Banking Circle, the banking solution provider, has rolled out virtual IBANs for marketplace sellers so they can avoid international fees when they collect the money they make on Amazon in the US.
Amazon, like many other major marketplaces, pays sellers in the currency of their bank account country, hence automatically converting the money and charging 3.9% of the transaction value for sending an international payment.
Virtual IBANs saves a significant margin in fees which would otherwise go in marketplaces like Amazon’s pockets
By allowing payments companies to offer the Banking Circle Virtual IBAN, merchants can hold US bank details and get paid by Amazon in USD through its automated clearing house (ACH) payment corridor – the US version of SEPA and BACS).
The Luxembourg-based business-to-business (B2B) solution provider already offers its virtual IBAN service to merchants – through its payments clients – on marketplaces in the European Union (EU) and the UK.
In the EU, international sellers can receive SEPA [Single Euro Payments Area] credits, and in the UK, international sellers can receive BACS, CHAPs and Faster Payment credits.
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Virtual IBANs mean merchants do not have to open multiple bank accounts, minimises the risk cross-border payment errors, and saves a significant margin in fees which would otherwise go in marketplaces like Amazon’s pockets.
Amazon also charges those merchants which sell more than 35 items a month a £25 monthly subscription fee, as well as referral and closing fees.
And in addition to facing multiple marketplace fees, sellers are also lumped with rising credit card interchange fees. Marketplace EuroCommerce filed a complaint in February with EU regulators, claiming that the card companies have continued to raise interchange fees, five years after they were supposedly capped by law.
Retailers, including IKEA, Tesco, and Amazon, have petitioned EU regulators to address what they call “a self-evident circumvention of the regulation”.
Card issuer Mastercard is among those which have revised their interchange fee structures for refund transactions in the Europe region, citing local market conditions for the changes.
The rise in interchange fees means merchants’ margins are stretched further, and makes the fees marketplaces charge seem less desirable when added together with card issuer charges.
Owned in part by Swedish equity backer EQT, Banking Circle landed a Luxembourg bank licence in February, which also allows it to offer financial institutions access to real-time payments, regardless of borders or company size.
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