Etsy Payment Glitch Causes Kerfuffle

If you’ve been trying to buy something off Etsy, the online marketplace that bills itself as “a world of vintage and handmade goods” with “more than a million independent sellers,” but not having any luck the past few days, calm down, because you’re not alone in experiencing this problem.

Or maybe don’t calm down, because according to Chain Store Age, thousands of purchases have not been able to process since July 1 due to what Etsy is terming a “bug” caused by a third-party payments processing issue.

Etsy has been updating would-be customers on the problem and its quest to find a solution on this thread on its website since problems first started to surface July 1. However, the company has still been deluged by thousands of complaints, and many frustrated customers have also taken their dissatisfaction to social media, as well to complain that they can’t complete transactions on the site.

Bill Massie, an engineer on Etsy’s payments team, tried to explain the situation to frustrated customers in a July 3 post:

“We’re still working on this issue with our processor, but I wanted to give a quick explanation of the difference between our normal payments processing, which can occasionally take 48 hours, and what’s happening now.

There’s a lot of complexity involved in processing a payment, but for simplicity’s sake, you can think of it as three main steps:

1) We ‘authorize’ the buyer’s credit or debit card.

2) We ‘fraud check’ the payment.

3) We ‘settle’ the payment.

Step 1 assures that the buyer has the funds on their credit or debit card and earmarks the funds for movement but doesn’t actually move the funds.

Step 2 is some due diligence that we do to ensure that the transaction looks valid. As you can imagine, managing fraud is a big part of online commerce. Normally, this step takes just a few seconds, but we manually review some transactions, and when that happens, it can take up to 48 hours.

Step 3 actually moves the funds and makes the payment ready for refunds (if necessary).

The occasional delays you see during normal processing are when we do a manual review in Step 2.

The issue we’re having this weekend is because our partner is having trouble with Step 3. Normally, they can process the ‘settlement’ immediately after the ‘authorization.’ But because of some issues on their end, they are taking much, much longer than normal to process settles.”

TechCrunch says that the Etsy backlog is now also starting to affect the merchants who utilize the site to sell their wares, with frustrated buyers beginning to turn their wrath on the merchants themselves, even though the situation is out of their control and they are not part of the problem.

In Etsy’s latest update, posted at 12:20 p.m. on July 6, Massie said that the company was still “working on resolving this issue with our payments processor.” He did not give a timetable for when the problem might be solved.