Etsy warns sellers of payments delays due to Silicon Valley Bank collapse
Etsy has begun processing payments to some of the sellers on its platform who were affected by the collapse of Silicon Valley Bank, the tech company said Monday.
"Approximately 0.5% of our active seller base had their payments delayed on Friday," an Etsy spokesperson said. "We are working to pay these sellers today, and we’ve already started processing payments via another payment partner this morning.”
Etsy declined to identify the payment partner it is using to help clear up the disruptions.
Etsy had warned some sellers about delayed payment processing after regulators seized the ban on Friday, according to an email from the company shared with NBC News.
The online crafts marketplace said that it used SVB to facilitate disbursement to some sellers and that it was working with other payment partners to issue deposits.
"We wanted to let you know that there is a delay with your deposit that was scheduled for today," the email from Etsy said.
"We know that you count on us to help run your business and we understand how important it is for you to receive your funds when you need them," the email continued. "Please know that our teams are working hard to resolve this issue and send you your funds as quickly as possible."
In a written statement Saturday, an Etsy spokesperson said the issue was related to "the unexpected collapse of Silicon Valley Bank."
The company said in the statement that it has been working on a solution, "and we expect to pay sellers via our other payment partners within the next several business days."
Etsy claims 7.5 million sellers worldwide. Regulators placed SVB into receivership around noon Friday to end a bank run on the tech lender that had begun Wednesday after it said it was seeking to raise more than $2 billion.
Etsy seller Owen McKinney said the deposits delay would have a "catastrophic" effect on his business.
McKinney, who runs Kentucky Country Home, a laser engraving business, said in an email that he relies on the deposits to pay for shipping costs, materials and other expenses. He said he had already reached out to one of his suppliers to delay an order for materials he needed for next week.
"At this time, Etsy has not provided a time frame for the funds to be deposited," McKinney said. "While I do have a website, Etsy remains a huge part of my business."
Another Etsy seller, Rachel Briggs, has been on Etsy since 2010 selling her designs: enamel pins, keychains and handmade art dolls. Briggs quit her office job in 2020 and has since been a freelance artist. She said her business on Etsy, in addition to her work as an illustrator, is a “huge part” of her household’s income.
Recently, Briggs paid for an “expensive” tax appointment with a professional to handle the documentation now that her income is less traditional. She expected her Etsy deposit would cover the cost.
“Getting the email that one of my most anticipated deposits is being delayed was not really a good thing to wake up to,” Briggs said. Part of her Etsy sales occurred before the deposit was held up, she added, allowing her to pay for the tax services.
Nina Bissett, another Etsy seller, has relied on the platform as her primary source of income since she was laid off. Her business is a curated selection of vintage home goods, handmade, disco balls and accessories.
When she got the email about the payment delay, she was worried for herself and the thousands of other sellers.
“My customers are still expecting their orders, and I won’t be able to use the funds I was expecting to use to pay for shipping and materials,” Bissett said.
“It will effectively limit how much extra inventory I can hold and sell,” she added.
She said she's hopeful the issue will be resolved soon.
The drama with SVB started last week when the bank disclosed that it sold about $21 billion of securities and proposed to offer over $1 billion in shares, all to raise money for “general corporate purposes.”
The move raised eyebrows among investors who pondered why SVB would need to raise so much money abruptly. It also worried depositors, many of whom suddenly wondered whether their money was safe and began pulling funds out.
On Friday, the Department of Financial Protection and Innovation said that it was taking over and closing SVB to protect deposits, naming the Federal Deposit Insurance Corp. as its receiver. The FDIC has formed a separate entity where all insured SVB deposits — up to $250,000 per depositor — were to be available by Monday morning.
SVB was shut down after a tumultuous morning when trading of its shares was halted after they fell by double digits before markets opened. The slide came on the heels of a more than 60% decline Thursday.
The closing marks the biggest bank failure since the 2008 financial crisis and the second-largest in U.S. history after Washington Mutual collapsed during that industry-wide meltdown, according to FDIC data.
This article was originally published on NBCNews.com