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Etsy Forces PayPal on Direct Checkout Option

Etsy made a stunning announcement on Tuesday – it is adding PayPal to its Direct Checkout payment option. At first glance, it might not seem like a big deal – the online marketplace already allows sellers to accept PayPal. However, there appears to be no way for sellers who wish to use Direct Checkout but not accept PayPal to exclude PayPal.

Etsy launched Direct Checkout in 2012 as a way for merchants to accept credit card payments without having to use an online payment service or set up a merchant credit card account. At one point, it even appeared that Etsy was considering getting rid of PayPal altogether.

Direct Checkout offers several advantages to merchants, including the ability to accept Etsy gift certificates and as a way to manage their fee payments.

Could Etsy’s decision to integrate PayPal with its own Direct Checkout flow be a result of PayPal separating from eBay, even though the two are still tied at the hip and share data due to 5-year operating agreements following the July breakup?

In the comments section of the Etsy announcement, sellers were unhappy with the inability to exclude PayPal from Direct Checkout. We’ve asked Etsy to confirm that’s the case. And we’ve asked which seller protection plan governs claims, a question raised by a seller:

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“The Etsy guideline says buyers have 60 days to file a claim, and the claim will be decided by Etsy, and that sellers return policy will be honored if the seller followed Etsy policy. In sharp contrast, the PayPal guideline says buyers have a whopping 180 days to file a claim, and the claim will be decided by PayPal,” the seller wrote, asking for clarification about which time frame would apply in cases of claims.

In an FAQ section, Etsy states, “When eligible, PayPal transactions processed through Direct Checkout are covered by Etsy Seller Protection” and links to this page.

Could it be the best of both worlds – letting buyers who prefer PayPal to pay that way, but be governed by Etsy seller protection rather than PayPal’s program? Or would that be too good to be true? Let us know what you think.

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.