Etsy Pumps $25 Million Into New Payer Protection Scheme

The announcement comes shortly after the platform attracted the ire of its users by raising fees.
Isobel O'Sullivan

Etsy is planning to roll out a new Purchase Protection Program for buyers and sellers, as part of a wider effort to improve user experience on their site.

The scheme, due to start on August the 1st, will refund buyers up to $250 for missing, damaged, or falsely advertised items.

For the thousands of Etsy sellers who recently went on a strike against rising transaction fees on the platform, this scheme represents a promising step in the right direction. Yet, with selling fees remaining at an all-time high, many sellers are still exploring other ways to sell online.

Etsy Launches a Payer Protection Program

Ever been forced to dig into your own pockets to finance a lost delivery? Etsy has finally acknowledged this problem, and from August 1st, sellers will no longer be required to cover the costs of lost or damaged items themselves.

Yesterday, the online retailer announced that they will be launching a Payer Protection Program that will fund refunds on behalf of sellers, up to the tune of $250 per item. This sum is also designed to cover costs associated with taxes and shipping.

Etsy has promised to invest at least $25 million into this scheme annually, and it's completely free for sellers to participate.

“Easy issue resolution is a critical part of the e-commerce shopping experience, and our new Etsy Purchase Protection program aims to help make shopping on Etsy even more worry free” – Raina Moskowitz, Etsy’s Chief Operating Officer

According to a recent release by the selling platform, the program is part of a wider effort “to improve customer support, increase trust signals across the user experience, and maintain the integrity of our marketplace as a destination for unique and special items.”

Aside from offering retailers a safety net when events happen outside of their control, Etsy has also pledged to invest over $50 million in its customer support system. This budget aims to reduce customer wait time by expanding the site's support team by 20% and improving its live chat presence.

Generally, these changes have been welcomed by Etsy sellers – but they aren't emerging out of the blue.

The announcement of the scheme comes just months after thousands of Etsy sellers went on a week-long strike against the site hiking transaction fees by 30%, from 5% to 6.5% on each sale.

One of the main demands of the strike was to improve the selling experience on the site. So, with the new protection scheme aiming to address this concern, will the program appease Etsy sellers?

What Does Etsy's New Protection Scheme Mean For Sellers?

When the scheme goes live, sellers will be able to keep their earnings when an item they sent out never arrives, or arrives damaged. Undeniably, this represents a massive win for online retailers – but the program does include a couple of caveats.

Firstly, the scheme will only cover the first instance of damage in a calendar year. After this initial recovery, sellers will be required to front the price of impaired items themselves.

Secondly, retailers will need to use a shipping label purchased on Etsy, deliver items with tracking information, and have an estimated delivery date to be eligible for the program. What's more, if the listed details are inaccurate, the cost of the package will not be able to be covered.

Despite these hoops users will be forced to jump through, the scheme is expected to quell the concerns of countless disgruntled sellers. But for retailers looking for lower transaction fees and greater selling autonomy, Etsy isn't the only way to sell online.

Is Etsy The Best Way to Sell Online?

If you don't frequently need to cover the cost of lost or damaged items, Etsy's new scheme might not affect you that much. Moreover, if your business has low margins and may struggle to meet the platforms surging fees, now might be the time to consider alternate options.

By launching your own e-commerce site, you can gain in full control over your selling process and avoid Etsy's escalating processing fees. While the payoff might take longer, it's likely to provide your business with greater, and more profitable opportunities in the long run.

If you're curious about revamping your e-commerce site or building one from scratch, read our guide to the best e-commerce website builders on the market. Alternatively, if you'd like to view the top solutions at a glance, take a look at our comparison table below.

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Isobel is a writer at with a wealth of experience covering business and technology news. Since specializing in Digital Anthropology at University College London (UCL), she’s been a regular contributor to Market Finance’s blog and has also spent time working as a freelance tech researcher. As a writer, Isobel takes a particular interest in issues regarding data security, social media, and emerging business technology.

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