Skip to main content
BoF Logo

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

Etsy, Other E-Commerce Companies Feel Squeeze of SVB Collapse

Etsy and other e-commerce companies feel squeeze of SVB collapse.
Etsy and other e-commerce companies feel squeeze of SVB collapse. (Shutterstock)

Etsy on Monday resumed payments to merchants with Silicon Valley Bank accounts after the e-commerce platform paused their payouts over the weekend following the US government shutdown of the bank last week.

Approximately 0.5 percent of Etsy’s active sellers — or around 2,700 merchants — had their payments delayed on Friday related to SVB’s collapse, according to Etsy.

“We are working to pay these sellers today, and we’ve already started processing payments via another payment partner this morning,” an Etsy spokesperson told Reuters on Monday.

The payments Etsy sellers received is unrelated to the Federal Reserve’s Sunday announcement, which ensured that SVB’s customers would have access to their funds on Monday.

ADVERTISEMENT

Shopify, which provides websites and apps to stores, also halted payments to online sellers with Silicon Valley Bank accounts, telling merchants they must switch accounts to receive funds, according to the company’s website.

Etsy and Shopify each work with 5.4 million and 1.75 million online merchants respectively worldwide, mostly small-to-medium size businesses.

Some Etsy sellers decided to put their stores on vacation mode, pausing customer purchases in an effort to minimise their financial losses while others say they have received their payments on schedule.

Moshe Steinberg, 31, said that he received a payment from Etsy on Monday morning, but is still waiting for it to clear with his bank.

“It was a nail biting situation until I checked my bank account this morning,” the 3D-printed seller from Central Ohio said, adding that Etsy is currently his only source of income.

Etsy merchant Elizabeth Thompson, 57, said she has received little guidance from the company on what transpired.

“I just don’t understand why they can’t be a little more transparent about what’s going on. It’s not like it’s their fault,” she added.

Etsy said it communicated with any seller who was impacted on Friday directly via email and posted an update in their forums on Saturday.

ADVERTISEMENT

E-Commerce Response

Shopify chief executive Tobi Lutke said in a tweet on Saturday that the company was seeing “very minor impact” from the SVB collapse.

“We use SVB as one of 12 or so banks spread over mostly Canada and US,” Lutke said, adding “a small portion of our US operational fund flows is tied up in SVB but we are working around it and it should be business as usual.”

Shopify has temporarily paused payments to its merchants who receive payments to SVB accounts. These online sellers must update their bank accounts that have no connections with SVB to resume getting payments.

Shopify Capital, an arm of Shopify that provides loans and cash advances to its merchants, has been impacted by SVB’s closure, according to the company’s website. Merchants are not able to view their loan offers or see their loan repayments as of now.

“Shopify expects to resume all operations for Shopify Capital in the United States within the next few days,” the company said on its website.

Shopify is also opening interest-free balance accounts for merchants with the funds equal to the amount of payroll so that merchants can pay their employees, according to a Shopify spokesperson.

Block Inc’s Square, which processes credit-card payments for online and brick-and-mortar businesses, on Friday began pausing payments to their merchants SVB accounts and required them to update their banking information, according to a person familiar with the matter.

Switching bank accounts can pose a problem for sellers whose sole business account was with SVB. The payment holds have forced thousands of marketplace sellers and mom-and-pop shops to scramble to switch bank accounts and scurry to get access to funds for new product inventory.

ADVERTISEMENT

By Doyinsola Oladipo and Arriana McLymore; Editor: Aurora Ellis

Learn more:

Luxury E-Commerce: Crash or Correction?

In a little more than one year, luxury e-commerce stocks, from Farfetch to The RealReal, have plummeted from astronomical highs to trading at significant discounts to benchmark Amazon.

In This Article

© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

More from Retail
Analysis and advice from the front lines of the retail transformation.

How Rent the Runway Came Back From the Brink

The rental platform saw its stock soar last week after predicting it would hit a key profitability metric this year. A new marketing push and more robust inventory are the key to unlocking elusive growth, CEO Jenn Hyman tells BoF.


Why Esprit’s Ambitious Rebrand Fell Short

The company is in talks with potential investors after filing for insolvency in Europe and closing its US stores. Insiders say efforts to restore the brand to its 1980s heyday clashed with its owners’ desire to quickly juice sales in order to attract a buyer.


How Adidas Sambas Took Over the World

The humble trainer, once the reserve of football fans, Britpop kids and the odd skateboarder, has become as ubiquitous as battered Converse All Stars in the 00s indie sleaze years.


view more

Subscribe to the BoF Daily Digest

The essential daily round-up of fashion news, analysis, and breaking news alerts.

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.
CONNECT WITH US ON
The Business of Beauty Global Awards - Deadline 30 April 2024
© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions, Privacy Policy, Cookie Policy and Accessibility Statement.
The Business of Beauty Global Awards - Deadline 30 April 2024