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Etsy Debacle Exposes Risk of Using Card Readers

Etsy confirmed it is investigating reports of a problem with its card reader that allows sellers to process in-person credit card payments. Some sellers discovered last week that Etsy failed to show transactions they had processed through the readers.

Etsy spokesperson Nikki Summer told EcommerceBytes on Monday afternoon, “We are aware of the issue and are actively investigating. We’ll share updates when we have them. We encourage sellers who have been affected to contact support@etsy.com.”

Etsy launched the card readers in October. They’re similar to card readers from Square, PayPal, and other firms, and not only process payments, but handle record-keeping and inventory-syncing as well.

While many of the reports of problems came in from sellers who had used the card readers at shows and craft fairs on Saturday, some reports came in earlier than that – one as early as April 26th.

One seller echoed her colleagues’ reports. “Same here. I just got home from my show and I was hoping I would see the sales on the computer. Same as you it showed the cards were accepted. At some point when I couldn’t see the updated sales on my phone I stopped using the Etsy reader and ran cards through square. I am glad that I didn’t go the entire day but considering the morning was the busiest time I am not sure how much money I may have lost. I didn’t write down which sells were cash and which were cards because I believed Etsy was keeping track for me. Now I have to go in and remove product manually from my shop. If I have to do that I may as well just use Square.”

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One seller was “lucky” in the sense she was not out any money after experiencing the problem. That’s because all of her sales were paid with cash – but she used the Sell on Etsy app to record the transactions, meaning she has no record of which items sold. She explained:

Oh no. I feel sick. Wish I had seen this before my show yesterday. Best in-person show I’ve ever had. Happily went about my 12 hour day using the Sell on Etsy app for each sale – all happened to be cash, so no reader to cause any issue. Late in the day tried to check my stats and 0 sales. Checked on the internet from phone, tablet and eventually desktop and 0 everywhere. I even showed my neighbor vendors how great the app was. Meanwhile I should have been using the old paper and pencil – at least I would know how many sales and what items I sold. I know the total $, but NO RECORD of anything else. First no readers in stock for more than 4 months (you can build a luxury car in less than 1) and now this. Etsy has let me down more than I ever imagined they would. Too much focus on the IPO and not enough on the customers?

The problem Etsy sellers experienced also exposes the possible vulnerabilities of using card readers from other providers such as Square or PayPal.

Etsy didn’t appear to be communicating with sellers in the threads we found where some were panicking. On Monday evening, Etsy issued the following response on a thread we had linked to in our blog post coverage earlier in the day:

Hello everyone,
We apologize for this issue. We will be happy to correct all your data and orders. To do so, we ask that you write in to support@etsy.com and include all relevant details.
We are working to correct the issue as soon as possible. Thank you for your patience and reports.

We have numerous questions in to the Etsy PR team.

Update 5/5/15: Etsy spokesperson Nikki Summer told EcommerceBytes on Tuesday that the problem stemmed from a bug on the Sell on Etsy app for Android and that affected sellers would be receiving their funds. As for their transaction records, she said Etsy was doing its best to restore as much as possible and said the company would be reaching out to affected sellers with more details, and that sellers with concerns could email support@etsy.com. “We know how important this is to Etsy sellers, and we’re committed to resolving this in as timely and effective a fashion as possible,” she said. See more information in Wednesday’s Newsflash.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.