![What Is Etsy Payments And How Does It Help Sellers? [Guide]](/img/content/etsy.jpg)
What Is Etsy Payments And How Does It Help Sellers? [Guide]
There are Etsy shops getting almost 50% more sales because of one simple differentiator.
According to an Etsy study, it’s due to offering buyers multiple payment options (compared to shops with just one payment method).
It turns out that ecommerce customers have certain expectations when it comes to buying online, and a lack of payment options is up there in the top 6 reasons people abandon carts.
Since 41% of shoppers have abandoned a transaction during checkout in the past year, it’s a good time to optimize your checkout experience to ensure you’re not losing sales.
Etsy Payments gives your buyers options, which helps you as a seller in a number of ways. In this guide, we’ll break down what those options are, and how you can benefit too.
In this guide to Etsy Payments:
Table of Contents
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Introducing Etsy’s Integrated Payment Gateway
What is a payment gateway, first of all?
It’s the method in which money is transferred securely between online shoppers and merchants.
Etsy Payments is Etsy’s default payment gateway, and it allows shoppers to choose how they want to pay.
What is Etsy Payments?
“Etsy Payments gives your buyers a range of different payment options and lets them pay in their local currency. It all ends up in your bank account on a deposit schedule you create.”
Etsy Payments is like the intermediary between merchant and buyer.
It uses third-party payment processors to safely transfer money between your customers and you, without requiring anybody to share their personal details with strangers.
Payment gateways are like secure, digital cash registers.
The payment methods that are supported under Etsy Payments are:
- Most major credit and debit cards
- Etsy Gift Cards and Etsy Credits
- PayPal
- Apple Pay
- Google Pay
- Klarna installment payments (Australia, Spain, United Kingdom, United States)
- Klarna invoice (Germany)
- iDEAL (the Netherlands)
- Sofort (Austria and Germany)
Since online transactions are a target for hackers, there has become a desperate need for payment gateways to do three things:
- Encrypt data for exclusive use online,
- Request authorization from banks, and,
- Securely allow the website and interface to process the transaction.
Etsy Payments exists so that:
- Your customers can trust they’re not engaging in a scam, and be comfortable typing their card number into Etsy.
- You, as a merchant, can process sales seamlessly, and get paid securely for the goods that you’re selling on Etsy.
Unlike Amazon Pay, Etsy Payments isn’t cross-channel, so you can only use it on Etsy (at the time of writing).
Setting Up Etsy Payments
“Etsy Payments allows buyers and sellers to use various forms of payments on Etsy.com, and Etsy’s mobile apps and other services. Etsy Payments users can pay with and accept payment by credit card, debit card, Etsy Gift Card, Etsy Credit, Etsy Coupon, some bank transfer services, PayPal (where available), Apple Pay, Google Pay, and some country-specific instalment payment methods - all in their domestic Etsy Payments currencies.”
To enroll in Etsy Payments, you must:
- Be registered in an eligible country and have a residential address and a valid bank account (Etsy doesn’t send deposits to a Paypal account or a credit/debit card).
- Have a valid credit, debit, or reloadable prepaid card (for most countries).
You can easily set up Etsy Payments through Shop Manager.
- Choose Finances > Payment Settings > Select your bank account country.
- Enter the required information and then add a credit or debit card.
There are a few differences between how this works in different countries.
For example, if your shop is based in Germany, Austria, or the Netherlands, you don’t need to add a credit or debit card.
For sellers in the EU, Hong Kong, Singapore, or Switzerland, you will need to do an extra step to verify your bank account.
To find more information about how it works in your country, check out this page from Etsy.
You can always make changes to and manage your account in Shop Manager.
How to receive money from Etsy Payments
You can be paid daily, weekly, fortnightly or monthly from Etsy Payments (as long as you meet the disbursement thresholds).
New sellers will be paid every Monday by default, but you can change your deposit schedule in Shop Manager > Finances > Payments Settings > Deposit Schedule.
There are a few things to note when choosing how often you want to get paid:
- Deposit minimum: Your funds that are available for deposit must be above the deposit minimum in order for them to be paid out into your bank account.
- Fee threshold: This is above the deposit minimum. You will be charged a deposit fee if your deposit (above the minimum) is below this threshold.
- Deposit fee: If applicable, this is deducted from your Available Funds at the time of the deposit (and is subject to tax across the board, where applicable).
By adjusting your deposit schedule, you can give your shop more time to make sales and try to exceed the fee threshold.
If you manage to do this, you won’t have to pay a deposit fee (which in some countries is equal to the deposit minimum itself).
The deposit fee is just one fee associated with Etsy Payments.
Let’s dive into what the others are.
Etsy Payments Fees
There are two important reasons why you should understand your fees:
- You need to know what to expect to pay. With information about how much your expenses will be, you can create a business plan and budget. Managing business expenses helps you forecast and minimize them, as well as catch any mistakes.
- It’s important to pay on time. There are consequences if you’re late with paying (you’ll risk your selling privileges, or worse, have your account suspended). On the other hand, if you pay your fees on time, you’ll have good standing, which means you’re in a better place to upgrade to Etsy Plus ( helpful tools and benefits).
Payment processing fee
The Etsy Payments processing fee is typically 3-4%, depending on your country.
“Etsy charges a fee (the ‘Payment Processing Fee’) for processing each transaction through Etsy Payments. The fee amount will be assessed on the gross order amount, including delivery and tax (if applicable). Payment Processing Fees will be reflected in your payment account and will be deducted from the total amount of the payment at the time the payment is considered complete.”
- Etsy.
The calculation Etsy uses is this:
A percentage of the total sales price + a flat fee per order (exclusive of tax, where applicable).
In the US, this is 3% + 0.25 USD.
You can find a list of the percentages and flat fees for each country here.
Listing currency conversion fee
It’s important to note that if you sell an item in another currency (one that’s different from your shop and listing), Etsy will settle the foreign transaction, and charge an additional 2.5% currency conversion fee.
Deposit fee
This applies when your available funds for deposit are above the deposit minimum but below the fee threshold.
To see what your other Etsy seller fees might be, read our dedicated guide here.
Can You Use Etsy Without Etsy Payments?
The simple answer is: no, not anymore.
In the history of Etsy, Paypal has been a significant payment provider.
In 2017, Etsy made some changes to how it takes payments, and Etsy Payments became the newly-named, updated version of Direct Checkout.
The new Etsy Payments provided shoppers with 10 different ways to pay.
Shoppers could still choose to pay via Paypal, but the payment was now processed by Etsy rather than Paypal itself. These funds go into the seller’s Etsy account, rather than into their Paypal account.
“When you’re enrolled in Etsy Payments, and Paypal is available in your country, buyers who purchase items from your shop can pay using PayPal. Your sales funds will go into your Payment account on Etsy instead of appearing in your PayPal account. This way you’re not managing your money in multiple places and you won’t pay a separate PayPal fee.”
- Etsy.
In 2021, Etsy made it necessary for all new shops to enroll in Etsy Payments.
“In order to provide a consistent experience for buyers, Etsy is requiring that all eligible sellers offer Etsy Payments in their shop. This allows buyers to pay using any of our 10 payment options in Etsy shops worldwide.”
- Etsy.
That means new sellers keen to set up shop on Etsy in a country that doesn’t currently support Etsy Payments are temporarily unable to sell on the platform.
However, sellers that opened a shop before these changes came into play (April 2021) can continue to receive payments directly to their own Paypal account. Even if they set up Etsy Payments too, they can still offer these two methods.
But buyers won’t be able to see the difference.
Buyers will simply see Etsy Payments and Paypal as payment options.
But not everybody on Etsy has to be enrolled in Etsy Payments: a large chunk of the platform’s sellers were selling on Etsy long before Etsy Payments became mandatory in 2021.
The benefits of using Etsy Payments extend to new and older sellers alike.
Let’s explore what they are.
The Benefits Of Using Etsy Payments
If what you’re after is happy customers and peace of mind, keep reading. These are some of the advantages of using Etsy Payments.
-
Multiple payment options for buyers
With Etsy Payments, you can give buyers what they really want: payment options.
“In the dawning of an ultra-connected age, consumers demand experiences that are swifter, simpler, and more seamless than ever—especially when it comes to online shopping. This is why it’s important to offer multiple payment options.”
- Go Daddy.
-
Security provided by the Seller Protection Policy
Etsy Payments has payment specialists and fraud-detections systems working around the clock, meaning your transactions are safe and you don’t have to worry about yourself or your customers.
-
Simplified finances
Etsy Payments sends you one payout in your local currency, regardless of how your customers choose to pay.
Remember, you can choose how often you get paid with your deposit schedule.
“Sellers enroll in the program and, as a result, let Etsy tackle all the procedures related to accepting, processing payments, transferring money between bank accounts, dealing with payment providers, handling disputes and chargebacks, etc.”
But even with this simplified approach, when it comes to your Etsy accounting, there’s a significant gap that needs to be filled.
Even With Etsy Payments, There’s A Crucial Gap…
Whilst it may seem like an advantage to have just one payout from Etsy encompassing all your transactions and various payment methods, this isn’t so helpful at reconciliation time.
You need to know all that detail in order to understand your business’ activities and performance in depth. The kind of depth required to forecast, grow and to thrive.
Without A2X, you’ll need to calculate the details manually. But by using A2X to integrate your Etsy store with QuickBooks Online or Xero, it’s done for you automatically.
For each payout, A2X will generate a journal summary with all the income and expense lines associated with that single settlement, split by month.
Your books will be organized via the industry-approved accrual method of accounting, so that you’ll have neat, accurate, professional accounts, without spending hours away from your biz.
Etsy Payments FAQs
Get quicker answers to your questions here.
Do I need Etsy Payments?
If you’re a new seller, yes. Making an Etsy seller account now requires you to enrol in Etsy Payments.
However, if you’re not a new seller and you take payments through Paypal, you might not need to enrol.
How do I add Etsy Payments to my shop?
You can enrol in Etsy Payments in the Shop Manager section of your Etsy Account.
You’ll need your bank account number and tax identification information, as well as your residential address and valid credit or debit card.
You must be in a country where Etsy Payments is enabled.
What are the fees for using Etsy Payments?
Etsy Payments takes a processing fee which is typically 3-4% of the total sales price plus a flat order fee. There’s also a currency conversion fee and a deposit fee which may apply.
Do I have to use Etsy Payments alone?
If you’re a new seller looking to sell on Etsy, yes. Etsy Payments enables you to take payments from 10 different payment providers.If you are not a new seller, it’s not necessary to enroll in Etsy Payments, but you might want to.
Also on the Blog
Want to feel completely confident in your ecommerce bookkeeping?
Businesses that document their processes grow faster and make more profit. Download our free checklist to get all of the essential ecommerce bookkeeping processes you need every week, month, quarter, and year.
Download it here
