Some sellers are fuming over changes Etsy will make in how it collects fees. Beginning in June, the online marketplace will start automatically deducting taxes and fees from their Etsy Payment accounts, the company announced this morning. "Starting in June, we'll automatically deduct any taxes or fees you owe from the money you've made from Etsy Payments sales. Way simpler, right?"
Etsy couched the change as a way to make it easier for sellers to view their revenue, fees and taxes all in one place. But sellers pointed out Etsy could improve reports without having to make a change in how it collects their fees.
Etsy failed to point out that collecting fees on the fly will help its own cash flow, while negatively impacting the cash flow of sellers. As one reader told us, "I don't get 30 days to pay my credit card balance - the Etsy fees are taken directly from my payment account."
The reader also pointed out the move will save Etsy money: "Etsy gets out of paying merchant fees on the credit card payments I make to pay for their bills."
A major concern for many sellers: they will no longer be able to earn cashback on their credit card payments. "How can Etsy decide how we pay our bills? We pay with a credit card that gives a percentage back - that will be gone," one seller wrote.
By promoting the billing change as a benefit to sellers without acknowledging how it helps its own finances, Etsy appears to have lost standing in the eyes of some sellers.
It also failed to anticipate questions the announcement would generate. For example, some sellers were concerned Etsy would reach into bank or credit card accounts associated with their shops to get money owed if their Etsy Payments balance wasn't enough to cover the charges.
That's not the case - in a discussion thread, an Etsy moderator responded to questions stating the marketplace would not take fees from seller bank accounts. And according to a page explaining the changes (a click away from the announcement): "If you have an outstanding balance that's not covered by your Etsy Payments sales, your outstanding balance will still be due on the 15th of the month as always, but any sales you make before then will count toward your balance."
Some sellers expressed concern that their bookkeeping would become more confusing as a result of the change rather than simpler.
Etsy provided some clarification in an update and through answers in a discussion thread about the changes, including the following points:
- "Taxes that you currently pay on your monthly bill will appear on your redesigned Payment account and be deducted from your sales."
- "Fees and taxes will be automatically categorized so you can see how much you spent on listings, shipping labels, and marketing. You’ll be able to see details of fees paid by looking at your current statement, the past six months, or the entire year. Promoted Listing fees will appear on the Payment account daily and be deducted from your sales."
- "You'll still be able to provide refunds to your buyers as you do today."
An Etsy spokesperson provided us with the following statement in response to our inquiry about seller response to the announcement:
"Simplifying finances has been one of the most common requests we’ve received from the Etsy seller community. The changes announced today are the direct result of feedback received from sellers and are designed to streamline the financial side of running an Etsy shop and make Etsy an even better platform to start, manage and scale creative businesses.
"We know that sellers rely on income from their Etsy shops and that finances are an important topic for them, which is why we wanted to share the news about the upcoming changes early.
"We understand that sellers have questions about the redesigned Payment account and we want to reassure them that we will be addressing those questions as we begin to roll out updates in June.
"In the meantime, sellers can visit this dedicated forums thread where we are responding to questions throughout the day."
Not every seller was concerned about the changes. Said one seller, "Maybe I'm the only one who actually thinks this is a good idea? I at least like the idea of it in the fact that after I ship an order out, I automatically pay my full bill, then manually deposit the funds into my account."
But a seller replied, "They are deducting the fees before you ship. Immediately upon order."
Another seller wrote:
"The ONLY thing that would make some semblance of sense would be for Etsy to deduct their transaction fees at the point of sale, like they do the CC processing fee. (Not saying I like this necessarily, but could live with it.)
"But deducting the cost of promoted listings, shipping labels, and .20 listing fees DAILY from sales money that happens to still be in my Etsy account is just outrageous. Please charge me for these things on a combined bill at the end of the month, like a normal company."
Another seller viewed the change positively, saying it would make Etsy a healthier selling site:
"Another person here who thinks it's a good idea.
"Yes, the spreadsheet accounting system I use will need some adjustments but I'll cope! I already pay my Etsy bill several times a month so this will aid in getting that job done efficiently.
"From Etsy's point of view (with my business manager hat on) this is an excellent move. The amount of seller debt that Etsy carries on a daily basis must be absolutely phenomenal; this will mean that more money is streaming through Etsy's accounting system and that makes for a much healthier Etsy selling site.
"Feeding the horse before the rider makes sense."
While this change only impacts Etsy sellers, those selling on eBay may want to pay close attention to how this shakes out. eBay will soon begin transitioning to a "payments intermediary" model as Etsy did with Etsy Payments. Once it does, eBay can make the same move to collect fees from sellers from their account balances.
You can find the full announcement on the Etsy website
. Let us know what you think.