Payday Loan Services for Online Businesses

Deep Dive Cases: Payability

Costs and Metrics to Consider When Selling on Amazon

Selling on Amazon can be an incredible opportunity for entrepreneurs and creators of great products.  Amazon’s power lies in its established trust, credibility, and instant traffic to get exposure to millions of visitors every day.  This can be  a profitable channel for big brands, new startups, creators, authors, and much more.

However, the allure of big profits and “passive income” with little effort creates a breading ground for scams and companies ready to take advantage of sellers.  It is essential that you understand the fees associated with selling on Amazon so the total costs are clear.  The true Amazon revenue potential, scalability, and, most importantly, profitability can get obscured quickly.  The #1 reason companies fail on Amazon is not understanding fees and using instant payment companies like 

What are Amazon Selling Fees

Amazon charges different fees for FBA and merchant fulfilled orders.  First, sellers can chose between a professional seller account or individual plan.  

Start by understanding a professional account versus an individual plan.

Payday Loan Companies to Avoid and Why

Just like the physical world has credit schemes stacking the odds against the small business with high interest loans and hidden fess, so does the digital world of onlline businesses.  Companies like Payability should be avoided at all costs

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Case Study:  Payability & Instant Amazon Payments

With Amazon’s two-week payment delay, you’re likely going to have cash flow challenges starting out and, sometimes, ongoing on a regular basis.  Like in regular business and life, there are financial services that prey on people and organizations in these positions.  One company we tested to see if it really delivered on their advertised promise of only 2% of sales (as pictured below), is Payability.

Google ad for showing their fee structure

How do transaction or merchant fees impact your bottom line?

First, it’s important to understand the impacts of only a 2% fee, although’s fee is much higher than their clearly advertised.  Here’s an example:

Scenario 1:  You have $1000 in sales on Amazon

To keep this example simple, we will not cover all the intricacies of referral fee tiers based on categories, closing fees, return fees, etc.  On average, we will assume that are products were sold through Amazon FBA (we shipped the items to Amazon and they fulfilled the orders).  On average, about 15%-20% of the total sale will be fees plus the FBA fulfilment charges.  In this case we will say our items were about $30 per item and light weight. In rough numbers we would pay about $250 in selling fees and $135 in fulfilment costs for a total of $385 paid to Amazon.  Noted below as selling fees.

Next we look at Cost of Goods Sold (COGS).  I am including again for simplicity, the amount we paid for the items and how much it costs us to get them to Amazon. We will use the minimum recommendation for reselling products (sell for at least 3x purchase cost) so our COGS for our 33 items sold at about $30 would be about $330

Assuming everything was perfect (no returns, mishaps, damages, expenses for supplies, etc), the last cost to add is the “Instant Funds” service from  If we took it at face value, that would be 2% of $1000 or $20.  Doesn’t sound like a lot, right?  Well if it were only 2%, it might make sense for some products but let’s look at all the costs thus far.

Amazon Fees:  $385
COGS:  $330
Payability:  $20
Total:       $735

Ok, keep in mind we are leaving out a lot of expenses here and not including returns, shipping supplies, office equipment, labels and much more.  Your $10 item that you were able to sell for $30, netted a profit of only $265.  Even if Payability really only charged 2%, when you look at your net profit, that’s almost 10% of your profits and we are looking at items being sold at a 300% markup!  

Here’s where it gets interesting.  1.  Payability does not give you instant access.  They give you only 75% of your proceeds less the amazon fees.  so if you sold this $1000 over 10 days or $100 a day, you only get $19 a day instantly released.  This is because, charges you 2% on gross sales, releases only 75% of the net proceeds of that sale, and that is based on the average amount that amazon doesn’t hold in reserve too.  So if Amazon on average holds 30% of your sales in reserve for return and cover any associated costs, you can get as little as $10 per day for using this service.  2.  Here’s where the hidden fees come in – Payability charges you 2% when the sale occurs, another 2% when the Payability reserve is released (the 25%) and again when Amazon eventually releases their reserve amount from the initial transactions of that $1000 in sales.  Sounds confusing, right?  Well that’s how they engineered it.  What you need to know is this – when it’s all said and done, you end up paying about 6% in fees after the double charges from reserves being released (for sales that already occurred) and being charged again on that amount.  This is how they almost triple their fees.

Complaint from a verified seller in 2020:

Payability fee structure is deceptive and fraudulent. After over 9 months of using the service for standard payments (if you research real reviews you will see the payments are not next day or instant), I discovered the actual fees were almost 6% of gross sales on. Many people think it’s similar to a regular merchant where they take 2% off the net that is sent but it’s actually gross plus hidden fees. The hidden fee structure works like this – Say you have $1000 in sales in 5 days, automatically you are charged 2% on that ($40), next you get 75% of the net sales of that $1000. So if you paid $400 total in shipping fees and amazon fees, you would get 75% of $600 ($450) but before that, Amazon reserve amount is taken into consideration so it is actually even less but here’s where the trick is: and their hidden fee scam
When Payability releases the 25% of their reserve from that period of sales you get charged another 2%, when amazon releases funds to Payability, you get charged another 2%, and finally when your reserves are released from amazon, you get charged another 2%.

During my time with them, I had $83,000 in gross sales, netted about $43,000 from Amazon, and Payability took over $4600. So the reality of Payability is 5.6% of gross sales and, in my case, over 33% of all profits. Because remember, Amazon paid out $43000 but that hasn’t factored in the Cost of Goods Sold.  As you see to the left, they falsely claimed that the seller had over $150,000 in sales when they only had $83,000 in sales!

This is similar to a payday loan company and they have load of complaints with the BBB and everywhere else. They are just really good and reputation management (and hiding fees)

This seller exported and went through every transaction during the time they used (almost 5,000 transactions) finding the hidden fees

What to do if you have been scammed by Payability

Contact your local Better Business Bureau here
File an official compliant with the FTC here Corporate Contact Information:

Payability, LLC 524 Broadway, 10th Floor
New York, NY 10012
(646) 494-8675

Submit your complaint to and learn more about the class action lawsuit 

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