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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.)

#21

Post by zende »

cwilson wrote: post #15
alapshah wrote: post #10

Earlier quoted context omitted.

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.

US merchants, international buyers -- just like Amazon (FPS) and Etsy's current systems. Which countries would you be most interested in us adding?

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

#22

Post by rellik »

jdp23 wrote: post #4

here's the pricing info: "Direct checkout will cost a 3% + $0.25 USD payment processing fee per sale."

This is worse than PayPal for sellers with products over $5 (after shipping, tax). I wish they could've come up with better pricing. I would think most shops would be selling things over the $5 mark, but I can't say for sure.

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

#23

Post by patio11 »

callmeed wrote: post #12

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 so…

Dang, the bad guys found out about eTrade? We used to use them to get Japanese folks US bank accounts because their Know Your Customer policy was so incredibly... Never mind, I understand how the bad guys figured it out now.

[Edit for posterity: You could open a brokerage account from anywhere with minimal documentation. After having a brokerage account, one phone call from your "secretary" and they'd add a US checking account to it. No KYC verification required because of "preexisting business relationship."

It was a great way to set up US bank accounts for folks who had business dealings with American clients before they got the opportunity to visit the US.]

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

#24

Post by dangrossman »

rellik wrote: post #22
jdp23 wrote: post #4

here's the pricing info: "Direct checkout will cost a 3% + $0.25 USD payment processing fee per sale."

This is worse than PayPal for sellers with products over $5 (after shipping, tax). I wish they could've come up with better pricing. I would think most shops would be selling things over the $5 mark, but I can't say for sure.

> I wish they could've come up with better pricing.

It's nearly impossible since their processing fees on some card types will be over 3%. They're already taking a loss on those transactions; most will be under 3% to balance it out, but not enough that they could offer better pricing than everyone else.

They're not going to be able to negotiate barely-above-interchange rates like PayPal probably gets from its banks with billions of transactions in monthly volume. Visa's interchange fee to the bank is still as high as 2.7% on some cards, which is the floor upon which the processor can set its markup to the merchant like Etsy.

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

#25

Post by dangrossman »

lnanek wrote: post #19
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 u…

> PayPal charges more than working with credit card companies directly

You'd think so, but in the general case that's untrue. Most MOTO merchant accounts advertise better rates but the effective rate the merchants pay is more than PayPal's 1.9-2.9%. PayPal's rate is flat, but anywhere else it's not. Virtually all credit cards (all rewards/points/cashback cards, all business cards, etc) are downgraded to a higher fee schedule -- plus AVS fees, auth misuse fees, batch settlement fees, statement fees, customer service fees, PCI compliance fees (virtually everyone added at least $100 a year in PCI fees in the past 2 years), chargeback fees, etc. And these are all variable and will generally be raised, one piece at a time, every month you have your account open.

I've worked with 3 direct merchant accounts and my effective rate is between 4% and 8% of transaction volume. At PayPal it's less than 4% including the fixed ($0.30) portion of the fee. A company with the expected volume of Etsy can probably negotiate a contract with fixed rates for some number of years, but the other 99% of small businesses accepting credit cards online (card-not-present transactions) are not beating PayPal's rates.

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

#26

Post by otakucode »

blueprint wrote: post #7
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…

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

Great alternative?

"Pricing like it should be! 2.9%..." I stopped right there.

It does not cost more to process larger numbers. There is no rational justification whatsoever for any money-handling service to charge a percentage. Period.

No amount of 'but the other guys are bigger assholes than me!' will cover up the fact that the banking environment right now is set up to make it as difficult as possible for anyone but extremely large businesses to do a large volume of transactions without making it outright illegal.

I want to see a payment processor that charges a low, flat rate for processing transactions, with their charges based upon the actual cost incurred by their processing plus a bit of profit. They are providing a useful service, I'm not against making money. But taking a percentage when the size of the transaction does ABSOLUTELY NOTHING to your costs of processing is like taking your dick out in public and asking children to pet it.

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

#27

Post by tonyarkles »

otakucode wrote: post #26
blueprint wrote: post #7

Earlier quoted context omitted.

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

Great alternative? "Pricing like it should be! 2.9%..." I stopped right there. It does not cost more to process larger numbers. There is no rational justification whatsoever for any money-handling service to charge a percentage. Period. No amount of 'but the other guys are bigger assholes than me!' will cover up the fact that the banking environment right now is set up to make it as difficult as possible for anyone b…

Given that they're accepting credit cards, Etsy's "cost of processing" does actually increase as the size of the transaction increases (the merchant account will usually have a 2-3% transaction cost associated with it).

Likely, the alternative one-size-fits-all transaction fee would end up making the low end of transactions ridiculous; a $1 painted popsicle stick with a $3 payment cost. Doing it by percentage more accurately reflects the model that Etsy has to pay.

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

#28

Post by callmeed »

patio11 wrote: post #23
callmeed wrote: post #12

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 so…

Dang, the bad guys found out about eTrade? We used to use them to get Japanese folks US bank accounts because their Know Your Customer policy was so incredibly... Never mind, I understand how the bad guys figured it out now. [Edit for posterity: You could open a brokerage account from anywhere with minimal documentation. After having a brokerage account, one phone call from your "secretary" and they'd add a US checki…

Yeah, we actually ended up blocking ETrade's routing number ... none of our legitimate customers actually used them.

Our biggest problem has been the people getting duped on Craigslist. Actually talked to a guy from Arkansas who gave up his entire ID, SSN and all bank accounts to a "business partner" in Africa.

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

#29

Post by ozten »

pbreit wrote: post #17
alapshah wrote: post #10

Earlier quoted context omitted.

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.

Did anyone at Etsy look into this integration? Why didn't this seem viable?

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

#30

Post by subpixel »

ozten wrote: post #29
pbreit wrote: post #17

Earlier quoted context omitted.

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.

Did anyone at Etsy look into this integration? Why didn't this seem viable?

That approach would remove a couple big wins:

1) the ability to sell Etsy-wide credit, e.g. gift certificates.

2) interest-earning cash in the bank (the days/weeks between the sale and when the seller marks the item as shipped)

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