Table of Contents Hide
- When Can you Use Amazon Pay
- Why you need an Alternative
- Amazon Pay Overview
- How to Setup Amazon Merchant Account
- Amazon Pay Transaction Fees
- Fee Comparison of Amazon Pay To Other Alternatives
- Amazon Pay Pricing Model
- Amazon Pay Hardware
- Features of Amazon Pay
- Amazon Pay Ease of Use
- What Users Think of Amazon Pay
- Bottom Line
Amazon Pay was formally known as Amazon payments and it is a very secure online payment processing platform that you can use in your online business. You have the option of Amazon pay checkout which allow your customers to pay for their order automatically synchronized from the information they stored in their Amazon account.
To use the platform, you will have to pay a transaction fee and you will not incur any setup fee or monthly fee. There are specific features designed for online, mobile and voice payments with Alexa devices. And you can get full analytic reporting, pre-orders, fraud prevention and recurring payment features too.
When Can you Use Amazon Pay
Amazon Pay is one of the easiest, effective and most popular ecommerce credit card processing platform out their. But worthy of note is the fact that only those who have Amazon account can use it as their check out payment option, therefore you will require alternative merchant account if you chose to use Amazon pay so you can get pay from customers who do not have Amazon account.
Lets look at the best features of Amazon Pay:
- It Reduces cart abandonment: If you know you are doing ecommerce and your business require online payment processing, then Amazon Pay is a good option to add to your checkout, because Amazon shoppers will find it stress free to pay since they will not have to go through the stress of entering all their payment information at check out.
- You can Managing international payments: Amazon is a global payment processor, and it’s widely used worldwide. Note If you are making international payment you might have to pay additional fees.
- For nonprofit organizations: If you a running a nonprofit organization like an NGO or Church, and you are qualified, Amazon Pay will give you some discounted on transaction rates. In that way you can accept donations and not lose so much to transaction processing fees. However, you can only benefit from this program is you are invited by Amazon.
- Alexa devices for voice payments: On Amazon Pay you can enable voice payments, so that customers who have voice enabled devices with Alexa voices can shop on your site.
Why you need an Alternative
To process offline credit card: If you know you will need to process in-person transactions using a POS hardware, then you can not use Amazon pay. You can check out for other alternatives here where i talked about the best Credit Card Readers for small business.
If you are a high-risk business: Amazon Pay don’t support high-risk businesses. It will hold or freeze your funds if your business is suspected to be high risk. If you operate a high-risk business, then you may need to sign up for a special high-risk merchant account.
Amazon Pay Overview
|Gives discounted rates for nonprofits||Approval time for merchant account is quite Long|
|A secure and trusted platform||First transfer for new merchant can take a long time|
|Online checkout is streamlined and optimized for mobile, it helps to reduce rates of cart abandonment.||No good customer support|
|Alexa devices enabled for voice payments||Not for profit organization program can only be gotten by invite-only|
|Tiered reserve for all accounts|
Amazon Pay was launched as Amazon Payments in August 2007, as a flexible payments solution for Amazon users. It then turned into Checkout by Amazon (CBA). With CBA they added features which allowed merchants to integrate Amazon as an option for checkout website,a feature which was similar to PayPal’s service.
However, this feature was removed in April 2017 and replaced with the Pay With Amazon which was later renamed Amazon Pay in January 2018, and had some upgraded features to support recurring payment processing, hosted payment buttons, and APIs for customization.
How to Setup Amazon Merchant Account
To signing up for a merchant account with Amazon Pay, you need to complete an online form on the Amazon Pay website. To do this, you will need a US-based phone number, a checking account with a US-based, a bank credit card issued by a US-based bank, and a business taxpayer ID, EIN, or personal Social Security number (SSN).
To get your merchant account approved, you may have to wait for about 20 to 30 days. Also, you will be required to leave as a capital base with Amazon which is a portion of your funds for processing your transactions. This is known as tiered reserve. You will find the policy in Amazon’s FAQs or seller central.
Amazon Pay Transaction Fees
- Local online transaction fee: 2.9% + 30 cents
- Local Alexa purchases transaction fee: 4% + 30 cents
- Cross-border transaction fee: 3.9%–5% + 30 cents
- Chargeback fee: $0–$20 + tax
- Nonprofit processing fee: 2.2%–3.2% + 30 cents
- Tiered Reserve requirement: Based on a percentage of processed payments over a period of time or all the total of unresolved transaction disputes over the same period
- Deposit speed: Takes up to five business days
Fee Comparison of Amazon Pay To Other Alternatives
|Best for||Online sales and offline sales||SMEs kind of business||Very new small businesses||Not too fast online sales|
|Monthly fee||Starting from $25/month||Starting from $99/month||Starting from $0/month||Starting from $0/month|
|Present Card transaction fee||2.9% + 30 cents||Interchange + 8 cents||2.6% + 10 cents||2.29% + 9 cents|
|Keyed transaction fee||2.9% + 30 cents||Interchange + 15 cents||3.5% + 15 cents||3.5% + 49 cents|
|Online payment transaction fee||2.9% + 30 cents||Interchange + 15 cents||2.9% + 30 cents||Starting from 2.59% + 49 cents|
|Visit Authorize.net||Visit Staxpay||Visit Square||Visit PayPal|
Do you want to get the lowest rates? Your payment processing rates depends on the types of business you run, the size, and the average processing volume. Look out this article on other credit card processing companies you can chose from here
Amazon Pay Pricing Model
To use Amazon Pay you get charged a flat processing fee and an additional standard authorization fee of 30 cents for every transaction and you can also get a discounted rate if you run a nonprofit organization. The payment processing fee varies with cross-border or local payments.
Additionally, the subscription is a pay-as-you-go kind of subscription and there are no monthly or cancellation fees. However, you will not get any discount base on volume and there is no custom rates, so if your business processes high-volume payments this might not be advantageous.
Amazon Pay Processing Fees
|Web and mobile||Alexa (real-world goods and services)||Nonprofits|
|Transaction fee||2.9% + 30 cents||4% + 30 cents||2.2% + 30 cents|
|International processing fee||3.9% + 30 cents||5% + 30 cents||3.2% + 30 cents|
For Products or goods covered in Amazon Payment Protection Policy, Amazon will not impose chargeback fee if you contest a chargeback. If you make a request to challenge a claim you will pay $20.
Another thing to put into consideration is the tiered reserve, where you are required to leave a capital base in your account to minimize the risk that comes from transaction dispute and claims. This is kind of frustrating for businesses who have limited capital. This is mostly common with Amazon and PayPal.
Amazon Pay Reserve Policy
|Tier Level||Reserve Amount||Merchant Account Included|
|1||You reserve 100% of payments processed over the past 7 days, AND all unresolved disputed transactions||Less than a year Amazon Pay merchants account|
|2||Higher than:3% of average daily payments processed over the past 28 days, OR all unresolved disputed transactions||More than 1 year Amazon Pay merchants account, must have completed 100 orders, OR have a merchants account for at least 6 months, with a minimum of 100 completed orders, have maintained an ODR* below 1%|
|2 Plus||The Value of all unresolved disputed transactions||Reserve Tier 2 Amazon Pay merchants, have maintained an average ODR* less than 1% over the past 60 days|
* Order Defect Rate: Is the percentage of orders that have received negative feedback
If you a new and your first transaction on Amazon Pay comes in, you will have to wait for 14 days before you can receive the money to your bank account. After this initial hold, deposits will start to take 3 to 5 business days for funds to reach your bank account.
Amazon Pay Hardware
Amazon Pay do not give hardware to merchants. The system is strictly for online payment, e-commerce only so there’s no need for hardware. You can not do in-person or offline transactions—like card readers and cash drawers. You might use the Amazon Pay software on your PC, mobile, and browser.
Amazon Pay Technical Requirements
|Desktop/Laptop OS||Windows 10||Mac OS X|
|Google Chrome (78 and later)Mozilla Firefox (70 and later)Internet Explorer (11 and later)Microsoft Edge (18.18362 and later)||Apple Safari (13.0.1 and later)|
|Mobile/Tablet OS||Android 9 and later||iOS 12.3.1 and later|
|Google Chrome 78 and later||Safari Mobile 12 and later|
Features of Amazon Pay
One of the standout features is Amazon Pay’s streamlined online checkout, which helps reduce cart abandonment rates. Shoppers don’t need their credit card information to pay when logged in. It also offers a simple platform for mobile payments so customers can pay right from their phones. Amazon’s most recent update is Checkout V2, which features tools replacing Amazon’s traditional payment and address widgets for a more seamless checkout experience.
Amazon provides an API that allows you to develop a checkout page for accepting recurring payments. You can set rules for managing subscriptions, including actions for requesting payment pre-authorization, triggering automatic card charging, and managing cancellations. You also have the ability to charge for a flat or fluctuating amount (for usage-based billing) and communicate with your customer this information ahead of time via email.
Note, however, that Amazon Pay limits the total amount of recurring payment transactions you can accept from each of your customers per month. The limit is usually based on your business type, but in most cases, it’s capped at $500/month. So, if you run a big-ticket subscription business, you’ll need to contact your account manager to request approval for a higher limit.
Contract and Merchant Agreement Terms
Customer agreement and policies are available on Amazon’s help center. You’ll find both general merchant terms of service and specific policies on the use of the different Amazon products. The customer agreement, in particular, is the general terms and conditions for any Amazon user (both buyer and seller), so make sure to read the document thoroughly before signing up for an account.
The sections relevant to your merchant account are:
- General terms: Covers stipulations on establishing your account, which may include undergoing a credit investigation, establishing a reserve, receiving payments and chargebacks, Amazon fees and taxes, contract terms and termination, and confidentiality
- Seller accounts: Details the terms and conditions for creating and maintaining a merchant account, accepting payments, depositing funds, and chargeback protection
- Marketplace Web service (MWS): Now referred to as Selling Partner API (SP-API); for sellers who want to avail of MWS, terms and conditions cover the use and access to APIs and tools specific for this service
- Credit Card Association agreement: Highlights the terms associated with accepting payments through card networks (Visa, MasterCard, AMEX, etc.) on Amazon Pay
Amazon provides settlement reports in lieu of a billing statement, which you can find in Seller Central under Reports > Payments > Statement View tab. You then have the option to generate all statements or specify the date range and then either view or download the report as a CSV file.
Aside from settlements, Amazon’s Seller Central has performance reports, including transaction and settlement reports for reconciliation. Here, you can also manage claims and disputes and check customer feedback.
Security and Fraud Management
Amazon Pay’s seller platform is backed by secure fraud detection technology. It verifies customer information before processing payments and gives you the option to process them asynchronously, increasing the chance of detecting fraudulent transactions.
It also provides chargeback controls and risk management tools at no extra cost. Amazon’s Payment Protection Policy waives chargeback fees for qualified transactions if you send in the requested supporting information within 11 calendar days after getting notified of the dispute.
There are different Amazon Pay merchant protection pay policies depending on where the purchases are made. For purchases made on the Amazon.com website, head on to your Seller Central account to learn how to represent your side in a buyer claim. If your customer purchased your product with their Amazon account on a third-party website, refer to the Amazon Pay A-to-z Guarantee for Merchants below.
A unique feature when compared with other payment options, Amazon Pay works with voice search and voice commerce via Alexa devices. Shoppers can add to their Amazon wish lists, reorder products, and check orders with voice commands.
To get started, attend Amazon Pay’s webinar for Voice Commerce, and contact one of Amazon’s skill builder experts. They will guide you in navigating Amazon Pay’s flexible APIs and SDKs, which you need to create a customized, secure voice checkout experience.
Amazon Pay Ease of Use
Amazon Pay supports most of the common payment methods, like credit/debit cards and mobile wallets. You can also accept international payments and set up pre-orders and recurring payments. However, Amazon Pay is surprisingly incompatible with Amazon gift cards.
Amazon Pay is simple to set up and use, making it a no-fuss platform for merchants with limited technical resources. The dashboard is relatively easy to get used to, and you can use it to set up notifications, check high-level analytics, and manage integrations. You can also store and update customer payment information. However, it’s a bit limited in terms of in-person payments.
As an online payment processor, Amazon Pay supports a wide range of ecommerce integrations. These include website builders, shopping carts, and marketplaces. Note that some of these third-party integrations may require additional fees.
Developer integrations can be intimidating, but Amazon Pay provides the necessary tools for developing a highly customized checkout experience for your customers. These tools allow you to visualize the look and feel of your checkout function, try a variety of options, and minimize the need for coding with its built-in code generators:
- Amazon Pay Demo site
- Amazon Pay SDKs
- MWS Scratchpad
- Widget Code generator
For troubleshooting, Amazon Pay has an extensive online support center. Merchants needing additional support can log in for more personalized assistance via accessing live chat or submitting an online form. Users have noted the team is usually responsive, though the user-friendly format minimizes the need for support.
What Users Think of Amazon Pay
Overall, Amazon Pay users are happy with the platform. Reviewers enjoy the simplicity of the program and the convenience for both merchants and customers. However, some users noted that fund transfers can be delayed for new clients and accounts can be suspended with little to no warning.
- G2: Some 330 reviews earn Amazon Pay 4.5 out of 5 stars. Users mostly comment on the security of the transactions and really like the cashback options. However, there are some complaints about fees.
- FinancesOnline: While there are only around 20 reviews, Amazon Pay received a 98% user satisfaction rating. Users commented on the secure and convenient checkout, and one remarked that the limit should be higher than $10,000.
- Trustpilot: Remarks were mostly negative, and Amazon Pay earned 1.5 out of 5 stars based on over 70 reviews. Merchants are disappointed with account suspensions that come with no explanation and the withholding of funds. However, one shopper reviewing Amazon Pay praised the cashback perks.
When reading through Amazon Pay reviews from merchants, we noticed the following trends:
|Users Like||Users Don’t Like|
|Trusted, secure platform||Unpredictable freezing of accounts and/or funds|
|Easy to use||High fees|
Amazon Pay is a quick and easy solution if you need a foolproof and trusted way to set up online payments. However, if you’re looking for something long term and can provide many business tools, you may want to opt for something more flexible. Plus, Amazon Pay’s frequent account and fund freezes make it a risky choice.