As an Amazon seller, having your money held in ‘Amazon Account Level Reserve’ is much more common than you might think.
What is Amazon Account Level Reserve?
Amazon Account Level Reserve is the amount of money reserved to ensure you have enough funds to fulfill any financial obligations not covered by delivery date-based reserve policies.
Amazon will withhold the total value of all the sales that fall into any of these categories:
- Ongoing A-to-Z claims.
- When an A-to-Z Guarantee claim is filed, the claim amount will be reserved until the claim is resolved. Some claims can take up to 14 days or longer to resolve, but the reserve will be released after the claims are processed.
- One or more of your orders has received a chargeback.
- Money might be reserved if your account has chargebacks from transactions in the last 90 days. The reserve will be released after the chargebacks are processed.
- Performance metrics below benchmarks.
- Money might be reserved if performance metrics fall below the benchmarks. Lower metrics frequently indicate a higher likelihood of claims, chargebacks, and returns.
- Account review. This could be due to sales fluctuations, unusual activity, or long EDDs on a new account.
- Income tax owed. This will be based on tax registration status and local regulations.
- Money might be reserved depending on your tax registration status and Amazon’s responsibility to withhold and pay income tax based on your sales.
Amazon’s Reserve Tiers
As an Amazon seller, your reserve amount is based on several factors, including the age of your account and what disputes, if any, you’ve got pending. Amazon Pay calculates the reserve rate according to the following tiered model.
Tier I
New sellers are placed in Tier I and are subject to a reserve rate of 100%, meaning that all their earned funds are held in reserve for a week after the transaction processing date. If everything checks out, funds are then disbursed to their bank accounts.
Tier II
Those that have used Amazon Pay for a year and completed at least 100 orders are upgraded to Tier II, which holds 3% of their daily processed payments over a 28-day average. Those transaction costs are also factored into the reserve rate if they have any pending disputes. Sellers can request to be moved to Tier II after just six months and 100 completed orders if they’ve maintained an Order Defect Rate under 1%.
Tier II Plus
Tier II sellers that have maintained an ODR rate of less than 1% for the past 60 days are automatically upgraded to Tier II Plus. Under this tier, Amazon only reserves the number of unresolved chargebacks and A-to-Z guarantee claims. However, if your ODR rate exceeds 1% at any time, you will be downgraded to Tier II until you get your metrics up again.
Why Does Amazon Do This?
Amazon applies reserves to seller accounts when the seller puts them at risk of losing money. For example, if you’re triggering too many return requests, they have to consider the possibility that you’ll be unable or unwilling to pay for all of them. Reserves help cover their losses and let them catch scammers in the act.
How Do I See the Reason for the Reserve Being Placed on My Account?
Once you login to Seller Central go to Reports > Payment > Statement View.
Or you can go to Reports > Payments > Transaction View and look for Current Reserve Amount.
What Should I Do Next?
- Surely having your money held by Amazon isn’t an ideal situation, but it comes with the territory of selling on Amazon. You can easily end up losing money if you don’t pay close attention to your payables, your reserved amount, and the tier you belong to.
- If you determine that based on your revenue, you are placed on the wrong tier, or your tier hasn’t been upgraded once your revenue increased, make sure to:
- Ensure there are no issues with your credit card;
- Ensure all your A-Z Claims and Chargebacks are addressed and handled;
- Ensure you are meeting the account KPIs;
- Lastly, contact Amazon
Get in touch with the BellaVix team to navigate your way to growth and success on Amazon!
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