Many Amazon sellers make use of virtual bank accounts when trading in overseas marketplaces. Merchants have two choices – accept payment in the consumer’s local currency and allow Amazon to exchange the funds back into Sterling, or open a virtual bank account with a payment services provider and accept their exchange rate. Typically, by using a virtual bank account merchants can save as much as 2% compared to Amazon’s exchange rate and so it’s an instant boost to the bottom line and a bit of a no brainer.
Opening a virtual bank account is much quicker and easier than opening a local currency account. Typically in most territories in order to open a local bank account you’ll need a ton of paperwork and in many cases it will be impossible if you don’t have an entity registered in that country. Payment service providers have solved this issue and can offer a raft of other currency services on top of repatriating funds at attractive rates.
Now, Amazon merchants will find their choice of virtual bank account much more limited than previously due to a new Amazon Payment Service Provider policy. Amazon are launching a new Payment Service Provider programme and soon merchants will only be able to use services from a few select providers.
Amazon say that the aim of the Payment Service Provider programme is to enhance their ability to detect, prevent, and take actions against potential bad actors so that they can continue to protect customers and sellers from fraud and abuse. Imagine you are a disreputable seller who sell dodgy products and then as soon as Amazon shut your account what do you do? Chances are that you don’t care and will simply open a new Amazon account and of course open a new virtual bank account which Amazon will find very difficult to link to your previous virtual account. If Amazon limit payment service providers to a small select group of approved suppliers you can bet that these providers will be charged with helping to prevent disreputable sellers from hiding behind a string of virtual bank accounts.
What’s happening with non-approved payment service providers
The service providers that are already approved by Amazon to provide virtual bank accounts are:
- LianLian Pay
We hear on the grapevine that Currencies Direct will be enrolled in the programme imminently, so if they are your provider sit tight and wait for further news.
Using your own bank account or an approved provider
If you do not use a payment service providers, but instead are using a bank account directly issued to you by a bank, no action is required. However here at Tamebay, if you sell on overseas Amazon sites, we would strongly suggest you investigate using a payment service provider to repatriate sales proceeds as doubtless you will save money.
If you use a service that is already signed up to participate in the Payment Service Provider programme Amazon Payment Service Provider programme, no action is necessary.
1st March – Sign up only to approved payment service providers
From the 1st of March 2021, sellers adding a new bank account from a payment service providers must use a service that is participating in the programme.
31st May – Switch virtual bank accounts or your disbursements will be delayed
If your payment service provider is not yet participating, Amazon recommend you contact them to find out if they plan to enrol in the Amazon Payment Service Provider programme. If they do not plan to enrol, you should switch to a participating payment service provider or use a bank account directly issued to you by a bank by the 31st of May 2021.
If you continue using a virtual bank account from a non-participating payment service providers after the 31st of May 2021, you will be subject to a longer disbursement reserve period of up to 21 days after the latest estimated delivery date. This will seriously impact your cash flow.
15th July – Switch virtual bank accounts or disbursements will cease
From the 15th of July 2021, Amazon will simply stop disbursement to sellers using non-participating payment service providers altogether and you will receive no more payouts until you add a regular bank account or sign up with a participating payment service provider.