Etsy on Monday resumed payments to merchants with Silicon Valley Bank accounts after the e-commerce platform suspended payments to them over the weekend following the US government’s shutdown of the bank last week.
Payments for about 0.5 percent of active Etsy sellers, or about 2,700 sellers, were delayed Friday due to the collapse of SVB, according to Etsy.
“We are working to pay these sellers today and have already started processing payments through another payment partner this morning,” an Etsy spokesperson told Reuters on Monday.
The payouts Etsy sellers received were unrelated to the Federal Reserve’s announcement on Sunday that guaranteed SVB customers would have access to their funds on Monday.
Shopify, which provides websites and apps for stores, has also stopped payments to online sellers with Silicon Valley bank accounts, telling merchants they must switch accounts to receive funds, the company said on its website.
Etsy and Shopify work with 5.4 million and 1.75 million online merchants, respectively, worldwide, mostly small and medium-sized businesses.
Some Etsy sellers have decided to put their shops on holiday mode, halting customer purchases, in an attempt to minimize their financial losses, while others say they have received their payments on schedule.
Moshe Steinberg, 31, said he received the payment from Etsy on Monday morning but is still waiting for it to clear his bank.
“It was a nail biting situation until I checked my bank account this morning,” said the 3D printing seller from Central Ohio, adding that Etsy is currently her only source of income.
Etsy merchant Elizabeth Thompson, 57, said she had little indication from the company about what happened.
“I just don’t understand why they can’t be a little more transparent about what’s going on. It’s not their fault,” he added.
Etsy said it contacted any sellers who were affected directly via email on Friday and posted an update on their forums on Saturday.
E-commerce response
Shopify Chief Executive Toby Luttke said in a tweet on Saturday that the company sees “very little impact” from SVB’s collapse.
“We use SVB as one of about 12 banks spread primarily across Canada and the U.S.,” Luttke said, adding that “a small portion of our U.S. operating fund flows are tied up in SVB, but we work around it, and it should be business like. common.”
Shopify has temporarily suspended payments to its merchants who receive payments to SVB accounts. These online sellers must update their bank accounts unrelated to SVB to resume receiving payments.
Shopify Capital, an arm of Shopify that provides loans and cash to its merchants, was affected by the closure of SVB, according to the company’s website. Merchants are currently unable to view their loan offers or view their loan repayments.
“Shopify expects to resume all Shopify Capital operations in the United States within the next few days,” the company said on its website.
Shopify also opens interest-free balance accounts for merchants with funds equal to salary 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, began stopping payments to its merchants’ SVB accounts on Friday and required them to update their bank information, according to a person familiar with the matter.
Switching bank accounts can be a problem for sellers whose only business account was with SVB. Withholding payments have forced thousands of market vendors and mom-and-pop stores to try to switch bank accounts and scramble to get funds for new product inventory.
- In New York, Doyinsola Oladipo and Arrianna McLemore report. Editing by Aurora Ellis of Reuters.