Etsy sidesteps PayPal, builds own payment system for its 2M monthly sales

Etsy, the handmade and vintage marketplace that lets anyone set up their own online shop, has finally introduced its own, direct checkout. Prior to this, buyers were directed to a third party payment processor, such as Paypal.

Considering that the handmade giant is processing over 2 million items a month, you’d think that the site would have shifted gears a lot earlier. To give you a glimpse at the sheer mass of transations flowing through the independent shops, know that the Etsy community sold $46.4 million of goods this past September alone.

As far as fees go, direct checkout will cost a 3% of the item plus a $0.25 USD payment processing fee. Originally, Etsy charged a fixed transaction fee of 3.5% of the item price, so it’s nice to see a slight drop that will be noticeable on costlier items.

Update: According to Etsy, the fee process operates differently. “When using direct checkout as a payment method, Etsy will charge a payment processing fee of 3% + $0.25 per transaction. This amount will be applied to the total sale price including shipping and sales tax. It will also be in addition to the existing transaction fee (the 3.5%). The cost of using Etsy’s direct checkout is comparable to what Paypal charges for their payment services.”

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From Etsy:

Beginning today, we are rolling out direct checkout for US-based sellers. This is a new and optional way for shop owners to accept and manage credit card payments from buyers directly on Etsy.

Direct checkout is currently enabled for a limited number of shops, including the EtsyStore. Direct checkout, in addition to simplifying payment, lays the groundwork for many more payment and checkout improvements, including Etsy-wide gift cards and enhanced international payment options.

Etsy has quickly become the eBay for artistic makers, and it’s a good sign that it is taking over its transactions, since this will add a whole new level of professionalism to the online stores. You can see the full announcement here.

http://vimeo.com/36116479