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Etsy: Announcing Direct Checkout. (No longer just PayPal.)

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Re: Etsy: Announcing Direct Checkout. (No longer just PayPal.)

#11

Post by callmeed »

mcfunley wrote: post #8
inmygarage wrote: post #3

If any Etsy employees are reading, I am curious about why it took nearly 7 years to add direct checkout to the site -- Paypal is not known for being particularly kind to either buyers OR sellers, though perhaps there were all sorts of scaling/technical issues that took priority over something like this? It just seems like, with the amount of volume that Etsy does, Paypal's rates would be on the very high side. Congra…

Once you are in the business of accepting payments from some people and dispensing them to others, you are playing an entirely different game from a regulatory standpoint.

How so? You're simply now a "Third Party Payment Aggregator". We do this with one of our products and we're a small operation.

In my experience, the hard parts are getting initial approval from a merchant/bank and dealing with fraud. But I don't know of actual government regulations.

Re: Etsy: Announcing Direct Checkout. (No longer just PayPal.)

#12

Post by callmeed »

Having direct experience in being a third party payment aggregator, here's some notes based on this post and their FAQ (if anyone cares):

1. Fraud will now be your #1 issue (if it isn't already). People will make fake Etsy accounts, add fake products, and then make "purchases" using stolen credit card numbers. They will have the $ deposited to an E*Trade bank account, a pre-paid debit card that accepts ACH, or use some rube's account they found on Craigslist. Most of the time, you won't catch it until the money is already deposited. Then the chargebacks start coming.

I don't have the luxury of having a $50M warchest of VC money. You will definitely have to spend money and engineering resources towards this soon.

2. Based on your FAQ, you're requiring sellers to mark an item as "shipped" before depositing their money. We actually had to turn this requirement off because it annoyed so many sellers. When a seller gets an order (in our case, photographs), getting it fulfilled becomes their focus. Making them go back to the web and mark it as fulfilled is something they will often forget. Getting their money deposited is something they won't forget.

IMO, I would try to make this more automatic. Use something like Twilio to send the seller a text 5 days after the order ... "Has order 24039 (yellow scarf) been shipped to Suzie J yet?"

Re: Etsy: Announcing Direct Checkout. (No longer just PayPal.)

#13

Post by gravitronic »

callmeed wrote: post #11
mcfunley wrote: post #8

Earlier quoted context omitted.

Once you are in the business of accepting payments from some people and dispensing them to others, you are playing an entirely different game from a regulatory standpoint.

How so? You're simply now a "Third Party Payment Aggregator". We do this with one of our products and we're a small operation. In my experience, the hard parts are getting initial approval from a merchant/bank and dealing with fraud. But I don't know of actual government regulations.

Based on the tax forms I've had to fill out whenever I've joined an app market or affiliate network, there is definitely government regulations with tax filing.

My assumption is that since you're collecting money that is 3rd party's profit, you need to show the paper trail that you're holding this money in escrow for a 3rd party.

This is why ebay transactions are buyerseller and then you're billed at the end of the month. Lightens the admin burden.

Re: Etsy: Announcing Direct Checkout. (No longer just PayPal.)

#14

Post by dangrossman »

gravitronic wrote: post #13
callmeed wrote: post #11

Earlier quoted context omitted.

How so? You're simply now a "Third Party Payment Aggregator". We do this with one of our products and we're a small operation. In my experience, the hard parts are getting initial approval from a merchant/bank and dealing with fraud. But I don't know of actual government regulations.

Based on the tax forms I've had to fill out whenever I've joined an app market or affiliate network, there is definitely government regulations with tax filing. My assumption is that since you're collecting money that is 3rd party's profit, you need to show the paper trail that you're holding this money in escrow for a 3rd party. This is why ebay transactions are buyer seller and then you're billed at the end of the…

> Based on the tax forms I've had to fill out whenever I've joined an app market or affiliate network

You mean the form W9 they have you fill out to provide your taxpayer identification number? That's so they can send you a 1099-MISC if needed. Any business that pays a non-employee individual over $600 in a year for any service (with a few exceptions) files a 1099-MISC, it has nothing to do with payment aggregation.

Re: Etsy: Announcing Direct Checkout. (No longer just PayPal.)

#15

Post by cwilson »

alapshah wrote: post #10
blueprint wrote: post #7

Earlier quoted context omitted.

Curious about that too. Recently we have some great alternatives like Stripe ( https://stripe.com ).

I asked them about this - they don't handle marketplace businesses (Taking money on behalf of another customer), for the same regulatory issues previously stated. PoundPay (also YC) is trying to solve this issue but I haven't heard a peep out of them... Also it is quite annoying because I paid for a zaarly and it showed poundpay on my statement, I had no idea what it was.

PoundPay is super interesting, because from what I can see, only Amazon has a solution that essentially handles escrow transactions (which is what KickStarter uses). You're right however, I haven't heard much from them lately (as opposed to Stripe, who seems to be killing it). There was also a limitation with PoundPay of being US only, which is not an option for many companies.

Re: Etsy: Announcing Direct Checkout. (No longer just PayPal.)

#16

Post by pbreit »

callmeed wrote: post #11
mcfunley wrote: post #8

Earlier quoted context omitted.

Once you are in the business of accepting payments from some people and dispensing them to others, you are playing an entirely different game from a regulatory standpoint.

How so? You're simply now a "Third Party Payment Aggregator". We do this with one of our products and we're a small operation. In my experience, the hard parts are getting initial approval from a merchant/bank and dealing with fraud. But I don't know of actual government regulations.

You might be classifiable as a money transmitter in which case you would possibly be regulated in your state as such.

Re: Etsy: Announcing Direct Checkout. (No longer just PayPal.)

#17

Post by pbreit »

alapshah wrote: post #10
blueprint wrote: post #7

Earlier quoted context omitted.

Curious about that too. Recently we have some great alternatives like Stripe ( https://stripe.com ).

I asked them about this - they don't handle marketplace businesses (Taking money on behalf of another customer), for the same regulatory issues previously stated. PoundPay (also YC) is trying to solve this issue but I haven't heard a peep out of them... Also it is quite annoying because I paid for a zaarly and it showed poundpay on my statement, I had no idea what it was.

Etsy could have implemented Stripe and not be the middleman while still offering a "direct pay-like" experience. Of course, each Etsy seller would need to sign up for Stripe. But I would think Stripe would be very keen on that.

Re: Etsy: Announcing Direct Checkout. (No longer just PayPal.)

#18

Post by gravitronic »

dangrossman wrote: post #14
gravitronic wrote: post #13

Earlier quoted context omitted.

Based on the tax forms I've had to fill out whenever I've joined an app market or affiliate network, there is definitely government regulations with tax filing. My assumption is that since you're collecting money that is 3rd party's profit, you need to show the paper trail that you're holding this money in escrow for a 3rd party. This is why ebay transactions are buyer seller and then you're billed at the end of the…

> Based on the tax forms I've had to fill out whenever I've joined an app market or affiliate network You mean the form W9 they have you fill out to provide your taxpayer identification number? That's so they can send you a 1099-MISC if needed. Any business that pays a non-employee individual over $600 in a year for any service (with a few exceptions) files a 1099-MISC, it has nothing to do with payment aggregation.

.. Right. And if your business is based on aggregating and paying out non-employee individuals then you will be filling out a lot of those documents, which becomes a significant added admin overhead...

Re: Etsy: Announcing Direct Checkout. (No longer just PayPal.)

#19

Post by lnanek »

descentintomael wrote: post #2

Is this because no one likes PayPal? Personally I've been screwed over by PayPal using Etsy when a seller didn't ship. It's since made me hesitant to buy anything there.

PayPal charges more than working with credit card companies directly. I was talking to a guy who runs an app that sells music the other day, and he got a much better rate by cutting out the middle man (less than Etsy is charging, by the way). If you are running a startup, you probably shouldn't waste your limited implementation and support time with payment processing and all the customer issues that arise vs. just using a third party, though.

Re: Etsy: Announcing Direct Checkout. (No longer just PayPal.)

#20

Post by zende »

alapshah wrote: post #10
blueprint wrote: post #7

Earlier quoted context omitted.

Curious about that too. Recently we have some great alternatives like Stripe ( https://stripe.com ).

I asked them about this - they don't handle marketplace businesses (Taking money on behalf of another customer), for the same regulatory issues previously stated. PoundPay (also YC) is trying to solve this issue but I haven't heard a peep out of them... Also it is quite annoying because I paid for a zaarly and it showed poundpay on my statement, I had no idea what it was.

it now says ZAARLY.COM on your statement for Zaarly. This was a previous bank limitation, not technical or design, that has been resolved.

new business comes in through referrals and press by our marketplaces, so we haven't focused on press.

if you want to sign up as a marketplace: https://www.poundpay.com/developers/application

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