With cross-border shopping set to hit $4 trillion by 2027, the global foreign exchange market now worth a staggering $2.4 quadrillion (yes, that’s an actual number! 😲), who can blame Amazon for using its Currency Converter to swoop in on such a massive opportunity?
Let’s dive into the details of the ACCS and uncover whether using it means you’re settling for less in your Amazon business.
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Amazon Currency Converter: What We’ll Cover
- The Full Scoop on Amazon’s Currency Converter for Sellers
- What’s the Amazon Currency Converter for Sellers and How Does It Work?
- The Highs and Lows of Amazon Currency Conversion
- 3 Hidden Ways Amazon’s Currency Converter is Hurting Your Growth
- How to Choose a Currency Exchange Service that Works for Your Business (Not Against It!)
- Don’t Be Afraid to Dodge Money-Sucking Currency Converters
The Full Scoop on Amazon’s Currency Converter for Sellers
Before the ACCS launched, receiving and changing currencies across territories was far from simple.
Amazon UK sellers had to open a bank account in the EU if they wished to operate in the Eurozone, they’d receive the funds in euros in Amazon Central and would then have to select an external provider to change their euros to British pounds. 🙄
Consequently, sellers’ profits were being eaten alive by both Amazon and whichever bank or currency exchange took a cut of the transaction.
This setup may have been a minor inconvenience for sellers residing in the Eurozone, but it caused substantial legal and financial problems further afield.
Something had to change — Amazon introduced its in-house currency conversion solution to make the process less admin intensive and more stress-free.
Or at least, that’s what we’d hoped would happen.
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What’s the Amazon Currency Converter and How Does It Work?
Noticing increasing demand for international selling, Amazon jumped into fulfilling the need for business currency exchange with its solution, the Amazon Currency Converter for Sellers (ACCS). The ACCS service enables you to quickly switch your earnings into another currency and direct it to a bank account of your choice.
The Amazon Currency Converter for Sellers uses a volume-based scale for its fee structure called Volume Based Fees (VBF).
VBF charges you by the number of sales you’ve finalized over the past 12 months, called the Total Processed Volume (TPV).
Amazon has structured its currency conversion to reward best sellers by discounting fees as the sales volume increases. In other words, as your TPV increases, your fees decrease.
But there’s a catch. You won’t know the exact deal you’ll get until you head to the view exchange rate button on the payment summary page in your Sellers Central account.
Even more worryingly, the figure you see may differ from other providers’ rates because:
- Amazon doesn’t give you wholesale exchange rates. They set their own, and there’s nothing you can do to influence it no matter how much you sell.
- Amazon, like most providers, doesn’t offer the interbank rate, which is the fairest rate in the foreign exchange market and is used by the big banks in their transactions. However, Amazon is also notorious for shaving down more than a fair amount of the returned currency.
The ACCS fees start at a more palatable rate but hike up to eye-watering amounts.
Here’s a snippet of the Amazon Currency Converter for Sellers:
- Tier 1: 0.75% fee for revenue equal to or over $10 million
- Tier 2: 1.00% fee for revenue equal to or over $1 million
- Tier 3: 1.25% fee for revenue equal to or over $500,000
- Tiers 4-6: 1.50% fee for revenue equal to or under $100,000
To put these figures into context, imagine you open an Amazon store and, with pure grit and sacrifice, get your revenue to $90,000. Amazon would take off $1,350 just for providing an automated service. Plus, there’s nothing to stop your bank from throwing their fees into the mix. Before you know it, charges are coming at your store from all angles. Not ideal!
The Highs and Lows of Amazon Currency Conversion
It would be unfair and inaccurate to say the Amazon Currency Converter for Sellers is all bad — the ACCS comes with some tempting and even valuable perks.
However, some of the downsides may make you think twice about signing up for your business.
Here are a few pros and cons of the ACCS you should know about:
The Highs of the Amazon Currency Converter for Sellers 😄
- Painless currency exchange across territories: ACCS offers a quick and convenient way to manage payouts. No more fussing with multiple bank accounts in different territories.
- Seamless funds disbursements: Receiving cash from the countries you trade in becomes as smooth as butter. All it takes is a few clicks for funds to land in your seller’s account in your chosen currency.
- Save time and energy: The Amazon Currency Converter for Sellers gives you precious time to funnel into more critical tasks like marketing and sales.
The Lows of the Amazon Currency Converter for Sellers 😔
- Steep fees: At first glance, the ACCS’ highest fees may not seem like much — but when you consider some foreign exchange providers don’t charge a fee and have fair exchange rates, you may think twice about signing up.
- Ever-changing exchange rates are a pain: It’s impossible to know how much money you’ll make from foreign transactions, even though you have a set selling price and know your margins. A bad exchange rate can make a profitable product a no-go, flushing all your hard work and money down the toilet. 🚽
- ACCS is a money-hungry monster disguised as a gift: While Amazon isn’t a bank, its ACCS service certainly looks and feels like one. The ACCS’s main purpose is to make money for Amazon under the guise of serving sellers. The uncertainty isn’t ideal, and sellers have little to no recourse once the transaction goes through.
3 Hidden Ways Amazon’s Currency Converter Is Hurting Your Growth
With these drawbacks comes the ultimate consequence: stunted growth.
Over time growth setbacks can prevent you from taking the calculated risks necessary to help your business excel, like taking on new territories and launching production variations.
Let’s explore some ways Amazon Currency Converter stops you from living your best eCommerce life:
1. The ACCS siphons the main resource you need to grow: capital
Sticking with the example we discussed earlier, £1,350 might not seem like much — but it’s enough to test a new product, start and optimize PPC campaigns, and engage in external marketing initiatives like influencer shoutouts. Giving this cash to Amazon can leave you with a painful opportunity cost that harms your margins and profits.
2. Amazon gets even more of your money for nothing
Amazon already charges you a subscription and referral fees for selling on their platform — which you can justify because you’re paying for access to their audience — but why should they get an extra 1.5% of your cash for a simple service? 👎🏼
3. The ACCS is inconspicuously risky
The Amazon Currency Converter for Sellers has a sneaky clause in its terms and conditions:
“When using Amazon Currency Converter for Sellers, you bear the risk, if any, that the exchange rate at the time of sale of your products on the Amazon Site, or at the time when any refund, reimbursement, fee, or cost is incurred, differs from the Estimated Exchange Rate and/or the Applicable Exchange Rate.”
This means if you get a refund through your store for $21, but only get back $18.50 when you put it through the ACCS, Amazon won’t give you the difference. Ouch! The same logic applies to your Amazon sales, which can be a costly expense over time.
How to Choose a Currency Exchange Service that Works for Your Business
When it comes to currency conversion, your choices boil down to three options:
- Accept Amazon’s eye-watering fees and fluctuating rates.
- Turn to traditional banks whose charges are sky-high, leaving you with some of the worst rates on the market.
- Find an excellent external Payment Service Provider (PSP).
We’ll hazard a guess and say that the third option sounds like the most appealing and feasible solution.
Amazon isn’t going to step up and give you the best rates anytime soon. You’ll have to go on the currency exchange treasure hunt alone. Here’s how to take the pain out of that experience.
The right PSP can be your trusted partner, allowing you to make power moves around the world without throwing resources away. 🙌
To give you the best footing, ensure your PSP is:
- A multi-currency account: Your PSP should enable you to house various currencies in one account.
- Equipped with transacting capabilities: The cross-border account from your PSP should let you send and receive funds.
- Reasonably priced: Your PSP exchange rates shouldn’t make you want to run for the hills. Ensure their pricing is affordable and fair. To preserve your funds, try to find a PSP that doesn’t apply any charges.
- Transparent and cut straight to the chase: The company should share its fees, exchange rate, and current interbank rate with you. No one wants costly surprises.
Dodge Money-Sucking Currency Converters
If you aren’t budget-conscious, you have excellent margins, and you don’t mind Amazon taking yet another slice of your earnings, Amazon’s Currency Converter for Sellers is probably for you.
But it’s more likely you don’t fall into this category, especially if you want to grow your Amazon store.
Your options? Head to the digital streets to find an All-In-One Payments Platform & Global Collections Account as you take on the world.
Don’t let fear of the unknown thrust you into the arms of greedy banks or PSPs (or even back to Amazon). Take sufficient time to assess your business’s foreign exchange needs. Research the going PSP rates (the best don’t charge a fee), and keep a close eye on the inter-bank rate for the best deals.
And finally, don’t allow Amazon’s Currency Conversion fees to get in the way of progress. Choose to preserve your margins, profits, and time, by hunting down the best currency converter for your store today.
Need a reliable Currency Converter for your Amazon store? Cut straight to the chase with our Digital Wallet.
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