Why Amazon Holds Sellers’ Money
Yes, Amazon holds sellers’ money. Here’s why.
Amazon holds sellers’ money to cover financial liabilities arising from customer disputes, i.e., chargebacks and Amazon Pay A-to-z Guarantee claims. This is officially called the Amazon Pay Reserve Policy. It applies only to merchants that use Amazon Pay.
The amount of the seller’s money withheld depends on a reserve rate based on the qualifying tier level of the individual seller.
To understand this whole process of how Amazon holds money, in this post we look at the different reserve levels:
- Tier I
- Tier II
- Tier II-Plus
In addition, there are other conditions that may affect how Amazon holds sellers’ money, including when you can request a tier upgrade.
Reserve Tier I
By default, you are automatically placed in Reserve Tier I when you register as a new Amazon Pay merchant. The following conditions apply to hold money:
- 100% of the payments processed over the past 7 days are held in reserve; funds are disbursed automatically at the end of the 7-day period. (For example, the seller received payment on June 1. The sellers’ money is held for 7 days and disbursed on June 8. Payment received on June 2 is disbursed on June 8, and so forth.)
- The total amount of any unresolved transaction disputes.
Sellers’ money held in Reserve II is whichever is greater of the following:
- 3% of the daily Amazon Pay processed payments averaged over the past 28 days
- The total amount of any unresolved transaction disputes
The seller’s money is automatically upgraded when merchants complete the following:
- Using Amazon Pay for one year
- A minimum of 100 orders
How to Request an Upgrade to Reserve Tier II Before a Year
It is possible to request an upgrade to Tier II after only 6 months, rather than a full year, if the merchant:
- Completes 100 orders in 6 months
- Maintains an Order Defect Rate (ODR) below 1.0% (ORD is reported in Seller Central)
Upgrades are not automatic, however. To request an upgrade, send an email to Seller Central that includes the following information:
- Merchant ID
- Merchant website URL
- Reason for requesting upgrade (i.e., that you’ve completed 100 orders in 6 months with a 1.0% ODR)
Note that you can only make an upgrade request once every six months.
Reserve Tier II-Plus
Reserve Tier II merchants that maintain an ODR below 1.0% averaged over the preceding 60 days are automatically placed in Reserve Tier II-Plus. The seller’s money held is only the amount of unresolved transaction disputes. However, if at any time ODR reaches 1.0%, the sellers’ money reverts to Reserve II. Reinstatement to Reserve Tier II-Plus occurs once you again maintain an average ODR below 1.0% after 60 days.
Other Conditions to Hold Seller’s Money
Regardless of Tier status, the amount of seller’s money held can be raised, lowered, or removed at Amazon’s discretion. These decisions to change the amount of sellers’ money held typically relate to order quality.
In addition, whenever bank accounts information changes, Amazon applies a 3-day hold of sellers’ money disbursements effective the day on which the bank information changed. Amazon cannot disburse sellers’ money without a bank account associated with your Seller Central account.
Other Ways to Get Amazon Sellers Money: GETIDA
Another way Amazon holds sellers’ money is when it makes mistakes in mishandling inventory and customer returns on behalf of FBA (Fulfillment by Amazon) sellers. More often than not, Amazon doesn’t reimburse sellers’ money for these mistakes. Rather, it is the sellers’ responsibility to identify the errors to file claims within 18 months of occurrence.
The problem for recovering sellers’ money, in this case, is the time and effort required to comb through transactions not only to identify errors but also to file and follow up on claims. Most sellers are too busy managing and growing their businesses to dedicate the necessary resources to this. However, there is the risk of losing significant sellers’ money unclaimed because of lack of time.
Fortunately, there is an easy solution to this not-uncommon problem.
GETIDA (GET Intelligent Data Analytics) offers an end-to-end solution combining a powerful software tool with an experienced team of former Amazon employees who file and follow up on claims. There is no charge to use the software or file claims. You are only charged a percentage of approved claims to recover sellers’ money for FBA reimbursement.
GETIDA is the largest provider dedicated to finding and obtaining sellers’ money owed FBA sellers. A member of Amazon’s Service Provider Network and the Amazon Marketplace Appstore, GETIDA was the 2020 winner of the Gold Stevie Award in the SaaS Enablement as a Service category from the American Business Awards. GETIDA sponsors various seller education programs and events, hosts the podcast Prime Talk, and offers complimentary consulting services on how Amazon sellers can grow their businesses.
It’s simple and easy to sign up with GETIDA, and there’s no charge to sign up. Go to the GETIDA website and click the “Free Signup” button. There’s no obligation and you can get $400 in free FBA Reimbursements to try them out. free.