A Basic Guide to Amazon Seller Repay

If you’re new to selling on Amazon, you may have heard the term “seller repay” and wondered what it means. Amazon is an excellent marketplace for online sellers, but it doesn’t come without a cost, and a seller repayment charge is just one of the fees you may accrue over time.

Seller repay is a fee Amazon charges in an attempt to cover past unpaid charges. Suppose you owe anything for other fees and service charges, but there is not enough money in your account to cover these expenses. In that case, Amazon will bill your credit card, and you’ll receive a “seller repayment” entry on your next card statement.

Read on to learn more about seller repay and how it relates to the various other fees, Amazon seller refunds, and expenses of doing business. We’ll also look at some tips for avoiding this unwanted and often unexpected charge on your credit card.

What is Amazon Seller Repay?

Suppose you’ve been using Amazon for several months but haven’t generated any new sales lately. You withdrew all funds from previous sales, leaving your balance low if not empty. If you initially signed up for the Professional seller subscription, you’ll be charged $39.99 per month, whether you sell anything or not. Amazon would usually withdraw this from your account balance, but they will charge your credit card if there’s nothing there.

This is one example of a seller repayment charge. Amazon seller repay is a second attempt to pay for fees after the first attempt failed. 

Ideally, whatever you may owe for service fees or subscriptions, Amazon will automatically withdraw the amount from your account balance so that you pay nothing out of pocket. However, if there are not sufficient funds in your account to cover the charges, your card on file will be charged instead.

If you don’t sell a lot on Amazon, or if you don’t keep track of which fees you owe, and when you owe them, you may find yourself slapped with a seller repayment charge. That’s why it’s incredibly important to pay attention to your finances, know what is going in and being taken out, and understand the various fees being charged to your individual seller account.

Amazon Seller Fees

Photo by Morning Brew on Unsplash

When you sign up for a seller account on Amazon, there are several fees you should be aware of. Depending on the type of account you have and the categories of products you sell, you may be charged some fees and not others. Knowing the different types of fees you could be charged is the first step in avoiding seller repayment charges. In this section, we’ll take a detailed look at each type of fee you may encounter. 

Monthly Account Fee

There are two types of seller accounts on Amazon: Individual and Professional. Private sellers and small businesses may be able to use an Individual plan, which charges no monthly fee but has limitations on how much you can sell. Larger businesses that sell a lot of products regularly will need to sign up for a professional plan, which costs $39.99 per month. 

Per-Item Fee

Individual sellers are charged a $0.99 fee for each item that is sold. Note that this fee is only charged after the sale occurs, and Amazon deducts the fee from the sale, so you aren’t charged anything out of pocket.

Professional sellers are not charged any per-item selling fees.

Referral Fee

Professional sellers are charged referral fees on each item sold. Referral fees differ based on the type of product sold and the product category. Most referral fees are between 6% and 20% of the sale cost, with a good majority hovering somewhere around 15%.

Some categories feature “minimum referral fees,” which are charged if the regular referral fee is below a predetermined minimum–usually $0.30. Professional sellers will be charged either the regular referral fee or the minimum referral fee, but not both. 

For example, the Shoes, Handbags, and Sunglasses category has a referral fee of 15% and a minimum referral fee of $.30. Say you were to sell cheap plastic kids’ sunglasses for $1.75 each. Fifteen percent of $1.75 is $0.26, so you would be charged the minimum referral fee instead of the regular referral fee. 

Amazon’s fee schedule will give you a specific breakdown of each category and the referral and minimum referral fees associated with each one.

Closing Fee

Both Individual and Professional sellers are expected to pay a closing fee of $1.80 for each media item sold. According to Amazon’s definition, media items include books, music, DVDs, videos, software, and computer/video games, video game accessories, and video game consoles.

High-Volume Listing Fee

This minimal fee charges $0.005 per item for items that, according to Amazon’s fee schedule, meet the following criteria:

  1. The ASIN is listed in a non-Media category. Media categories include: Books, DVDs, Music, Software, Computer/Video games, Video Game Consoles, and Video Game Accessories, among others.
  2. You have had an active offer on the ASIN at some point during the month.
  3. The ASIN was created at least 12 months ago. ASINs created less than 12 months prior are not eligible for the fee.
  4. The ASIN has not sold in the previous 12 months.

Essentially, this fee exists to help cover cataloging costs and other expenses associated with large numbers of ASINs. However, Amazon waives this fee for the first 100,000 eligible listings, so you won’t be charged this fee unless you have a very high volume of unique and qualifying ASINs. 

Amazon provides further information about this fee on their High Volume Listing Fee FAQ page.

Refund Administration Fee

Even refunds from Seller Central have fees. If an Amazon seller refunds a customer after receiving payment, then Amazon will refund the initial referral fee, minus a refund administration fee of $5.00 or 20%, whichever is less. 

In other words, the refund administration fee is based on the referral fee. If you paid a referral fee of, say, $2.00, the refund administration fee would be 20% of that, or $0.40–so of your original $2.00 referral fee, you would be refunded $1.60.

Similarly, if you had a larger referral fee on an expensive item–let’s say the referral fee was $45.00–you would be charged a flat rate of $5.00 for the refund administration fee because, in this case, $5.00 is less than 20% ($45.00 minus 20% equals $9.00). 

It’s especially important to understand the cost involved with Amazon seller refunds because it may be an unexpected charge if you’re not looking for it.

Shipping Costs

While shipping costs don’t exactly count as fees, they can add up over time and lead to seller repayment charges if you aren’t careful. 

For Individual sellers, Amazon offers credits toward the shipping cost. However, the credits are usually lower than the total cost of shipping. If you find yourself paying more to ship items than you earn through selling them, you run the risk of losing money on the sale and being charged repayment fees. 

Even Professional sellers can run into similar problems if they aren’t selling enough items at a high enough price or if they don’t charge enough for shipping. Whatever your seller status, it’s important to know how much shipping is going to cost so you can charge enough in shipping and product costs to cover the expenses and avoid unwanted charges. 

FBA Fees

Fulfillment by Amazon (FBA) is a third-party service in which Amazon stocks, packs, and ships orders for the seller. FBA handles the hassle of getting the product to the customer so the seller can focus on selling more of their products.

Of course, this service isn’t free. FBA charges fall into two categories: pick, pack, and weight-handling fees, and monthly storage fees. These fees vary from seller to seller based on the products you sell as well as amounts and sizes. You can find more information about FBA fees here.

Remember that FBA fees add up on top of subscription fees, referral fees, and any other fees that may apply to your specific merchandise.

Image by Preis_King from Pixabay 

How to Avoid Seller Repayment Fees

Now that you have a better understanding of the types of services fees Amazon may bill you for, let’s look at some other steps you can take to avoid those unwanted seller repayment charges.

Know What You Owe

Make sure you know exactly which of the above fees you’re being charged on a regular basis, any new or one-time fees you may accrue, how much you owe, and whether you have enough funds in your account to cover the charges. Understanding the cash flow in and out of your account is the best way to avoid surprise fees.

Keep Payments Up To Date

If you know you don’t have sufficient funds in your account, why not be proactive? You can always pay whatever fees are due with your card on file. That way, you’ll still be paying out of pocket, but at least you won’t be surprised when the charge shows up on your card statement.

Change Your Account Subscription

If you have a Professional subscription but find that you don’t sell enough to cover all the fees, you can easily downgrade to an Individual subscription. As an individual seller, you won’t be charged any fees until after you sell a product, and even then, the fees are generally lower.

To change your account subscription, simply go into your Seller Central account, select Account Settings > Tasks and Tools > Switch Your Selling Plan/Close Your Selling Account. From there, you’ll be able to select the option to switch to an Individual seller plan. 

Can I Cancel My Seller Account?

Some sellers may choose to close their account entirely if they are no longer selling enough to cover expenses and make a profit. While this is a viable option, it’s important to remember that Amazon cannot reinstate accounts that have been closed. If you ever want to sell through Amazon again, you will have to start over and set up a new seller account from scratch. 

Generally, the better option is simply to downgrade to an Individual plan. That way, you will not be charged any fees if you’re not selling anything, but you will also keep your account and have the option to return to a Professional account at any time.

That said, if you do choose to cancel your account permanently, you’ll need to get in touch with an Amazon representative. You can submit a “request account closure” form through Seller Central or go to Settings > Account Info > Close Account. Someone will review your request, and you will receive a confirmation email once the account has been closed.

For more information on closing your seller account, check out Amazon’s close your seller account page.