard also offers 5% cash back, but it can only be received through purchases at Target, according to Creditcards.com. Costco offers 2% cash back, and 4% on gas, with the fee covered by club membership. Nordstrom offers a doubling of Nordstrom points, and Toys R Us offers eight times the stores points at Toys R Us and Babies R Us, plus 10% off store purchases every Thursday.

Writing for Forbes, Phil Lempert, “The Supermarket Guru,” said a family of four could earn $658.38 cash back shopping at Whole Foods annually with the Prime card. This may be a low estimate because of the chain’s expensive products and a customer base more likely to pay for them. “There is little doubt that Amazon’s approach to building a relationship with Whole Foods shoppers is based on value and rewards and will be hard for other grocery retailers to match,” he wrote.