Etsy Payments Policy Update October 2025: What Sellers Need To Know
Etsy is making updates to their Payments Policy, effective October 9, 2025 - here's what sellers need to know.
The following summary of changes was provided in an email sent to users:
Payments Policy:
- We’ve made updates to our Payments Policy to provide greater clarity around certain processes. The policy outlines that we may take action on a Seller’s account (or related accounts) when required by applicable law, including placing holds or delaying deposits.
- We’ve further clarified that Etsy acts as an agent on behalf of US Sellers for the sole purposes of receiving, holding, and settling payments to Seller.
- We’ve also updated the policy to clarify the actions we may take if a Seller provides inaccurate or invalid tax information. We’ve made similar updates to our EPIL terms, as well as clarified what happens when a Seller moves out of the EEA.
- You can review the updates here: Payments Policy
As always, sellers are encouraged to read the entire updated terms carefully, but Value Added Resource has you covered with a side by side comparison highlighting some key changes.
Disclaimer: comparisons are made using both automated and manual methods and are provided for informational purposes only - no warranty of completeness or accuracy is expressed or implied and users are advised to do their own due diligence.
First, it's important to note there was a previous update on August 6th which added language specific to sellers in Canada related to requirements of the Canadian Retail Payment Activities Act (RPAA) which go into effect on September 8, 2025.
If you live in North America or South America, except Canada, the contract is between you and Etsy, Inc.
If you live in Canada, as of September 8, 2025, this contract is between you, Etsy, Inc., and Etsy Canada Limited (ECL), a subsidiary of Etsy, Inc; thereafter, the services described in Section 12 (Canadian Sellers) below will be provided by ECL, and all other services will be provided by Etsy, Inc.
In addition to the terms above, this section applies if you live in Canada. ECL is a registered payment service provider under the Retail Payment Activities Act (Canada).
ECL will safeguard any Available Funds it is holding for you by holding an amount equivalent to your Available Funds balance, in trust on your behalf, in a segregated account at a Canadian financial institution that is not used for any other purpose.
By using the Services, you confirm that you intend for ECL to hold such amount in trust on your behalf. You will not be entitled to any interest earned, if any, on the amount held in trust on your behalf. ECL will be responsible for disbursing your funds.
Then on August 25th, Etsy posted additional updates to Payments Policy which go into effect October 9, 2025.
Etsy Acts As Agent For US Sellers
The previous version of this section only applied to sellers in the UK and Europe, but the new version also extends to US sellers as well, saying that Etsy acts as an agent for the sole purposes of receiving, holding, and settling payments to seller.
Old Version:
Appointment of Etsy as Limited Collection Agent for Sellers (EEA/UK)
Each seller appoints Etsy as its agent for the purpose of receiving, holding, and settling payments to seller. Etsy will settle payments that are actually received by Etsy to each seller, less any amounts owed to Etsy and subject to these Terms.
New Version:
Appointment of Etsy as Collection Agent for Sellers (US/EEA/UK)
Each seller in the United States, UK, and EEA appoints Etsy as its agent for the purpose of receiving, holding, and settling payments to seller, less any amounts owed to Etsy and subject to these Terms.
Each seller accordingly authorizes Etsy to represent to buyers and third parties that they are the seller's agent for the foregoing purposes. Notwithstanding the prior sentence, no agency is established for tax or for any other purpose, other than to complete a transaction as set forth in the penultimate sentence of this section.
Holds and Delays
While holds and delays on funds have always been a possibility on Etsy, this update now gives them the power to apply them against any accounts they believe may be associated with each other.
Old Version:
Separately, 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.
New Version:
Separately, if we believe that a seller's actions may result in buyer disputes, chargebacks, increased risk of fraud, counterfeiting, or other claims, or if applicable law requires it, 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 (and any accounts Etsy determines are related to your account).
That same wording is also repeated in sections on "recoupment" for cases and other buyer complaints as well as debts owed to Etsy - and as Etsy seller and ecommerce consultant Cindy Baldassi points out in on article on Patreon, that could be a concerning proposition, given Etsy's history of getting things wrong and lack of support.
Do we really want Etsy determining what accounts are "related" to others and then placing a reserve on other shops, or deducting a debt owed from shops that are in fact not related? Given Etsy's history with this sort of thing, and the complete lack of Support available to sellers right now, this is a huge potential problem. I'd really like more clarification on how they plan on determining this
Value-Added Tax (VAT)
Etsy has clarified they may charge the prevailing tax rate for VAT and that they may adjust the rate if tax information is incorrect or invalid.
Old version:
Depending on your business status and location, Etsy may be required to charge VAT on seller fees accrued each month and remit it to the relevant tax authority. VAT is collected on Etsy Payments processing fees for sellers located in eligible Etsy Payments countries where required
New version:
Depending on your business status and location, Etsy may be required to charge the prevailing applicable VAT rate on seller fees accrued each month and remit it to the relevant tax authority. VAT is collected on Etsy Payments processing fees for sellers located in eligible Etsy Payments countries where required...
...Etsy reserves the right to charge tax rates based on the tax information provided and adjust tax rates if the tax information is incorrect or invalid.
Tax Information
Etsy repeated the language about being able to adjust tax rates if information is incorrect or invalid and provided more details around what action may be taken if tax details are incorrect or invalid.
Old Version:
To comply with these reporting obligations, Etsy requires that you add your taxpayer name, taxpayer-identification and/or other applicable information to your Etsy shop as you approach the relevant thresholds. Your selling privileges may be suspended until you provide this information.
New Version:
To comply with these reporting obligations, Etsy requires that you add your taxpayer name, taxpayer-identification and/or other applicable information to your Etsy shop as you approach the relevant thresholds.
You are responsible for providing valid and accurate tax information. If you provide inaccurate or invalid tax information, Etsy may remove the information, suspend your selling privileges until you provide corrected information and/or take whatever action is deemed necessary per local tax rules without notice.
Etsy may also adjust the amounts charged for withholding tax and/or taxes on seller fees based on any inaccurate or invalid information you provide.
Payment Methods
Etsy has added Pay by Bank to the list of accepted payment methods for buyers.
How will these changes impact your Etsy business? Let us know in the comments below!
