Many sellers are understandably worried about the Etsy Payment Reserve that’s seeming to increase in 2023. Let’s chat about what Payment Reserves are, why you might have them put on your shop, and what to do to have them removed.
What is the Etsy payment reserve?
The Etsy payment reserve is a system that can be applied to a sellers account that holds a certain percentage of funds for up to 90 days. It acts as a safety net for both the customer and Etsy as a platform. Typically Etsy holds 75% of funds from an order when a payment reserve is in place. Funds can be released by shipping the order with a valid tracking number or after the default reserve period has past.
Why Etsy implemented the payment reserve system
Most product business platforms, including Amazon and wholesale platforms, hold funds from sellers for weeks or even months. So while newer to Etsy, systems like the payment reserve system are very normal for product business owners.
Etsy started implementing this system in 2020 when mask sellers caused a lot of customer service issues. Masks were in high demand and many sellers took on more orders than they could actually complete. So Etsy began taking measures to product both themselves and buyers like payment reserves or even putting shops on vacation mode involuntarily when orders spiked.
Why sellers get put on reserves
There are generally a handful of reasons why Etsy sellers get put on reserves. These include:
- getting a large increase in order volume
- shipping orders late
- shipping orders without tracking
- increasing the amount of refunds you’re giving to customers
- having a case opened against you
- receiving trademark or copyright violations
In general, these are all reasons that provide a bad customer experience and risk Etsy needed to intervene and give refunds on your behalf.
How the Etsy payment reserve works
When you are on reserves, Etsy will generally hold 75% of your funds from each order for up to 90 days or until you ship the order with valid tracking. Then funds get released to you in full.
The tracking number does need to show movement of your product. So if you purchase a shipping label and don’t ship if for days afterwards, your funds will not be released until the package is moving.
How to get off of reserves
The best way to get off of reserves is to provide exceptional customer service. Ship all of your orders as quickly as possible with tracking and avoid trademarked and copyrighted materials. You can also get reserves removed from your account by becoming a star seller.
Want to learn more about Payment Account Reserves. Click here to read what Etsy has to say.