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Amazon Seller Repay Explained: Handling Charges For Failed Payments And Refunds

amazon-seller-repay-explained:-handling-charges-for-failed-payments-and-refunds
Amazon Seller Repay Explained: Handling Charges For Failed Payments And Refunds

A young Asian lady using a cellphone to shop online. amazon seller repay

“What is Amazon Seller Repay? How do I handle Amazon Seller Repay charges in the books?”

We get these questions from time to time. We know very well that Amazon has just about the most complicated fee structure there is. At least, when it comes to online marketplaces. It confuses a lot of sellers, and you can end up paying more than you need to if you don’t know your way around them. 

So, we decided to do up a short guide for you all on Seller Repayment. This way, you can access the correct information at any time. In this post, we’ll cover how Seller Repay works and how to avoid related charges. We’ll also go over how to handle refunds processed through the system.

Amazon imposes many different kinds of charges on sellers. Amazon Seller Repayment is just one of them that you need to know about. Seller Repay charges indicate that Amazon is trying to get paid for something you haven’t paid them for yet. Also called Seller Repayment, these fees can appear at any time. 

Well, Amazon usually takes fees out of your account balance automatically, every billing cycle. When your account can’t cover these fees, Amazon will charge your registered credit card instead to cover them. This should set your alarms off immediately. If you don’t have sufficient account balance to cover just your selling fees, something is terribly wrong!

What Are The Selling Fees on Amazon?

Amazon charges sellers fees to sell on their marketplace. They collect these fees on schedule – some monthly, some when sales are made. These fees also cover related costs like promotional charges and modifications in their fee structure, which Amazon always notifies sellers of in advance. 

Amazon collects several types of fees:

Selling Account Fee vs. Per-item Fee

Professional sellers pay the monthly $39.99 fee mentioned above. Individual sellers pay the $0.99 per item fee, plus a commission and variable closing fee, which are subject to change. 

Referral Fee

Amazon charges a referral fee for each item sold. They deduct this fee as a percentage of the sales price. This is the total amount that the buyer paid, including things like gift wrapping and shipping, but not tax. Different categories of items have different referral fee rates. Generally, it ranges from 8% to 15%. 

Closing Fee

Amazon sellers all pay closing fees for each item sold in the media categories. The see is $1.80 for items like books, DVDs, videos, music, computer or video games, software, video game consoles, and gaming accessories.

FBA Fee

If you choose FBA (Fulfillment by Amazon), Amazon takes care of packaging, shipping and handling for your items. They even help with returns and customer service. In turn, you pay fees. These FBA fees are also subject to change. Seasonality, type of product, size of items stored and shipped, and several other factors also affect the FBA fee structure. To give you an idea, check out the Amazon FBA page

High-Volume Listing Fees

Amazon charges a high-volume listing fee every month on certain ASINs (Amazon Standard Identification Number). The fee is $0.005 per ASIN to cover their costs for cataloging and maintaining larger numbers of ASINs. Eligible ASINs are listed in non-Media categories and created at least one year prior. The ASIN must also have an active offer during the month that the fees refer to but not sold in the last year. 

Amazon Refund Administration Fees

When you refund a consumer for a paid order, Amazon refunds 80% the referral fees they collected. The 20% is the Refund Administration Fee.  

How to Avoid Amazon Seller Repay Charges

Payment for goods by credit card via smartphone. amazon seller repay

Understand Amazon’s Fee Structure 

Make sure you know what fees you’re supposed to pay based on your seller account. This is the first step to avoiding unexpected charges. When you know which fees apply to you, you can keep an eye on your Payment Reports. You will spot regular charges easily, which makes identifying irregularities easy, too. Then you can take steps to get your structure right.

Pay on Time 

With the above, you can then also stay up to date with payments. It won’t be crazy because you’ll have them dialed in to only what you need to pay. If you know that your account balance doesn’t have enough to cover fees, you don’t need to worry. You can choose to pay with your credit card in advance instead of being surprised by a charge. This way, you won’t pay those additional Amazon Seller Repay charges. 

To check your transaction reports, log into Seller Central and click on the Reports link. Then, click Amazon Pay Transactions and you’ll see there where to generate the available Amazon Pay transaction reports. You can download them to your computer so you can study them in detail. You can request for individual reports like Transactions or Refunds, and you can isolate certain date ranges, too. 

Right Seller Account 

For example, you might have signed up for a Professional seller account. This means that you need to pay a recurring $39.99 monthly. Amazon will take it out of your account balance automatically. So, if you don’t have it there, you can expect your credit card on file to reflect the charge not long after your account is due.

Note that you must pay your seller fees even if you haven’t sold anything or made any profit. If you don’t sell enough to cover your fees or remain profitable, a Professional seller account is not the right type of seller account for you. You can downgrade to an Individual seller account, which means that you pay only when you sell something. To downgrade, go to your Account Settings then navigate to Tasks & Tools, Look for the one that says “Switch your selling plan” then click “close your selling account”.

Bonus Tip: Make sure that you’re pricing structure takes the $0.99 per item fee into account, not to mention everything else. There’s a commission plus a variable closing fee that you need to stay updated on. Costs like shipping, for example, can also pile up and quickly eat your profits if you’re not careful.  

Clean Up Your Listings

Dead listings and listings that aren’t selling can cost you a bunch. If you’re a dropshipper or other seller with loads of products, check your listings! You may not have the time to go through them all if you have over 100,000, but you can always get help! Hiring a freelancer or a service dedicated to high-volume cleanup can save you a ton in the long run! 

Avoid Customer Refunds

Amazon Refund Administration Fees are 20% of the referral fees you pay. These can really add up if you sell in the higher percentage categories, or if you get a lot of refunds. 

The first step to avoiding higher volumes of refund requests is listing accuracy. On top of cleaning up dead listings, make sure that your actively selling listings are reliable. This means that they have the correct information on them. It also means that they are very easy to understand.

Don’t make them longer than they need to be, and make sure the important information stands out. Most customers scan listings, reading fairly quickly. If they misunderstand something about your product that causes them to want a refund, they’re likely to get it. Avoid confusion as best you can.

The second step to avoiding loads of refund requests is great customer service. As an FBA seller, you can leave customer service up to Amazon. However, this is probably not the best option. Yes, you’re already paying for customer service under FBA. But, no one can give your customers that special treatment better than you can. Hiring someone to handle customer inquiries with a more personal touch than Amazon does it is so worth it. 

What Is EcomBalance? 

EcomBalance is a monthly bookkeeping service specialized for eCommerce companies selling on Amazon, Shopify, Ebay, Etsy, WooCommerce, & other eCommerce channels.

We take monthly bookkeeping off your plate and deliver you your financial statements by the 15th or 20th of each month.

You’ll have your Profit and Loss Statement, Balance Sheet, and Cash Flow Statement ready for analysis each month so you and your business partners can make better business decisions.

Interested in learning more? Schedule a call with our CEO, Nathan Hirsch.

And here’s some free resources:

Final Thoughts

Seller Repayment is a huge burden for many Amazon sellers. The worst part is, some of them don’t even know they’re paying more than they need to! We hope that this post has helped to open your eyes to these sneaky fees that you can easily avoid. They may not seem like a lot on their own, or maybe they’re small tight now. If you don’t nip this one in the bud, though, you can be facing a larger issue down the road that causes your business to bleed cash.

This originally appeared on the EcomBalance Blog and is made available here to cast a wider net of discovery.
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