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PayPal Is Behind Missing Payments on Etsy

Etsy passed along a message from PayPal in a discussion thread about missing payments from sellers’ accounts. PayPal said the problem was resolved, but refused to disclose if the problem was on its end. For well over a week, some sellers were finding that their customers’ PayPal payments were not showing up in their accounts and appeared to be diverting to an Etsy account instead of their own.

On Wednesday morning, a member of Etsy’s Payments team, “Joe,” wrote, “PayPal would like us to share the following message with the Etsy members affected by this issue,” seemingly worded to put the blame on PayPal.

The statement he posted was identical to one PayPal provided to EcommerceBytes by a spokesperson on Wednesday: “We have been made aware of an issue impacting some Etsy sellers and their ability to receive payments from customers using PayPal. The issue has been resolved and Etsy sellers should not see any issues moving forward. For those impacted, we apologize for any inconvenience and we will ensure that all funds are properly distributed and allocated properly to both buyers and sellers. If you have additional questions, or are experiencing any issues, please contact your PayPal customer service representative.””

We asked the PayPal spokesperson if that meant it was a problem on PayPal’s end. “The below is our statement on the matter,” he said of the statement he had provided and would not provide further information.

Sellers still say they are not getting answers, and some sellers said PayPal customer service reps are blaming Etsy for the problem. “So the bottom line is that at least some of the sellers money is still missing, but both PayPal and Etsy consider this matter to be resolved,” concluded one seller.

Wednesday morning’s post by the Etsy moderator was the first official response about the issue since he acknowledged the problem on Monday, when he posted that Etsy had been working directly with PayPal’s engineering team to determine the root cause of the issue and how to address it.

Many sellers said they were upset at the lack of communication over the issue. A number of sellers said they shut PayPal off in their Etsy shops over concern about the growing problem, as both Etsy and PayPal were slow to provide information to sellers.

In a long thread about the issue, one seller summed up some of the concerns. “I don’t know that people are being quick to blame Etsy, but rather baffled by the lack of, hmmm, urgency on their part to even update sellers affected as to what’s going on with their payments! I personally have had no issues and have had multiple PayPal sales since this has been reported and everything shows up where it should. But for the few (many?) this issue had affected, they are left in the dark, with customers wondering where their money went and sellers with no money for the transaction. I can understand the frustration and conspiracy theories. All this being said, I personally doubt that this in an intentional thing, but rather a complex bug that requires cooperation with another entity (PayPal) to get to the root cause of this. Some updates though would be nice, Admin.”

The incident follows on the heels of another problem in which Etsy sellers did not receive payments for transactions they had completed. That problem affected its card reader software for Android. Sellers who processed in-person payments using Sell on Etsy for Android app found their transaction information vanished. As with the current problem with PayPal, Etsy initially failed to recognize the scale of the problem.

Comment on the EcommerceBytes Blog.

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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.