Etsy have updated their payment policy to allow for Etsy payment account reserve. In most cases this will only apply to new sellers and if you’ve been trading for more than 90 days you should be unaffected.
“More and more people are doing their shopping online and millions of new buyers have recently discovered Etsy, but that also means some sellers are seeing an increase in order disputes and issues. To keep buying and selling on Etsy safe and easy for everyone, we’re introducing payment account reserves. For now, this means some sellers may have a reserve placed on their account for a short period after their first sale.”
If you are subject to an Etsy payment account reserve you will have a percentage of each sale held before the funds are available for deposit. Some sellers may have a reserve placed on their account for the short period after their first sale. Etsy say that reserves help to keep a shop’s balance from going into the negative if they receive a chargeback from a customer’s credit card company.
Sellers with funds reserved will be able to see the amount reserved, their charge activity, as well as how much is available for deposit in their Payment account.
Reserve funds will be used to cover refunds, chargebacks, and shop expenses and fees. For example, reserves can help to keep a shop’s balance from going into the negative if the seller receives a chargeback from a customer’s credit card company. All the money held in reserve will be available for deposit after the reserve period if it’s not used to cover any fees or chargebacks. However, as this will be a rolling reserve a percentage of future sales will also be held.
No one likes reserves as if you sell regularly it effectively removes a wedge of money from your cash flow that you’ve earned but can’t access. However, if it’s the difference between being allowed to sell on Etsy or being blocked from selling as too high a risk, most would prefer a reserve to a selling ban.
Factors considered for an Etsy payment account reserve
Etsy take a number of parameters into consideration when deciding whether to apply a reserve to your account. These include:
- How long you’ve been in business on Etsy (including how long since you’ve made your first sale)
- Details of your sales (including volume and average sales earnings)
- The extent of any backlog of orders from your shop
- Availability of delivery tracking information
- Types of goods you sell (whether they’re ready to dispatch or made to order)
- Ratio of cases (disputes) opened by buyers in respect of your sales
- Suspensions or warnings already received
- Estimated delivery times; and
- Delivery status of active orders