Thursday, June 28, 2012

Asking Even... What's the difference between Paypal, Square, and Etsy direct checkout?


Thanks so much for asking questions via askingeven@gmail.com!  Each Thursday I'll be posting my research and ideas based on your requests.  Business and personal topics are welcome and I also appreciate your advice, stories, and resource tips.  You will be anonymous unless you ask otherwise, in which case, I'll happily link to your shop or homepage as you direct!  Please enjoy this inaugural post of "Asking Even" and keep the questions coming!

Etsy has recently rolled out Direct Checkout to all sellers and I've received a few questions about what this means for us in the SF Etsy team.  I'll walk through the pros and cons as well as specific fees associated with each. I've linked the terms of use or help guidelines to each of the titles below--lots more specifics to be found at each site. Please share your experiences in the comments below!

All Etsy sales incur the transaction fee of 3.5% and the listing fee of .20 regardless of checkout method.

Etsy: 3% + .25 per transaction
Advantages: buyer isn't directed off of Etsy.  Refunds will be handled all via Etsy.
Cons: Buyer still has to be a member of Etsy (this is true of all methods). Money earned deposits into your matched account only once you mark item as shipped on Etsy.  Money then deposits on Mondays only.  There isn't an automatically integrated shipping label option (like with Paypal), however you can still use merchant services on Paypal to create labels or sites like Stamps.com.  Etsy will require sellers with 50 or more sales a year to provide "taxpayer-identification" information.  (This is really to follow a new tax law for 2011 that requires sites like Etsy to report sales info for sellers who make more than $20,000 and have more than 200 transactions.  The other checkout methods will probably have some version of this as well.)

Paypal: 2.9% + .30 per transaction
Advantages: Instant availability of balance; many use this to cover shipping.  Shipping services include label printing and payment with USPS for lower cost than the Post Office. Debit card allows access to balance via ATM or for purchases.
Cons: Some buyers are not paypal members. Paypal can be finicky if you change your bank account--set it up well in advance of holiday purchases to avoid problems.

Square: 2.75% no transaction fee.
Advantages: Can take phone orders or actual credit card swipes in person. There is also a "pay with Square" app that allows you to just pay by phone rather than have your card.  I wrote a Tech Tools post about Square awhile back if you want to know more.
Cons: Square works best in person or over the phone.  It isn't a great choice for primary checkout for Etsy sales. Does take up to two business days to deposit your earnings once you set up accounts. Works without the actual Square device, but it's quicker if you have it.

Google Checkout: 2.9% + .30 per transaction (price goes down if you sell over $3000/month)
Advantages: gives buyers who don't use paypal an option to checkout via "other" in your Etsy shop.  Presently, you would need to enable the use of the "other" option as well as specify in listings and shop policies that you want people to use Google Checkout and give them a time deadline for making payment.
Cons: Not as popular as Paypal so it requires sellers to look up if a buyer has paid before shipping. Many sellers report that by allowing the "other" option, buyers can checkout without actually paying and it causes a hassle for both parties.

Each of these services has arrangements for returns and fraud protection.  I'd love to hear if our team members have had great customer service experiences or other helpful tips when it comes to using these services to make returns or buyer and seller protection from fraud.  Coupon codes are also important to some sellers, let us know if you have a favorite for that!






~Even







If you're an Etsy seller in the San Francisco Bay Area, contact Katy or Steph about joining SFEtsy!

2 comments:

Katy said...

Thanks Even! This is SUPER SUPER HELPFUL!

Ashley Anna Brown said...

Hello! My husband just received his first transaction with Etsy Direct Checkout - honestly it seems like more a hassle than it should be. It's nice to see all the pros and cons written out here (thanks!) but I do want to mention that you don't have to be a PayPal member to pay with a credit card through PayPal. I'm not sure how easy or difficult it is because I have been a member for years, but it is an option. So far PayPal seems to far exceed any benefits Etsy may be offering. You have to wait 3+ days to have access to your money and you have to ship the sold item first? That doesn't make sense to me. I like to have the option to physically hold the money paid for an item before sending it out into the world. I'm not interested in another system where money leaves one persons account and lingers in computer land for days before reaching its destination. Who is reaping that reward? I don't really see anything direct about it. Not from a sellers end at least. Thank you for the chance to vent! :) I would really love to hear some feedback from others who have used this new checkout option.

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