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Etsy Changes Refund Process Due to Lingering Payment Issues

Etsy sellers continue to struggle with certain types of transactions thanks to the widely-publicized payments processing problems that began on July 1st. No refunds and no cancellations were going through, one EcommerceBytes reader explained this week. “Refunds are getting bounced back to the seller’s account, even partial refunds for shipping overcharges,” the seller explained.

Etsy confirmed there was a problem with refunds, and a spokesperson told EcommerceBytes on Tuesday evening it was making a change to the way it processes refunds on its side to work around Worldpay’s issue. The spokesperson referred us to this post on Etsy, where it provided an update and explained:

“If a seller doesn’t have the balance to cover a refund in their Shop Payment Account, we will add the remainder to their bill, rather than charging the card on file. Sellers will pay for the refund with the rest of their bill at the end of the month. Please note, we are actively reaching out to affected buyers to assure them that this issue is caused by delays in Etsy’s payment processing and not the shop they bought from.”

Sellers who wish to provide excellent service to their customers have found it difficult over the past week-and-a-half due to the technical issues that delayed orders from completing. The problem stemmed from a gateway issue at Worldpay, the third-party service that powers payment processing for Etsy’s Direct Checkout system. Meanwhile orders processed through PayPal – directly through the seller’s PayPal account or through Etsy Direct Checkout, experienced no problems.

The Etsy seller who contacted us on Monday received an email after trying twice to refund a buyer. The email said, “Unfortunately, we were unable to process the refund of US$(redacted) for Order #(redacted). A refund on this order requires the assistance of Etsy Support. If you’d like to issue a refund, please contact Etsy Support and provide the Order #(redacted) and the amount you would like to refund.”

The seller told us, “I did this hours ago and no response.” Pointing to a thread on the Etsy boards, the seller said, “The thread also says to contact Etsy support,” but, the seller said, “It does no good.”

Sellers noticed a difference in the way their transactions are labeled in their reports – some have a status of “Posted” instead of “Settled,” and sellers speculated about what that might mean. When we asked Etsy about it on Tuesday afternoon, a spokesperson provided us with the following statement:

“While new orders are processing without delays, we’re still experiencing issues processing refunds. This is due to the way our third-party payment processor handles these transactions. We’re seeing that some refunds are not being processed, while others are taking longer than usual to process. Sellers who receive an email that a refund has failed should re-submit it to push it into the processing queue. We are also actively reaching out to affected buyers to assure them that this issue is caused by delays in Etsy’s payment processing and not the shop they bought from.”

Clearly the problems with Worldpay must be frustrating not only for sellers, but for Etsy management, as issues lingered throughout day 12 of the incident.

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/.