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Etsy Direct Checkout Glitch Hits over July 4th Weekend

Shoppers have been experiencing problems when trying to pay for items on Etsy using its Direct Checkout system since Friday, July 1st. An Etsy engineer blamed the problem on a third-party and in posts throughout the weekend said it was working with the vendor to try and eliminate the problem, but in the meantime, sellers have reported cancelled orders and irate customers.

Etsy did not use the Etsy Status page. Rather, an engineer on the Payments Team explained the issue on Friday afternoon in a thread in the Bugs forum: “One of our partners is having a technical issue that is delaying the last step of payment processing. We’re working with them to help resolve the issue. Once the issue is cleared up on their end, all the payments that currently say “processing” will be able to finalize.”

Etsy has been pushing sellers to use its Direct Checkout system, but the holiday weekend problem isn’t the first it’s had – a similar problem arose in January and in February.

Problems poured in from sellers. One reader wrote, “Etsy has again had a major glitch in processing orders – worse than the last one earlier this year. Their excuse is that it the 3rd party processor that’s at fault, but since that’s WorldPay, I find that hard to believe.”

(The reader also reported that a spammer posted 24,000 posts over the course of 6 hours on the Monday holiday.)

Another reader wrote, “As usual, Etsy is blaming it on an “outside payment processor”, but we all know that something got messed up with Direct Checkout. You can check out the Etsy forums under “Bugs” to get the scoop. Please don’t use my name! We just want a little transparency and reliability. This processing problem has struck over three “long weekends” in the past year, and we (sellers) don’t appreciate it. Wonder what the shareholders would think?”

Here’s how Etsy’s Payments engineer explained the problem on July 3rd:

Hi All,
We’re still working on this issue with our processor but I wanted to give a quick explanation of the difference between our normal payments processing, which can occasionally take 48 hours, and what’s happening now.

There’s a lot of complexity involved in processing a payment, but for simplicity’s sake, you can think of it as 3 main steps:

1) We “authorize” the buyer’s credit or debit card.
2) We “fraud check” the payment.
3) We “settle” the payment.

Step 1 assures that the buyer has the funds on their credit or debit card and earmarks the funds for movement, but doesn’t actually move the funds.

Step 2 is some due diligence that we do to ensure that the transaction looks valid. As you can imagine, managing fraud is a big part of online commerce. Normally this steps takes just a few seconds, but we manually review some transactions and when that happens it can take up to 48 hours.

Step 3 actually moves the funds and makes the payment ready for refunds (if necessary).

The occasional delays you see during normal processing are when we do a manual review in Step 2.

The issue we’re having this weekend is because our partner is having trouble with Step 3. Normally they can process the “settlement” immediately after the “authorization.” But because of some issues on their end, they are taking much, much longer than normal to process settles.

We’re looking into how we can make Etsy more resilient to issues like this going forward, but that is not something we can put in place over the weekend so for now we’re just working with our partner to make sure we’re settling payments as soon as they can handle them.

I hope this helps. I sincerely apologize for the delays you’re seeing.

Thanks for your patience through all this.

On Monday evening, Etsy said it was still working with its third-party payments processor to resolve the delay in payments and wrote:

“The following is the latest status: For orders that are still processing, buyers have now received the appropriate order processing emails and will receive receipts once their orders are confirmed. Once we are able to successfully process the buyer’s payment, it will appear on your Orders page and the buyer will receive an order confirmation email. We encourage you to begin fulfilling orders after payments have been confirmed. If you have any questions or concerns, feel free to reach out to Etsy Support for assistance. We are deeply sorry for the frustration these delays have caused, and are working hard to resolve this issue as soon as possible.”

You can read the full thread with updates from Etsy and comments from users on this thread on the Etsy boards.

And you can comment on the Ecommerce EKG board

You can now comment on the AuctionBytes 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). 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/.