Following the collapse of Silicon Valley Bank, Etsy is warning sellers that the company may take longer than usual to process some payments. “We wanted to let you know that there is a delay with your deposit that was scheduled for today,” Etsy told affected merchants Friday in an email the company shared with nbc news. “Please know that our teams are working hard to resolve this issue and get your funds to you as quickly as possible.”
An Etsy spokesperson attributed the delay to the “unexpected collapse of Silicon Valley Bank,” noting that the company used the bank to facilitate payments for some merchants. They added that Etsy is working with other payment partners to make deposits easier. The company expects to pay affected sellers “within the next few business days.” More than 7.5 million merchants use Etsy to sell their products online.
Federal regulators took over SVB on Friday amid the biggest banking collapse since the 2008 financial crisis. With its close ties to Silicon Valley, SVB’s failure has had repercussions throughout the tech industry. On Friday, Roku said it could lose up to 26 percent of its cash reserves, or more than $487 million, due to the collapse. A day later, the value of USD Coin, a stablecoin pegged to the US dollar, fell to a low of $0.87 after Circle, the company that manages the coin, revealed it had $3.3 billion stuck in the bank. While the value of USD Coin has mostly recovered, the news raised fears of potential financial contagion within the cryptocurrency industry.
More importantly, there are many people whose next paycheck won’t arrive on time. That includes employees of early-stage startups and small business owners who depend on Etsy for their livelihood. One vendor, Owen McKinney, said nbc news the delay of the deposit could have a “catastrophic” effect on your business.
What comes next is hard to say. On Sunday, US Treasury Secretary Janey Yellen said CBS Face the Nation, the federal government would not bail out SVB and would instead focus on helping depositors. “Let me make it clear that during the financial crisis, there were investors and owners of large systemic banks that were bailed out…and the reforms that were put in place mean we’re not going to do that again,” Yellen said. “But we are concerned about depositors and we are focused on trying to meet their needs.”
Update 03/13/22 11:07am ET: In an update Etsy shared late Sunday, the company said it would start processing late payments starting Monday morning. “This issue has affected a small group of sellers. Approximately 0.5 percent of our active seller base had their payments late on Friday. We are working to pay these sellers today and have already started processing payments to through another payment partner this morning. an Etsy spokesperson told Engadget.