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Etsy Makes Checkout with PayPal Mandatory in New Shops

Etsy is making its own checkout system mandatory for all new shops, whether they’re opened by new sellers or by existing sellers wishing to expand or diversify. That means sellers who want to use their own PayPal account in new shops are out of luck.

Unlike eBay, Etsy had always been liberal about which payment methods sellers could accept even after it launched Direct Checkout in 2012. Etsy Direct Checkout lets merchants accept credit card payments without having to use an online payment service or set up a merchant credit card account – buyers who pay using Direct Checkout are actually paying Etsy, which then pays the seller.

Until 2 weeks ago, merchants had the option of using Direct Checkout and their own standalone PayPal account along with other methods (such as cash and check). But Etsy surprised sellers in September by integrating its own PayPal account into Direct Checkout, meaning all shoppers who encountered Direct Checkout saw PayPal as an option, which didn’t sit well with all sellers.

With Wednesday’s announcement, there will soon be no way for US sellers to offer their own standalone PayPal account as a payment option if they accept Direct Checkout for new shops, which has some sellers livid.

Etsy spokesperson Sara Cohen confirmed, “For new shops, including new shops from existing sellers, Direct Checkout with integrated PayPal is required in the U.S. They cannot set up a new shop with standalone PayPal.”

She said, “With sellers who have already made a choice, we’ve seen a majority choose integrated PayPal.”

One seller told EcommerceBytes Wednesday that with PayPal, she gets immediate access to funds, but with Etsy Direct Checkout, “there is a 24-hour hold and then it takes time for the money to hit your account.”

And, she continued, “With Etsy, they hold funds all of Friday, Saturday and Sunday. With PayPal, I can transfer money any day of the week and funds hit my account the next day excluding Sunday. Plus with PayPal I have immediate access to funds by using my debit card or paying with PayPal. If I integrate my PayPal payments into the Etsy system, I now must wait for my funds.”

The seller said it was unacceptable, calling it a “total money grab by Etsy.”

Other Etsy sellers expressed the same concerns on the Etsy discussion boards.

Cohen said that whether an existing seller chooses to upgrade to Direct Checkout with integrated PayPal or keep Direct Checkout separate from their standalone PayPal account, buyers will see the same payment options available to them.

“Our goal is to provide a consistent experience for buyers on the Direct Checkout platform, so that a buyer can choose their preferred payment method when shopping on Etsy,” she said. “We are simplifying our payments platform for sellers, so sellers can manage all of their payments from one place.”

According to Etsy’s announcement, sellers who offer only PayPal will not be affected, though they can choose to sign up for Direct Checkout with integrated PayPal. For sellers opening a new shop and who have a US-based bank account, they will automatically be upgraded to Direct Checkout with integrated PayPal. “At this time, all new United States based shops will need to register for Direct Checkout when signing up.”

Sellers who currently accept Direct Checkout and PayPal must opt out of Direct Checkout with integrated PayPal by October 27, 2015 if they choose not to offer it in existing shops, otherwise Etsy will turn it on in their accounts – sellers will be able to switch back to standalone PayPal until December 31, 2015.

Sellers outside of the US will continue to be able to switch between integrated Direct Checkout and standalone PayPal “for the foreseeable future.”

See the full announcement on the Etsy site, and seller reaction can be found on the Etsy discussion board.


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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). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.