April 16, 2024

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Etsy is delaying payments to sellers due to the collapse of the Silicon Valley bank

Etsy is delaying payments to sellers due to the collapse of the Silicon Valley bank

Etsy warned sellers that the collapse of a Silicon Valley bank on Friday caused delays in processing payments, according to an email from the company shared with NBC News.

The online do-it-yourself megastore said it used SVB to facilitate the exchange for some sellers, and that it was working with other payment partners to issue deposits.

“We wanted to let you know that there was a delay in your deposit that was due today,” the email from Etsy said.

“We know you rely on us to help run your business, and we understand how important it is to receive your money when you need it,” the email continued. Please know that our teams are working hard to resolve this issue and send you your money back as quickly as possible.

Etsy did not immediately respond to a request for comment.

etsy It claims 7.5 million sellers worldwide. Regulators placed SVB into receivership around noon Friday to end a bank run on the technology lender that began on Wednesday after it said it was seeking to raise more than $2 billion.

Etsy seller Owen McKinney told NBC News that delaying a deposit would have a “catastrophic” effect on his business.

McKinney, who runs a laser engraving business at Kentucky Country Home, said in an email that he relies on deposits to pay for items such as shipping costs and materials. He said he has already reached out to one of his suppliers to put off ordering the materials he needs next week.

“At this time, Etsy has not provided a time frame for funds to be deposited,” McKinney said. “While I have a website, Etsy remains a huge part of my business.”

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Another Etsy seller, Rachel Briggs, has been on Etsy since 2010 selling her designs: enamel pins, keychains, and handmade art dolls. Briggs left her office job in 2020 and has since become a freelance artist. She said her work on Etsy, in addition to her work as an illustrator, is a “large portion” of her family’s income.

Recently, Briggs paid for an “expensive” tax appointment with a professional to handle documents now that her income is less traditional. She expected her Etsy deposit to cover the cost.

“Getting the email that my expected deposits are being delayed wasn’t a really good thing to wake up to,” Briggs said. She added that a portion of her Etsy sales occurred prior to the filing delay, which allowed her to pay for tax services.

The drama with SVB started earlier this week when the bank revealed it It sold about $21 billion in securities He proposed offering more than $1 billion in stock, all to raise money for “general corporate purposes”.

The move raised eyebrows among investors, who pondered why SVB needed to raise so much money all of a sudden. It also alarmed depositors, many of whom suddenly wondered if their money was safe and began withdrawing funds.

On Friday, the California Department of Financial Protection and Innovation said it is Take over and close SVB To protect deposits, designate the Federal Deposit Insurance Corporation as its recipient. The FDIC has formed a separate entity where all SVB insured deposits — up to $250,000 per depositor — will be available by Monday morning.

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The close came after a tumultuous morning for SVB, as its shares halted trading after falling by double digits before the markets opened. The decline followed a drop of more than 60% on Thursday.

The closure marks the largest bank failure since the 2008 financial crisis and the second largest in US history after that Washington Mutual collapsed During this industry-wide meltdown, according to FDIC data.