Etsy warns of merchant payment processing delay due to Silicon Valley Bank collapse
Following the collapse of Silicon Valley Bank, Etsy is warning sellers it may take longer than usual for the company to process some payments. “We wanted to let you know that there is a delay with your deposit that was scheduled for today,” Etsy told affected merchants on Friday in an email the company shared with NBC News. “Please know that our teams are working hard to resolve this issue and send you your funds as quickly as possible.”
An Etsy spokesperson attributed the delay to “the unexpected collapse of Silicon Valley Bank,” noting the company used the bank to facilitate payments to some merchants. They added Etsy is working with other payment partners to facilitate deposits. The company expects to pay affected sellers “within the next several business days.” More than 7.5 million merchants use Etsy to sell their wares online.
Federal regulators took over SVB on Friday amid the largest bank collapse since the 2008 financial crisis. With its close ties to Silicon Valley, SVB’s failure has created knock-on effects throughout the tech industry. On Friday, Roku said it could lose as much as 26 percent of its cash reserves, or more than $487 million, due to the collapse. One day later, the value of USD Coin, a stablecoin pegged to the US dollar, fell to a low of $0.87 after Circle, the firm that manages the currency, disclosed it had $3.3 billion stuck at the bank. While USD Coin’s value has mostly recovered, the news nonetheless sparked fears of a possible financial contagion within the cryptocurrency industry.
More importantly, there are many people whose next paycheck won’t come on time. That includes employees at early-stage startups and small business owners who depend on Etsy for their livelihood. One seller, Owen McKinney, told NBC News the deposit delay could have a “catastrophic” effect on his business.
What comes next is hard to say. On Sunday, US Treasury Secretary Janey Yellen told CBS’s Face the Nation the federal government would not bail out SVB and would instead focus on assisting depositors. “Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out… and the reforms that have been put in place means we are not going to do that again,” Yellen said. “But we are concerned about depositors and are focused on trying to meet their needs.”
Update 03/13/22 11:07AM ET: In an update Etsy shared late Sunday evening, the company said would begin processing delayed payments as early Monday morning. “This issue has impacted a small group of sellers. Approximately 0.5 percent of our active seller base had their payments delayed on Friday. 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 Engadget.