Mastering fx for Amazon Sellers
Going international through the listing on one of Amazon’s global marketplaces is a major milestone and the declared goal for many Amazon sellers.
With the expansion into new markets, new challenges arise: among other things, the new customers will pay in a new currency. And these new currencies somehow must end up in the domestic bank account of the seller.
This requires a currency exchange. Every currency exchange has some cost associated, but with the right set up, a lot of money can be saved during the process.
In this article, we take a closer look at the Amazon Currency Converter and the associated fees, and also show how Amazon sellers can improve their margin not only while selling, but also in purchase process.
How does Amazon handle payments in foreign currencies?
Amazon’s ultimate goal is to have the highest conversion possible. To achieve this, the platform offers a local shopping experience to its customers in all stores worldwide, which also includes payment in the respective local currency.
On the seller side, however, Amazon operates a strict regime: payments are only possible to bank accounts that are managed locally in the respective currency area.
In all other cases, sellers agree to use the Amazon Currency Converter and receive funds in their home currency.
What is the Amazon Currency Converter?
Amazon markets the Currency Converter as an “optional service that allows Amazon sellers to receive the net proceeds of their earnings into their local bank account if that account is located in a different country or region from the marketplace where they are selling.”
For sellers based in Swizerland or Germany, this means that any sales proceed in GBP will be paid exclusively to a bank account in the United Kingdom, USD to local bank accounts in the United States, etc. Foreign currency accounts at the local bank are explicitly excluded, as they are not local.
All other disbursements are made exclusively in the seller’s home currency. The necessary exchange from the store currency to the home currency is done by the Amazon Currency Converter.
What are the fees for the Amazon Currency Converter?
According to the current official pricing, the applicable fee for any currency exchange is between 0.70% and 1.50%, depending on the annual volume processed via the Amazon Currency Converter. Sellers who are paid in CHF pay a flat rate of 1.50%, regardless of the volume.
This means in other words that for every CHF 10,000 in international sales, a whopping CHF 150 will be charged immediately for the currency conversion.
Since these 1.50% are included in the fx margin, you will never see any invoice for it which is why it can easily be overseen.
Refunds and VAT: currency risk and unnecessary fx cost
In addition to the high fees associated with using the Amazon Currency Converter, this forced fx exchange also creates a currency risk on the seller side that could be avoided: any refunds are made in the shops’ local currency. Amazon’s refund policy can allow refunds within up to 90 days after the sale. Depending on the fluctuations on the fx markets during this time, such a refund can deviate considerably from the original sales proceeds.
In addition, the currency has to be exchanged again, which means yet another loss of margin.
An additional currency exchange is also required for the settlement of the value added tax (VAT) abroad. In order to avoid having to exchange the currency twice, it would actually be beneficial (from a seller’s point of view) to deposit the VAT in a foreign currency account and pay the VAT directly from there, without switching back and forth.
Global business accounts as a solution
Amazon traders with global ambitions therefore need a strategy for dealing with foreign currencies from early on. Opening a local bank account in the respective currency area is very often not an option, as this is usually expensive and regulatory complex, and very often prohibited without the opening of a local presence.
With amnis COLLECT, amnis offers companies free local foreign currency accounts in the respective currency area and is therefore the ideal partner for Amazon sellers.
Currently, amnis offers local accounts in USD, GBP and CAD, which can be deposited in Amazon Seller Central as a payout account.
This way, the Amazon Currency Converter exchange rate surcharges can be bypassed and sellers can decide for themselves when and how much they want to effectively exchange into which currency.
In addition, amnis also makes purchasing cheaper through favorable exchange rates and payment fees. Resourceful Amazon sellers optimize their margin with amnis not only in sales, but already in the purchase process.
How to connect your amnis account with Amazon
The amnis fx business accounts (currently supported currencies: USD, GBP and CAD) can be added in Amazon Seller Central as follows:
- Click Settings -> Account Info -> Payment Info -> Bank Account Info
- Add or replace account details: Click “Assign” to add a new bank account or click “Replace” to change an existing one.
- Select “Add new deposit method”
- Select the banks domicile country:United Kingdom for GBP
United States of America for USD
Canada for CAD
- Add the details of your business account.
You can find these in your amnis dashboard under “Accounts” -> “Account Details”.
Amazon UK: The Sort Code and the Account Number are required.
Amazon US: Add your account number and the ACH routing number.
Amazon Canada: Add your account number and the routing code.
- Verify and save. Click on “Set Deposit Method” in order to save your settings.After that, your amnis account will be set up to receive your Amazon sales proceeds.