The new Etsy Payments provides shoppers with 10 different payment options including Apple Pay, Android Pay, and bank transfers in some countries.Ā Etsy shoppers will still be able to use PayPal to checkout, but the payment will now be processed by Etsy rather than PayPal and the funds will go into the seller’s Shop Payment Account rather than into their PayPal account.
Etsy Payments also offers sellers a more flexible deposit schedule: daily (as long as there’s at least $25 to deposit), weekly, biweekly and monthly. The fee for Etsy Payments will be 3% (including shipping fees and sales tax) plus .25 for each sale made, the same fees as Direct Checkout.
Etsy Payments is one of a suite of seller services Etsy provides and together these make up a significant portion of the company’s revenue. Seller services currently includes Direct Checkout (Etsy Payments), Promoted Listings, Shipping Labels, and Pattern by Etsy (a website maker).
As of the end of 2016,Ā 51% of Etsy sellers used at least one seller service. After May 17 that number will be 100%. As of 2016, seller services $200.9 million, or 55% of Etsy’s revenue.
When Direct Checkout launched in 2015 sellers had a choice to opt out and choose to have shoppers use PayPal exclusively. Those sellers who opted out then will now be required to enable Etsy Payments, but will also continue to be allowed to process orders through PayPal for now, although an Etsy customer support agent told me this option will also likely go away sometime in 2018.
Etsy has shared internal statistics which show that shops that allow Direct Checkout (now called Etsy Payments) see 49% higher sales than shops that don’t, yet many Etsy sellers have resisted this option up until now.
Some sellers have expressed doubts about the security of Etsy’s payment processing system although there haven’t been any reported security breeches. Etsy has assured sellers that all bank account information is encrypted and stored securely. Etsy is certified as a Level 1 PCI DDS compliant institution which is a stringent security certification process recognized across the payments industry.
Other sellers are concerned about how payment disputes with customers will be mitigated going forward. Once all payments are processed by Etsy all disputes will be mitigated by Etsy as well (even if the payment was made using PayPal). For some sellers this is a red flag because they trust PayPal’s mitigation process over Etsy’s. Sellers cite Etsy’s customer support call back system as a source of concern. Rather than reaching a customer support specialist, sellers leave a message and get called back. (Note that when a reporter left a message she received a call back within 10 minutes). Transactions made using Etsy Payments will be covered by Etsy Seller Protection which is Etsy’s system for buyers and sellers to resolve the issue together. If they’re unable to come to a resolution the case escalates to Etsy for review.
Banking
Sellers who don’t have a bank account for their business and will now have to open one for the first time or connect their Etsy Payments account to their personal bank account. Although this might seem simple, it’s proving problematic to the many Etsy sellers who are hobbyists and use PayPal rather than a bank for their shop’s financial transactions. For these sellers Etsy Payments is a push to professionalize.
Opening a bank account for even a hobby business is a good idea. A separate bank account helps keep business and personal finances segregated which allows sellers to keep tabs on how their business is doing, ensure they’re paying taxes completely and correctly, and helps to protect you personally from liability. In addition, PayPal is not FDIC insured. PayPal does have FDIC insurance on its deposits, but PayPal doesnāt have nearly enough FDIC coverage to cover all of the money its holding at any given time.
Some sellers that already have bank accounts are disappointed to lose the immediate access to their funds that PayPal offer.Ā It generally takes banks a few days to process new deposits. (Note that those Etsy sellers who didn’t have Direct Checkout enabled will have a five day hold on their funds when they initially sign up for Etsy Payments.)
Others are concerned about the possibility of even longer delays in access to their funds. Last July Direct Checkout payments were delayed by several weeks due to an outage at WorldPay, the payment processor that Etsy contracts with. To remedy this issue and prevent it from happening again in October of 2016 Etsy added an additional payment processing partner, Adyen, which added redundancy and resiliency to the system to avoid future interruptions.
International sellers have expressed concern about currency conversion fees under the new Etsy Payments system. To avoid additional fees Etsy is recommending that listings are made in the same currency as the seller’s bank account. If that’s not possible Etsy will charge a 2.5% currency conversion fee for each sale according to the market rate.
According to another recent announcement Etsy Payments appears to be paving the way for guest checkout which would allow shoppers to make purchases on Etsy without first setting up an account. Removing that barrier for shoppers could lead to increased sales for all sellers.
If your Etsy shop already had Direct Checkout enabled you don’t need to take any action to activate Etsy Payments. If not, you’ll need to activate Etsy Payments by May 17. Sellers who fail to do so and have their selling privileges revoked will be reinstated within 24 of adding Etsy Payments.
When I received the email regarding Etsy Payments, I was very glad for the option of keeping Paypal separate. I am not very happy to hear that Etsy may in future eliminate the separate Paypal transactions.
On the other new changes front, a recent email from Etsy congratulating me for trying out Shop Manager asked that I be supportive in its forums and help answer other sellers’ questions. While I’m happy to help people navigate something new that I’ve learned, I’m not sure it’s reasonable to intimate that I am to act as Etsy support. Community is one thing; asking hundreds of non-employees to do Etsy’s customer support job via this email is another.
I did check out the forums today which I rarely do, and I noticed a number of questions (unanswered by Etsy) regarding an extreme loss of views and sales since last November. Most of these comments were from fairly established sellers, some selling well daily with sales dropping to one or none a day. I also have been experiencing a diminished number of sales – about 60% less per month since November.
In understand it’s up to the seller to promote one’s own business, but could there be something internal that is (perhaps unintentionally) engendering a favoritism towards some businesses rather than a fair go for all shops? Etsy promotional sales emails have links to several categories, often including embroidery patterns, which I visited again today. Editor picks for embroidery patterns and shops remains much the same for several months now. Is it just a lack of resources to rotate the links within the sales category? Is there a short-sightedness by not perhaps also including a “have you seen these shops also?” bar of images that helps promote smaller and not frequently Etsy-promoted shops? Is this “looks-like-favoritism” simply the result of an algorithm based on shop sales and not representative of editors’ choices?
I am committed to building my business (using Etsy) which has experienced the same sales losses as many others since November, and to be honest, I make more money designing projects for magazines. But I am very drawn the idea of a more “passive” income as I get older and more busy caring for family in need. If Etsy is a tool, it seems to be a mystery tool of random benefit and that makes the tool harder and harder to use to the benefit of the business. Is there something about the work on Etsy Payments, Pattern, Etsy Studio, and Shop Manager that is responsible for lower views and sales which will self-repair as, perhaps, focus is shifted to viewing supplies shops via Etsy Studio? I have no answers, but still high hopes that Etsy has a plan and isn’t just throwing spaghetti at the wall to see what sticks.
My reservations with this program is why does Etsy need a copy of proof of self when they have already a complete profile of me and credit info and now want me to download a copy of my driver licence or other official proof, etc. of self. It seems like a phishing scan! I have over 50 transactions they can’t accept that of credit and trust? !!
As a customer of Etsy I am concerned that they will process my Paypal payments rather than Paypal? I trust Paypal implicitly and am not sure of Etsy. We’ll see going forward…
I wonder what makes you trust PayPal implicitly, but not so sure of Etsy’s security when it comes to payments?
Abby, I respect your opinion about this and love your podcast. Are you receiving positive feedback from some of the more well known shop owners too? I have my concerns about giving yet another website sensitive information. …. I’m reese Osborne. I’m on histogram as such. My website isn’t up yet.
Hi Reese, I have a friend who is a sewing pattern designer in rural Australia. She’s a fairly new Etsy seller (she’s had her shop less than 2 years) and until now she hadn’t set up direct checkout. She’s now set up Etsy Payments and reports that her sales have doubled this month! It’s worth doing. If you think about it most employers ask you to set up direct deposit for your paycheck. This is no different. I’ve never had a financial security breech through Etsy and I’ve been a seller for 12 years.
This is the dumbest move Etsy has made. What about business that need instant access to their funds? How about paying bills? Many banks charge a fee if the deposit is less the 25$,
How about people who buy daily for their shop? I buy and sell vintage . I am constantly needing my Etsy revenue to restock my store. PayPal has instant access via PayPal debit card. Can Etsy do the same? No way this ridiculous and about greed. Etsy has increased their sellers fees. What has has the sellers gotten from all the increased fees? Not much just paying more. Not much advertising on TV.
Hi Abby
I opened my shop last year and only have Paypal payment option but would like to change that. I am in South Africa will this be possible.
You’ll have to check with Etsy. Direct Checkout it not available in all countries.
Definitely seen a massive drop in sales since ETSY Payments were enforced! Plus am charged more for the the privelage.
Why would enabling Etsy Payments lead to a massive drop in sales?
Etsy is became crook company. trying to grab money by changing currency . I sold in US dollars and etsy gave me in Canadian dollars. my previous bank account is closed, so I can’t withdraw my money from etsy sell. probably I will close my shop in etsy and I have ebay store, where my 99% sales. I opened etsy many years ago, but my sells is not good. To list in etsy takes too much time and all kinds bullshits there.
Does anyone have any guidance as to how to log this for bookkeeping in quickbooks? It is all mixed up now and I’m trying to get a handle on how to integrate the payments and fees š Very confusing.
What does the MN in front of the amount of money mean? How do I figure the amount in US dollars?
I’m late to the party but as a buyer I’m dismayed that my payments are not being processed instantly through PayPal. I had a seller tell me yesterday that they could not ship my order for 5 days until they received the funds. PayPal had an option to ship and create a label right away as soon as payment was made. I’m really mad about this and will limit Etsy purchases if deliveries are delayed. I’m not interested in waiting 10 days for delivery from an Etsy seller here in the USA when I can go to eBay and have my order shipped immediately.
Hi Brandy, If you are paying for an item on Etsy using PayPal and the payment isn’t cleared instantly you are likely paying using what’s called a PayPal echeck: https://www.paypal.com/us/smarthelp/article/i-sent-an-echeck,-but-the-payment-is-pending.-why-faq572 It’s not the seller’s fault that they have to wait for the payment to clear before sending you your item. You can connect your PayPal account to a credit card and that way your PayPal purchases will clear instantly.
I only use credit cards to make PayPal payments so it’s always instant. I’m aware of how this works. I sold on eBay and Etsy for several years.
I just found your article because sellers are now REQUIRED to use this form of integrated service or their shop will be suspended until they do so. As a seller on Etsy since 2007, I have a problem with Etsy. They are constantly changing formats/policies to their own financial advantage but present it as if they are actually helping you.
Example 1: We are providing a level playing field FOR YOU by now charging you fees on the postage you collect. They seriously expect me to be excited by this? Sounds like they are about to make a small fortune in fees across the Etsy playfield.
Example 2: They make getting your end-of-the-year totals for tax purposes so complicated that it almost forces you to use their affliate partner, Quickbooks. I’m sure they get a kickback every time an Etsy seller signs up to use this service. I came to this conclusion after comparing my ‘Revenues’ (provided by them in Shop Manager>Shop Stats) and more concise numbers in the Payment Accounts >Monthly Statements. They don’t match up at all. Like thousands of dollars off for the year-end figures. I really don’t know what to think about that. I just went with the monthly breakdown, and supposed the inflated revenues were to make us feel so good about ourselves and how Etsy is making us so rich! Another predominate thought (and one I can’t seem to brush off) is that they are somehow taking that money–my money–and reporting it in such a confusing or misleading manner that I’ve paid them those thousands of dollars, but I just don’t know it.
All the changes over the years makes me very suspicious of them. I get visions in my head of sheep being rounded up and herded from place to place. Maybe I don’t like people telling me what I HAVE to do, when it always seems to advantage them. I have visions of people sitting at a big round conference table bouncing ideas around of how to increase profits. I still sell as a hobbyist on Etsy, but my warm-fuzzy views of them have definitely soured over the years. The customers that use Etsy have been really wonderful, but I can’t say the same for Etsy itself.
UGH. I have had such a hard time reconciling this Etsy account since payments started operating this way. It’s not in favor of shopkeepers who like to stay on top of their books.
If the Etsy buyer uses Paypal, is the sale subject to Paypal’s “random 21-day hold”? Paypal has algorithms of some kind which flag an item as one that is statistically more likely to result in a dispute of some kind, and they put a 21-day hold on the payment to make sure everything has gone smoothly before releasing the funds to the seller. This just happened to me on eBay, and I was selling something really innocuous, a well-known brand-name mortising attachment for their drill press, so I have no clue why it triggered the hold. I was surprised with it AFTER I had agreed to accept the buyer’s offer.
I am upset that I got a charge of $6.95 from my bank account and donāt know what for. On top of that there telephone 718-855-7955 didnāt work and you are cut off