Payment Reserve on Etsy

Our approach to running an Etsy shop in Payment Reserve

Recent Etsy Developments

Editorial: This is an article that I did not want to have to write. I have had tremendous success using the Etsy platform and I want nothing more than to continue the relationship that has developed. However, there is a fiscal responsibility for business owners to identify risk and to avoid conditions that are unfavorable to prosperity. This article delves into the current risk of having a partnership with Etsy.

There is a recent trend where long established Etsy shops are being put on Payment Reserve. Simplified, this means that these shops will not receive payment for an order until they provide proof of shipment. My established shop, with sales in the thousands, is among those that have been put on reserve.

My shop has received a large amount of orders from the Etsy platform. Our team has worked hard, and have dedicated countless hours to achieve the success we've had with Etsy. Being put on reserve has forced me to look at how I will use the platform going forward, as well as developing strategies for directing sales through other (arguably more reliable at the moment) channels.

Today I will be exploring how I got to this point and how it impacts how I leverage the Etsy platform going forward.

What did I do to be put on Payment Reserve?

When your shop is put on payment reserve, Etsy will send an email detailing that this fact. You will be provided with a number of (ambiguous) reasons why your shop may have been put in reserve. These reasons are lifted directly from their Payments Policy and are as follows:

  • A large increase in sales
  • A large increase in refunds to buyers
  • Many of your orders didn’t ship in time
  • Many of your orders didn’t have tracking info, or Etsy couldn’t verify the tracking info you added

You will not receive a definitive reason why your shop was put on reserve.

In our case, a majority of our sales are custom and made to order which often leads to longer shipping timeframes. This is communicated to our customers immediately during the sales process. By the time an order is placed, they are 100% clear on the longer shipping timeframes. I suspect that these longer shipping times are the reason why we were put on reserve. However, as Etsy will not provide clear reasons, this can only be a guess.

How we will operate during Payment Reserve

Since getting orders out the door will release our funds, the first reaction will be to simply ship sooner! To do this, we will be cutting corners and be putting our reputation on the line, which we are not willing to do to satisfy a platform's conditions for sales.

Quite frankly, being put on Payment Reserve, or the looming threat of being put on Payment Reserve has made Etsy a much more expensive platform to do business on.

We will need to take a hard look at our pricing for custom works and increase them in order to make the risk of having funds being held worth the reward.

For the items that we make that are not custom, we will continue to ensure they are shipped in a timely manner. We will also continue to have our inventory properly reflected on Etsy.

But, there's a catch…

Listings are being cancelled for not meeting the Handmade Policy

A month ago, our bestselling item on Etsy was removed by the "Trust and Policy" team. We received another ambiguous email where the Handmade Policy is detailed, but there is no specific reason why the listing was removed.

I can assure you, this item (as is all our items) are handmade and individual to each of our customers. When trying to reach out to Etsy to plead our case, we were greeted with yet another form email, essentially telling us we were out of luck.

We are punished for selling off the shelf items that will ship quickly, and we are punished for selling custom items that will ship slowly.


For my shop, we will continue to leverage the Etsy platform for the immediate future. At this point in time, there are simply too many eyes there to ignore it. However, this has become a risky place to do business, and as such, our prices on the platform will certainly have to reflect this.

Is there hope for Etsy?

With their recent actions, Etsy has painted themselves into corner. Many sellers are skeptical of the direction that the platform has taken. For this to change, Etsy will have establish themselves as a trustworthy platform for sellers and will minimally need to implement the following:

  • Provide "real" seller support
  • Give specific feedback why actions are taken on our shops
  • Hold to realistic payment conditions
  • Removal of the true Handmade Policy violators on the platform

There has been no indication that Etsy is interested in addressing any of these issues. With that in mind, our days of doing business on that platform may have to be numbered. This is a sad truth for us, as we truly believed in the vision that Etsy first promised when they launched.