When transactions are made through buyers and sellers on leading ecommerce platform, Etsy, this is done through something called Etsy Payments. This system offers great benefits for both merchants and their customers.
In this guide to Etsy Payments we cover:
- What Etsy Payments is
- The benefits of offering customers multiple payment options
- How the Etsy Payments gateway benefits ecommerce merchants
- Understanding Etsy Payments fees
What is Etsy Payments?
Etsy Payments is the payment gateway through which money transfers between merchant and seller. Through this gateway, customers can buy and merchants can receive in their own local currency.
It is Etsy’s default payment gateway and is specifically designed and integrated to provide customers with multiple ways to complete a transaction. Ten payment options, to be precise, including PayPal, most major credit or debit cards, Apple Pay, Google Pay and Klarna, as well as Etsy gift cards.
Etsy Payments is now a requirement for all ecommerce sellers on the platform.
The benefits of offering customers more ways to pay
If you’re going to retain existing customers, attract new audiences and then convert those customers into repeat buyers and loyal brand advocates, your user experience needs to be solid. For ecommerce customers, a large part of this is the checkout process, including offering buyers multiple ways to pay.
Customers like to feel that they have choice and control over their buyer journey; ecommerce shoppers no longer want to be forced to complete transactions through one single payment method. Offering this choice and control will cultivate a happier, more loyal customer who is more likely to buy from you time and time again.
Convenience and accessibility also come into play when it comes to benefits for ecommerce customers. The likes of PayPal, Apple Pay and Google Pay mean buyers no longer need to have a bank card to hand to complete a purchase, while methods such as Klarna mean customers can break the cost of items down in cases where a full payment wouldn’t otherwise be viable.
Research  found that 40% of online customers feel more comfortable purchasing from a retailer with multiple payment methods than those with just one. So, it also boils down to customer perception of your brand, which can be significantly influenced by whether or not you offer more than one way to pay.
How Etsy Payments benefits ecommerce sellers
Now that we’ve covered why Etsy Payments is beneficial to your customers, let’s explore how the integrated gateway supports you as an ecommerce merchant.
No need to rely on one payment provider
When the ecommerce platform a merchant sells through offers multiple payment options, it means they aren’t relying on the errorless function of a single payment provider. If PayPal went down, for instance, Etsy shoppers can still complete their transactions in any of the nine other payment methods currently listed.
ETSY doesn’t use external providers like Stripe, but if you use Stripe on your website, you need to know about VAT on Stripe fees – Click here
Etsy found that stores on its platform saw 49% higher sales when they offered buyers multiple payment options through the Etsy Payments gateway, compared to those who only offered one. This statistic demonstrates how providing customers with more ways to pay can help boost your sales – and your profit.
Fewer abandoned carts (equals even more sales)
When giving customers the checkout experience they want – i.e. more payment options – it reduces the instances of abandoned carts. In fact, research found that half of customers abandoned their carts when their preferred payment method wasn’t listed.
When you minimise how many people abandon the checkout process before completing their transaction, you once again increase your sales and profit.
Integrated security and protection
All transactions processed through the Etsy Payments gateway are protected by the platform’s Seller Protection Policy. This protects merchants and customers from any fraudulent activity to reduce the risk of them falling victim to cybercrime – an important measure to take when operating an online business.
Local currency deposits
The Etsy Payments gateway works by enabling customers to pay in their own local currency whilst also allowing merchants to receive payment in their own local currency too, even if they’re different. This simplifies the transactional process for international sales and in turn, streamlines bookkeeping and accounting too.
A payment schedule that suits
Merchants selling on Etsy can decide when they want to receive their sale payments through the Etsy Payments integration. These deposits could be daily, weekly, biweekly, monthly or even ad hoc, which makes bookkeeping and accounting much easier. It also helps sellers manage cash flow better and keep a tighter reign on how money is moving in and out of their bank account.
Understanding Etsy Payments fees
Understanding the Etsy Payments fees you’ll incur is essential for good ecommerce accounting and bookkeeping as you’ll have a clear idea of what expenses you’ll need to attribute to the platform and its sales. Plus, adhering to the applicable fees and paying them on time is a crucial part of being allowed to sell as an Etsy merchant.
We’ve broken down the fees that UK Etsy sellers need to consider below:
Payment processing fee – This is calculated as a percentage of the total sales price + a flat fee per order (exclusive of tax, where applicable). For UK merchants, this is 4% + 0.20 GBP. You can find this under Fees & Taxes in your payment account.
Currency conversion fee – If you make a sale that is completed in a currency different to the currency of your shop and product listing, Etsy charges a 2.5% currency conversion fee to complete the transaction through Etsy Payments.
Regulatory operating fee – This fee applies to sellers in the UK, France, Italy, Spain, and Turkey and supports the services that Etsy offers in these locations. For UK sales, this fee is 0.25%, charged on the item price + postage and gift wrap.
Fees are subject to VAT where applicable.
Looking for help with your Etsy accounting?
Although there are many advantages to Etsy Payments, payouts encompassing all transactions and their various payment methods can be tricky to navigate when it comes to reconciliation. That’s just one of the reasons why we’d recommend seeking the support of a specialist ecommerce accountant.
To find out how we can help your e-commerce empire grow, book your free consultation today.