Payment holds for new sellers: Current Etsy policy
I'm making this guide because we are currently getting multiple posts a day asking about payment holds for new sellers. I want to make a FAQ with a link to Etsy policy to provide information and consolidate these questions.
Here's the basics:
Etsy started payment holds for new sellers in March 2024.
Originally they started with a 14 to 20 business day hold. Funds were held for that length of time for a seller's first 90 days on the platform. Recently, the hold has been extended to 180 days.
It is my understanding that what this means is that for your first 6 months on the platform, your funds may be held between 14 and 20 business days before being released to you.
Does this happen to all new sellers?
I can't say for sure, but my guess is no. I think Etsy's internal system flags specific risk factors that trigger a payment hold.
What are the risk factors for a payment hold?
Etsy isn't specific, nor will they be. They have a blanket policy that allows them to identify whatever risk factors they like. It reads as follows:
if we believe that a seller's actions may result in buyer disputes, chargebacks, increased risk of fraud, counterfeiting, or other claims, then we may, in addition to any applicable Reserve and in our sole discretion, put a hold or deposit delay on the seller’s payment account balance.
To be more specific, I believe that the more sales you make as a new seller, the more likely they are to put a hold on your funds.
Etsy views a new shop doing well right away as somewhat suspicious.
This is understandable. The following types make up a hefty chunk of new sellers doing markedly well with a new shop:
-Scam listings with "too good to be true" prices
-New sellers committing copyright infringement
-Those selling items that violate Etsy policy or the law
...These ARE all absolutely at risk of claims or chargebacks.
Another risk factor is anything with the potential to be counterfeit, such as selling designer or brand name vintage items.
How does this correlate to a payment reserve?
It's a completely separate thing. I will work on a separate guide for payment reserves... but generally speaking, payment reserves have different risk factors such as shipping without tracking, shipping late, or canceling a bunch of orders.
Of course, there is going to be crossover in the risk factors, but payment holds are specifically for new shops, whereas payment reserves can happen to any established shop if they fall behind on orders or ship without tracking.
It's been more than 20 business days and I haven't received a payout.
Etsy always takes fees from your available balance first. So if you have money for a sale come off hold, before it can be transferred, Etsy will subtract any fees you owe from it. So if you have a $100 sale come off hold, but you've made more recent sales, fees from those more recent sales as well as other costs such as Etsy ads or shipping labels will be taken from the $100 that came off hold from the older sale. This can put you below the deposit minimum.
Your payment account page is the best place to see what's going on. Every single credit and debit is listed there in a running balance. You can always do the math.
See the section "other types of holds" for a couple other scenarios where this happens.
Other types of holds:
I also want to mention this. It is possible for there to be other reasons for a payment hold or deposit delay not related to being a "risk factor" new seller.
If your credit card on file expires, Etsy will hold your money until you update your account with a valid credit card.
If your bank account isn't verified, and/or ID isn't verified, Etsy will hold your money until that is resolved.
This isn't the post with all the details about that. I'm going to link the account suspension checklist... please read the section about ID verification as the same stuff mentioned there could be the reason for a deposit delay as well as account suspension:
https://www.reddit.com/r/Etsy/comments/uwrqck/account_suspension_help_checklist/
This is so unfair!!
Well... yes and no. Etsy is doing this because of the massive rise in scammers and policy violating shops that happened on the platform since 2020. They were left holding the bag for a lot of scammers.
Holds like this are common across all online marketplaces, and will only become more common as scamming continues to spiral out of control.
Ebay has a 3 week hold on payments for new sellers. I'm not sure how long you're considered a "new seller" there. Amazon has a 2 to 3 week payment hold... forever. Those are just two examples.
It's also important to keep this in mind... Etsy is actively trying to discourage new sellers currently. Unfortunately, the majority of new sellers over the last couple years have been "low effort" POD types, "low effort" digital types, AliExpress dropshippers, copyright violators, or other policy violators.
This is because of the rise in YouTube etc influencers heavily promoting Etsy as a "get rich quick passive income" scheme. It absolutely sucks for legitimate sellers, but Etsy is now doing what they can to try to curb these types of shops from starting up... and that means some legitimate businesses will also have to play by the same "unfair" rules.
Etsy's official policies:
Here is the link to Etsy's official policies. If you don't want to rely on what I've written here, or what other people have said across the internet, go read the official policies:
https://www.etsy.com/legal/etsy-payments/
I would absolutely suggest reading the official policies rather than relying on third parties, bloggers, YouTubers, Redditors, etc to give you information. A lot of those people are just straight up wrong. The official source is always the best source.
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I'm going to be leaving the comments on this post open and redirecting future posts about payment holds to this post. You are welcome to use it for discussion or questions, but keep complaining and ranting to a minimum. We understand it sucks for legitimate new sellers. Complaining unfortunately won't change that, or change the reasons for these policies in the first place.