NEW YORK: Etsy on Monday (Mar 13) resumed payments to merchants with Silicon Valley Bank accounts after the e-commerce platform paused their payouts over the weekend following the US government shutdown of the bank last week.
Approximately 0.5 per cent of Etsy’s active sellers – or around 2,700 merchants – had their payments delayed on Friday related to SVB’s collapse, according to Etsy.
“We are working to pay these sellers today, and we’ve already started processing payments via another payment partner this morning,” an Etsy spokesperson told Reuters on Monday.
The payments Etsy sellers received is unrelated to the Federal Reserve’s Sunday announcement, which ensured that SVB’s customers would have access to their funds on Monday.
Shopify, which provides websites and apps to stores, also halted payments to online sellers with Silicon Valley Bank accounts, telling merchants they must switch accounts to receive funds, according to the company’s website.
Etsy and Shopify each work with 5.4 million and 1.75 million online merchants respectively worldwide, mostly small-to-medium size businesses.
Some Etsy sellers decided to put their stores on vacation mode, pausing customer purchases in an effort to minimize their financial losses while others say they have received their payments on schedule.
Moshe Steinberg, 31, said that he received a payment from Etsy on Monday morning, but is still waiting for it to clear with his bank.
“It was a nail biting situation until I checked my bank account this morning,” the 3D-printed seller from Central Ohio said, adding that Etsy is currently his only source of income.
Etsy merchant Elizabeth Thompson, 57, said she has received little guidance from the company on what transpired.
“I just don’t understand why they can’t be a little more transparent about what’s going on. It’s not like it’s their fault,” she added.
Etsy said it communicated with any seller who was impacted on Friday directly via email and posted an update in their forums on Saturday.
Shopify chief executive Tobi Lutke said in a tweet on Saturday that the company was seeing “very minor impact” from the SVB collapse.
“We use SVB as one of 12 or so banks spread over mostly Canada and US,” Lutke said, adding “a small portion of our US operational fund flows is tied up in SVB but we are working around it and it should be business as usual.”
Shopify has temporarily paused payments to its merchants who receive payments to SVB accounts. These online sellers must update their bank accounts that have no connections with SVB to resume getting payments.
Shopify Capital, an arm of Shopify that provides loans and cash advances to its merchants, has been impacted by SVB’s closure, according to the company’s website. Merchants are not able to view their loan offers or see their loan repayments as of now.
“Shopify expects to resume all operations for Shopify Capital in the United States within the next few days,” the company said on its website.
Shopify is also opening interest-free balance accounts for merchants with the funds equal to the amount of payroll so that merchants can pay their employees, according to a Shopify spokesperson.
Block’s Square, which processes credit-card payments for online and brick-and-mortar businesses, on Friday began pausing payments to their merchants SVB accounts and required them to update their banking information, according to a person familiar with the matter.
Switching bank accounts can pose a problem for sellers whose sole business account was with SVB. The payment holds have forced thousands of marketplace sellers and mom-and-pop shops to scramble to switch bank accounts and scurry to get access to funds for new product inventory.