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Worldpay Is Culprit Behind Etsy Payment Debacle

Etsy sellers are still dealing with a major payments issue that began on Friday, and nearly a week later Etsy said Worldpay was the cause of the problem. While Worldpay apologized to buyers and sellers through an Etsy message, it downplayed the problem in an announcement on its own website after Bloomberg picked up the story.

As we reported on Tuesday, payment delays have been causing sellers to hold orders, making for unhappy shoppers. Sellers have been forced to make judgement calls on whether to take a risk and send orders to customers before their payments have gone through.

Worldpay told EcommerceBytes via email on Thursday that much of the backlog was resolved over the weekend, “however we observed some additional errors, and residual issues arose on Monday.”

It had blamed “an isolated issue impacting one of our gateways,” so we asked why it wasn’t possible to move to a different gateway for Etsy transactions. A spokesperson replied, “We do not comment on individual customers, however we can confirm that this isolated issue is impacting settlement of some deposits and refunds impacting one of our payment gateways. Payment transactions are processing normally, so there would be no reason for any customer to switch to another gateway.”

We questioned what the spokesperson meant when she wrote, “Payment transactions are processing normally,” since sellers and Etsy continued to report problems, but we did not receive a response by press time.

The timing of the technical issue couldn’t have been worse, with reports surfacing a day before the long holiday weekend. While an Etsy engineer acknowledged the problem and posted updates on a thread throughout the weekend, the company didn’t update its status page until Tuesday.

When Etsy posted a message on the announcement board on Thursday, it was not exactly what sellers wanted to hear. “Those with pending orders should begin to see those orders process soon, although we expect some delays to continue on new orders in the near term.”

Included in the post were FAQs, and in them, Etsy explained that buyers were receiving “order pending” emails.

“To ensure that buyers understand that delays are not related to the shop they’re purchasing from, we’ve updated the pending email notification to let buyers know that we’re experiencing delays with our payment processing and to expect to receive a confirmation email when processing is complete.”

When the problem is finally fixed, some sellers may have work to do. One seller said Etsy took funds out of her checking account to refund a customer order, and after the pending order processed, Etsy processed the refund again and took it out of her Direct Checkout account.

However, a spokesperson told us, “Etsy is seeing the same processing delays for refunds as for payments. Once the card payment for a return is fully processed, the seller will see a second line in their shop payment account with the credit. Sellers are not being charged twice for refunds.”

Sellers upset after 7 days of dealing with delayed payments said they hoped Etsy would provide some form of compensation for the aggravation and cancelled orders.

When we asked if Etsy would be giving any form of compensation to sellers, the spokesperson responded, “Etsy is working with our payment processor to ensure that all impacted orders process. If a seller receives a negative review as a result of the processing delay issue, Etsy will remove it to make sure their shop’s reputation is not affected.”

At 7 pm on Thursday, Etsy announced it had made significant progress in addressing the issue and had successfully processed 90% of the backlog of delayed orders – but said new orders were still impacted by payment processing delays.

Etsy also said it would make a second disbursement Thursday to sellers “in order to get sellers their funds from affected orders as soon as possible.” Sellers with affected sales should have received an email and a deposit in their bank account on Thursday evening.

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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/.