Every so often, Etsy updates their seller policies, aka their “House Rules.” And recently, they made some changes to its payments, which could affect you.
The changes took place on February 23, 2021. And in this post, I wanted to talk about what’s different so you’re aware.
Below, I go over everything I’ve learned about Etsy’s new policy and address potential concerns you may have.
Get extra protection with Etsy’s payment account reserves
What is a payment account reserve and how does it work?
Payment account reserves apply to certain Etsy sellers — mostly new sellers. If you’ve been selling on Etsy for more than 90 days, you likely won’t be affected, although other parameters aside from shop age are taken into account (more on that below).
This is what Etsy has said about payment account reserves:
“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 this applies to you, a percentage of the funds in your payment account balance is held before the funds become available for deposit. This is to prevent shop balances from going into negative numbers due to shop expenses and fees, refunds, and chargebacks from customers’ credit card companies.
The funds in the reserve are held only temporarily. After the reserve period has ended, any remaining available funds are released to you on a rolling basis.
If, however, during a reserve period, a customer files a case or a chargeback against you and you do not have enough funds in your reserve to cover the refund, your reserve funds are not released to you.
What percentage of funds does Etsy keep in the reserve and for how long?
The amount of funds Etsy requires the reserve to contain and the length of time those funds remain in the reserve depend on sellers’ risk factors, which Etsy’s risk team uses to determine a threshold amount and timeframe for sellers’ reserves.
These thresholds also dictate the amount of available funds to deposit and the amount of pending reserve funds. Funds exceeding the amount of your threshold reserve may be deposited.
But funds below the threshold reserve must remain in your reserve until that reserve period is complete, and funds from future sales will be added to your reserve to maintain your threshold.
If it’s decided that your shop requires a reserve, you’ll receive an email detailing the percentage held from your payment account and the reserve length of time.
Reserve funds may be withheld from sellers’ available funds for up to 180 days and they may be deducted from sellers’ payment accounts for up to 90 days.
The risk factors that Etsy takes into consideration are as follows:
- How long your shop has been open, including the length of time since you made your first sale
- Your sales details, including your average earnings and volume
- Any order backlogs you might have
- Availability of tracking information on orders once they ship
- Whether your products are made to order or ready to ship
- Ratio of sales to disputes filed by customers
- Any suspensions or warnings you may have received
- Estimated shipping and delivery times
- Active orders’ shipping status
Are there different types of payment account reserves?
There are two types: fixed and variable.
Fixed reserve
With a fixed reserve, the percentage of your payment account balance that’s held in your reserve is set for a specified period of time. It does not fluctuate.
Variable reserve
On the other hand, with a variable reserve, the percentage can fluctuate, depending on your shop’s activity. Your shop’s activity is influenced by things like…
- New sales, refunds, and chargebacks
- Applicable charges to your payment account
- And reserve amounts released at the end of each reserve period.
For some sellers, a variable reserve may be used in addition to a fixed reserve. This is up to Etsy’s discretion. Etsy places account reserves on sellers’ accounts on a case-by-case basis.
How can I have a payment account reserve removed from my account?
This is entirely up to Etsy. If their risk assessment of an account changes due to positive performance indicators, Etsy may reduce the percentage of reserve funds and/or reserve period or they may remove the reserve altogether.
Etsy notifies sellers of any changes to the terms of their reserves.
What can I do to reduce the likelihood of having a reserve placed on my account?
The best offensive approach you can take is to keep your account in the best standing possible. Here are some best practices for your Etsy shop:
- Respond to customers within 24 hours, including disputes
- Ship orders on time and adjust your processing times if necessary
- If orders are dispatched without postage labels purchased on Etsy, don’t mark those orders as having been dispatched until they’ve been dropped off with your carrier
- Include tracking information as often as possible
Where can I learn more about Etsy’s payment account reserves?
Here are two resources from Etsy that go over everything you need to know in more depth:
If a payment account reserve is applied to your account, you can take Etsy’s survey to leave your feedback by clicking this link.
And if you’d like to learn how Etsy’s new payment policy compares to the old one, check out this link from AdvancingAiden.com.
What are your thoughts on Etsy’s payment account reserves? Do you think this change is helpful or hurtful to sellers? Let us know by leaving a comment below. And if you enjoyed reading this post, please consider sharing it with your friends and followers.
My store has also been in payment reserve from the 25the September 2022 and should hve by all accounts been released from the 90 days on Christmas Eve. This is not fair. There must some consumer law worldwide that can revisit this law. etsy entices sellers to join them, and then when they do they are penalised. I am sure if an etsy employ left and joined etsy seller market and it happened to them they would be furious. oh wait they probably wouldn’t join as they know what would be around the corner. I understand etsy supports the customers, however in many ways do not support the sellers. Nothing stays at the top forever. There are so many people world wide complaining about this policy and leave unhappy, who I’m sure didnt really want to leave in the first place. if this standover tactic continues then etsy will fold. people will leave just like the twitter which is now a thing of the past, it too is on the brink of folding. I think this payment reserve is in place to allow new sellers to monopolise the market place. if it really is a necessity then at lest think about the length of time you do this to sellers. 180 days wow.. I wonder what would happen to etsy if it didn’t receive any funds for 180 days.
Etsy has just infor me they will be HOLDING my funds for 180 days and have given me a release daye of sep 27th! Theyve compley ruined my business and wOnt speak to me snymore about the matter, im contacting trading standards and the OMBUDSMAN, does anyone know any way to get these Funds back. I have proof of delivery ? ?
hello if you manage to contact trading standards and do get any help, id be interested to know im in the same situation etsy placing a reserve making it impossibkle to carry on selling :(
I have a new shop on Etsy, and have done everything by the book in regards to the 7-8 sales I’ve completed so FAR with absolutely no issues. I was sent a generic email that my account was being hit with a 75% reserve. I feel as if I’m being penalized for doing what the site allegedly intends…selling (in my case) vintage items.
I’ve asked for specific information as to “why” my account Has a reserve attached to it with no response aside from direction to the website POLICY. I read that prior to contacting THEM…I’m not stupid and UNDERSTAND what I read. I simply wanted to know what the issue was regarding MY account in particular. Clearly…I’m being penalized for selling on etsy…by etsy.
I’LL be investigating new avenues to sell my items. I’m very disappointed in this policy.
Hey Lucinda, So sorry to hear about these negative issues you’ve been having with Etsy! Please email [email protected] if you have any Etsy reserve questions that relate to the Low Hanging System. Thanks!
I have been selling on Etsy for a few years. Why am I being hit with this money held in Reserve? If I shut my shop down do I automatically get my money that is in reserve?
Hey John, I’m not sure what would happen if you shut your shop down. I’d contact Etsy about that question. Thanks!
I have over 14,000 sales equaling over $100k revenue in <24 months with etsy. I pay thousands of dollars a month in ads, listing fees and commissions to them. today I was put on a 75% revenue hold for no reason. Their chat nor their regular support cant figure out why and wont tell me. Seems like it's time to have our attourney chat with them.
Hey Joshua, We’re so sorry to hear about the trouble you’ve been having with Etsy! That is SO frustrating and disappointing!
Just happened to me after 4 years with no problems at all, very frustrating, now looking at other options
An account on etsy for 3 months costs me an extra $300 in fees compared to shopify.
This policy is terrible. Etsy should not put this reserve on your account unless you have an issue. The email I received says the reserve was placed on my account due to the amount of sales I received in a short period of time. Lol the sales total at the time the reserve was placed on my account was 7 sales that where all delivered on time. This seams like some type of control tactic more than beneficial to our shops. The entire point of the platform is to work for yourself but this feels more like working for ETSY.
Hey Sadie, Thanks for your comment! Other people have expressed similar thoughts about Etsy reserves.
I just opened my shop on Sunday and within 24 hours, had a reserve of 75% of my sale funds for 90 days, each sale. I’m going to have to immediatly close my Etsy shop. I can’t afford to go 90 days with that much of my sale costs just sitting around. I’m not able to buy new supplies for my business without that money, and I can’t pay bills at home either. It’s absolute garbage. I think Etsy has just tanked itself with this new policy. I’m going to close and go with Shopify.
Thanks for sharing your experience, Holly! And so sorry you had to close your Etsy shop! :(
Its not clear
Its noT fair , if they hold 75% of you sales fOr up yo 180 dsys in my case 90 days!!
As i cant invest in new stock
I have had To suspdnd my trading on etsy untill i recieve it
I’m so sorry to hear that! :(
Have never used it but I want to trying
I think, this is a bit drastic. However, if there are continued issues arising, then they must be curbed. Is this the right way to go about it though? I”m not sure
Hello
i like that new payment method
IT LOOKS CLEAR AND A MODERN WAY AND EASY TO FOLLOW
what do you like about it? that you dont get paid? you must work for etsy!