What is Direct Checkout on Etsy? Should you sign up?

I sell my crochet patterns and stuffed animals in my Etsy shop, and sales on Etsy are a big percentage of my business.

Yesterday, I got an email from Etsy inviting me to sign up for direct checkout in my shop. My first thought was: what is direct checkout, and is it worth it?

And the answer is: it depends on what you sell.

What is direct checkout?

Direct checkout is a system where a customer can use their credit card directly on the Etsy site to make a purchase. This means that customers will no longer be directed to go through PayPal for purchases, and the money will show up in your ‘Etsy Shop Account’ rather than PayPal.

What are the advantages of direct checkout?

The advantage that Etsy is touting is that customers will stay on the Etsy page instead of getting rerouted through PayPal. It’s an obvious advantage for Etsy (because they are getting the processing fee for the payment instead of PayPal), but I’m not convinced it’s a true benefit for the customer or seller.

Customers have always been able to checkout through PayPal without an account (using only a credit or debit card), so you aren’t getting more functionality by switching to direct checkout.

Is it worth it?

Now that’s the big question! The answer is that it depends on the dollar amount of your typical sale. Here are the fees for Etsy direct checkout, PayPal Standard and PayPal Micropayments:

Although I sell some stuffed animals, the bulk of my sales on Etsy are for patterns in the $5 range. As you can tell by the table, it costs me much less in transaction fees to stick with PayPal, where I have a MicroPayments account. (If you’re not familiar with MicroPayments, read this blog post).

If you sell larger items, then the cost of using direct checkout is comparable to PayPal. (Although the amounts are identical for $50 purchases, PayPal is slightly cheaper for larger amounts).

The Summary

If you’re a pattern seller, and you have PayPal MicroPayments, you’ll save money by sticking with PayPal. If your typical transaction is more expensive, you’ll have to decide if the benefits of direct checkout is right for you.

As for me, I’m going to hold off on activating direct checkout!

Tags: , ,
Apr 19, 2012 | Posted by in Blog, Business of Design | 8 comments

Comments (8 Responses)

  1. Diane says:

    Thanks for breaking this down and providing a more objective perspective than the one provided by Etsy. I came to the same conclusion as you but now I feel validated. Thanks!

  2. Kimberly & guide dog Abby says:

    It doesn’t matter to me that I can use Paypal without an acct. I refuse to buy through them. They are a horrible company. As such, I only buy from Etsy sellers who don’t use Paypal. Something for you to think about as a seller…

  3. Trista says:

    I too was on the fence. Thank you for breaking it down! I had decided to start direct checkout, because Etsy will be starting to use gift cards. I had my first transaction today, but I’m not thrilled. Paypal allowed me to have funds right away. Direct check out will not transfer funds until your item has shipped. Because my pieces are custom orders, I might need that money right away to purchase supplies. Thankfully, my business is advanced enough that I have a reserve for supplies, but new owners might not be so lucky. That’s the only flaw I’ve found so far.

    • Stacey says:

      Thanks for your feedback. I have since signed up, but still have difficulties with the shipping (PayPal makes shipping very easy…). Working on it, tho!

  4. Maura says:

    Thanks for the info, Stacey, I’m deciding whether it’s worth it for my digital papers now…I hadn’t heard anything about Paypal Micro until reading this!

  5. marta says:

    I love Paypal, never had a single problem getting my funds, once I had to cancel an order and it took seconds, times when I’ve had questions their support was super fast and friendly. There have instances when the buyer wanted to use a credit card and were able to do so through Paypal without a hitch. The only appealing point is the giftcard feature…but is it worth the trouble of changing what is working?…not for me.

  6. Ruby says:

    Hi, i went to purchase an item with paypal without logging into my account because my card is a debit card. But it didn’t work it said ‘the email address and card number cant be used if their is already an existing account’ i have an account but if i log in to my paypal account will it block my card as it is a debit card?

The shop is on vacation for the summer! Come back in September for a full restock!