PayPal has been eBay’s main payment provider since 2003 but at the beginning of this year the e-commerce giant moved to the Amsterdam based payment company Adyen. Whilst buyers will still have the option of using PayPal until 2023, it will no longer be the preferred payment method.
Xero’s PayPal bank feeds were a game changer as they directly fed each individual sale and fee into the software, making it easy to record and reconcile individual sales. Adyen has no direct bank feed and the periodic payments they make into the business bank account are made up of a mixture of sales, fees, and shipping charges etc. However, there are solutions available that can take the pain out of reconciling these transactions.
Dedicated apps such as A2X or integration apps like Zapier can be a useful solution, but when considering the best way to record e-commerce sales in a MTD compliant way, there are a number of factors you’ll need to consider such as:
The volume of transactions – do you really want to be reconciling thousands of transactions individually each month?
Products at different tax rates of VAT – how does your financial software identify the split of standard rates, reduced rate and zero-rated sales?
Overseas sales – how do you identify overseas sales and account correctly for VAT? If you need to prepare foreign VAT Returns how will you get that information?
HMRC’s requirement for digital links – do you have unbroken digital links between the source transactions and the figures on your VAT submission?
Other sales platforms – some solutions work better than others if your business is selling on multiple platforms.
Amazon – Approved Payment Service Providers
Businesses selling on Amazon in overseas marketplaces have the choice of either taking payment in the buyer’s local currency and accepting Amazon’s exchange rate, or opting for a virtual bank account with a Payment Service Provider (PSP). The latter option can result in savings of up to 2% on Amazon’s exchange rate and so prove an attractive option for many overseas sellers.
What’s changing?
Amazon has launched a new Payment Service Provider program that they say will help to detect and prevent fraud and abuse by limiting the number of providers that can offer virtual bank accounts. If your business currently has a bank account issued directly by a bank or uses a Payment Service Provider that has already signed up to the program, then you do not need to do anything.
However, from 31st May 2021 businesses using a non-approved provider will be subject to a disbursement period of up to 21 days after the latest estimated delivery date - and an obvious impact on their cash flow! From 15th July 2021 pay-outs from non-approved providers will stop altogether and sellers will need to switch to a standard bank account or an approved payment service provider to continue receiving payments
For advice on e-commerce accounting and integrations please contact Richard Woolgar on 0808 144 5575 or email help@armstrongwatson.co.uk.
