Answers
Mar 31, 2019 - 11:34 AM
The Pros
Amazon Pay lets you handle credit card payments online inexpensively. Although it doesn’t support as many payment types as some alternatives, it makes sense for certain companies to add it as an option, especially those that already sell through Amazon. Also, if your customers shop through Amazon already, they’ll like the convenience of being able to pay through their Amazon account.
Many merchants like Amazon Pay because in addition to being reasonably priced, it doesn’t come with hidden fees or long-term contracts, unlike some payment processors. It has flat-rate pricing: a standard 2.9 percent plus 30 cents for credit and debit card payments. If it’s an international payment, the fee goes up to 3.9 percent plus 30 cents. This is similar to the fees charged by other online payment processors.
You’ll also benefit from Amazon’s built-in security features, adding another layer of security when your customers make a payment. It does inspire confidence in customers, since they’ll likely recognize Amazon as a brand they trust, even if they haven’t heard of your brand before. Customers are also more likely to go through with a purchase if they don’t get taken to another site to enter payment information, so Amazon Pay’s streamlined approach will help you make more sales.
Amazon Pay integrates well with many ecommerce platforms, including WooCommerce, so it’s a versatile option for many brands.
The Cons
One big problem merchants run into with Amazon Pay is the slow payout process, due to the platform’s standard reserve policy.
Once you start accepting payments for the first time, there’s a two-week observation period. (This is a one-time thing, but still might be a dealbreaker for some sellers.) Then the processed funds start to get released over a rolling week-long disbursement period. Finally, the actual bank transfer after funds get released will take three to five business days.
This practice is unconventional among online payment processors. Most have a much shorter payout turnaround time (two days is standard), and only make yours a reserve account if it’s high-risk or you have lots of chargebacks.
Amazon Pay, on the other hand, treats all companies like they’re high-risk from the start. After a period of six months, you’re allowed to ask for better reserve terms.
For some businesses, this slow process is a mere annoyance. But for those that need to have their processed funds available right away due to cashflow or other issues, this is a more serious drawback.
With this as the baseline approach, it should come as no surprise that some merchants have complained about Amazon holding their funds for as long as 90 days. Amazon also views some products as more high-risk than others, so if you sell one of those products (such as an item that’s frequently sold illegally), you might run into more problems with your account, even as a perfectly legitimate business.
Amazon will flag accounts it deems risky, perhaps too often. They can suspend your account without warning, and getting it back up can be a lengthy, difficult process that results in many lost sales.
It’s also possible for criminals to commit fraud through Amazon Pay, creating chargeback issues that your company will need to handle. That said, it’s possible for fraud to be committed on just about any platform, so this isn’t necessarily a reason to avoid this payment processor.
The Verdict
Amazon Pay is a good choice for lots of businesses, but with a few caveats.
First, if you have a limited cashflow and need to access processed funds right away, you should definitely avoid Amazon Pay. Even without extra holds, the rolling payout process slows things down significantly.
Also, if you sell items that Amazon might deem risky, you’ll probably want to avoid Amazon Pay. This includes anything that’s often bootlegged, like designer clothing, or items often mistaken for illegal goods, such as hemp-derived supplements.
However, if you don’t have cashflow issues and don’t sell anything that Amazon might see as suspicious, your site will probably benefit from using Amazon Pay. It’s a recognizable platform, which inspires trust in customers. And because it’s fast and easy to use, you won’t miss out on sales due to a slow or clunky checkout process.
May 27, 2022 - 09:57 AM
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