Accepting Payments on Etsy with PayPal and its Alternatives

Accepting Payments on Etsy with PayPal and its Alternatives

When you’re an e-commerce business owner, setting up your online store with Etsy sounds like a great option for creating an additional revenue stream, with over 80 million active buyers across the world purchasing goods on the platform. One thing that might be complicated is choosing a payment option that will work best for you — and one that will guarantee your customers an excellent online shopping experience.

This blog will teach you how to receive payments on Etsy, both including and apart from PayPal. We’ll also talk about some of the great benefits they offer sellers and buyers alike.

This blog is a part of a series dedicated to the most popular e-commerce marketplaces’ payment solutions. Click here if you want to check out more.


Introduction to selling on Etsy: getting paid via PayPal and more

What is Etsy Payments and how does it work?

Using Etsy PayPal payment option

Pros and cons of Etsy Payments vs direct PayPal account

Buy now pay later: Etsy Klarna

Other PayPal alternatives for Etsy

More tips for selling online on Etsy, Shopify, Amazon, and eBay


How to survive the downturn

Introduction to selling on Etsy: getting paid via PayPal and more

Etsy is one of the most popular marketplaces where small businesses, solo entrepreneurs, artisans, and craftsmen can sell their products to a global audience. 

This platform offers its own processing system called Etsy Payments, which has been an alternative for using only a PayPal account on Etsy for years. 

Starting this April, Etsy introduced a temporary limitation on using a direct PayPal account for Etsy businesses. For a certain period of time, it will be only possible to open a new Etsy store in a country where Etsy Payments is eligible (and accept PayPal payments under the umbrella of Etsy Payments to a debit bank account). 

However, this rule does not apply to the shops opened on Etsy previously, and their owners can continue to receive payments directly into their PayPal account just like they did before.

For some countries, where PayPal does not operate, as well as for those who need a PayPal alternative, Etsy Payments offers a range of other payment options too, including credit and debit cards, Etsy Coupon and Gift Cards, some bank transfer services, Apple Pay, Google Pay, and some country-specific installment payment methods — all in their domestic Etsy Payments currencies.

This article will provide you with more details on each of them. 

What is Etsy Payments and how does it work?

First, let’s find out what Etsy Payments is and how it influences the way businesses accept payments on this marketplace.

Etsy Payments is the major payment processing system owned by Etsy that allows its merchants to get paid for the goods they sell on the platform. 

Unlike Amazon Pay, the Etsy Payments system is not cross-channel, meaning that it can only be used on Etsy (at least, for the time being).

Sellers enroll in the program and, as a result, let Etsy tackle all the procedures related to accepting, processing payments, transferring money between bank accounts, dealing with payment providers, handling disputes and chargebacks, etc.

Buyers can choose any (supported) payment method to purchase from a shop with Etsy Payments. Sellers get direct deposits to their bank account. 

In other words, this system serves as a unified gateway through which merchants receive money directly to their business bank account, regardless of the payment method the buyers used.

List of supported payment methods under Etsy Payments

  • Credit cards
  • Debit/bank cards
  • Etsy Gift Cards and Etsy Credits
  • PayPal
  • Apple Pay
  • Google Pay
  • Klarna installment payments (United States)
  • Klarna Invoice (Germany)
  • iDEAL (the Netherlands)
  • Sofort (Austria and Germany)

Using Etsy PayPal payment option

PayPal has been the most natural way of selling and buying things on Etsy over the years. But after the new (temporary as claimed) “Etsy Payments only” policies came into force in spring 2021, things have changed a bit.

What hasn’t changed is that people still buy and pay with PayPal. The only thing that has changed is how merchants receive the funds. With activated Etsy Payments, merchants get the money into their account on Etsy, not into their direct PayPal account. In fact, businesses don’t have to have a PayPal account at all to accept PayPal payments. 

This rule is mandatory only for newly started shops. All Etsy businesses that existed before the new policies were announced, can proceed using their direct PayPal account for accepting payments as they did before. 

Pros and cons of Etsy Payments vs direct PayPal account

Etsy uses its own payment processing to simplify payments for both sellers and buyers. Nevertheless, there are both advantages and disadvantages to this system.

Here’s a quick overview of the pros and cons:


1. Sellers using Etsy Payments don’t need to have an account on any of the payment services to actually receive money from them. The buyer can use these payment methods, and the money made from the sale will be available in the merchant’s Etsy account.

2. It means paying no separate payment providers’ fees. With Etsy Payments, merchants are managing money in one unified Etsy account rather than in multiple places. Etsy has an extensive range of fees under the hood, making accounting for Etsy sellers a bit more of a headache than it already is. This solution may provide a small but, nevertheless, enjoyable relief. 

3. Etsy takes responsibility to resolve disputes and chargebacks. As the seller, you won’t directly participate. This is a convenient way since the business owner doesn’t have to spend their time gathering and providing the right sales data to the banks.


1. If your country is not eligible for Etsy Payments, you won’t be temporarily able to open an Etsy store, even if you have a PayPal account. It is not disclosed, for how long the policies will be in force.

What do you think about using Etsy Payments? What is your experience with this payment solution? Is it more convenient than using a direct PayPal account or not? Feel free to share in the comment section below.

Whatever payment gateway you are using for selling online, you can always fetch the correct sales data from the direct Etsy PayPal integration with Synder or via the Etsy integration with accounting on its own. There’s absolutely no need to worry about knowing your net and gross income amounts and monthly reconciliation. The software will automatically put the information about the disbursements in the correct lines of your digital ledger once the payments are settled with the bank. 

Buy now pay later: Etsy Klarna 

Another payment option that is relatively new to Etsy sellers and is definitely worth mentioning is Etsy’s partnership with Klarna.

It is a payment provider offering a specific buy now pay later model for buyers and sellers in the United States (under Etsy Payments, there’s no necessity for merchants to have a Klarna account to use this solution). 

Buyers with a US billing address can pay for certain items later after the purchase in a few installments. Here are the options:

  • 4 interest-free installments for orders totaling between $50 and $250 after discounts, and before shipping and tax. With this option, buyers can pay the first installment when checking out on Etsy.
  • Monthly financing with interest for orders totaling between $250.01 and $10,000 after discounts and before shipping and tax. Klarna will determine payment schedule options and an interest rate based on the order total and a credit check assessed by the provider. 

What’s good for merchants is that this solution gives more chances to catch clients while they are “hot” and close the deal. Customers can purchase goods when they have fallen in love with them even if they don’t have the whole budget right away. 

On the other hand, this solution brings delays in payments and a certain level of operational inconvenience due to negative cash flow. Synder will always have your back when it comes to simplifying accounting for e-commerce businesses. With the software’s precision to details, you will generate cash-based and accrual-based financial reports with correct numbers, and easily track how much cash you have on hand. 

Other PayPal alternatives for Etsy

Etsy offers a variety of payment options to make it easier for its merchants to get paid online. As has been already said, PayPal is the most popular payment option on Etsy, but there are alternatives.

Let’s take a look at what they are:

Credit and debit cards

Sellers on Etsy get a possibility to accept most major credit issuers, including:

  • Visa
  • Mastercard/Eurocard
  • Discover
  • American Express
  • Carte Bleue (France)

Etsy Gift Cards and Etsy Credits

When a buyer purchases from an Etsy shop, they can use an Etsy Gift Card or Etsy Credit as a payment method. Etsy deposits the money to a seller’s bank account just like any other Etsy Payments transaction. 

Etsy Apple Pay

iOS buyers who are shopping on the mobile app or Safari on desktop or mobile can pay for items with Apple Pay.

Etsy Google Pay

Buyers who are shopping on the Android mobile app can purchase goods via Google Pay

More tips for selling online on Etsy, Shopify, Amazon, and eBay

Trying to reach out to as many customers as possible, you might decide to start selling online not only on Etsy but on other popular marketplaces too, such as Shopify, Amazon, and eBay.

When your business is present on several e-commerce sites simultaneously, you might wonder if there are ways to integrate these platforms somehow, or at least share some valuable information between them to optimize your business processes.

Amazon Etsy, Etsy eBay, Shopify Etsy

Here is a tip on how to get the most out of connecting Amazon Etsy, Etsy eBay, Shopify Etsy. 

Synder accounting software allows e-commerce companies to add multiple sales platforms into their accounting

It means if you have online stores on Etsy, Amazon, Shopify, eBay you can get all sales data from each source automatically synchronized into your accounting system. With no manual work involved. You will know how many sales you have made via what channel, what the net and gross amounts are. The customer, vendor, merchant fees, and shipping data will be correctly reflected as well. It will be much easier to track inventory and even pay taxes, as all your financials will be securely recorded in one place.

You will have no problem with financial reporting and strategic planning from the moment you connect Synder to your online stores. Try it now for free.

This blog is a part of a series dedicated to the most popular e-commerce marketplaces’ payment solutions. Click here if you want to check out more.


The variety of payment options adds more flexibility and bigger revenue potential for an e-commerce business. 

Morden marketplaces, such as Etsy, offer a variety of solutions for merchants to accept payments online. They partner with the most popular payment providers, for example, PayPal and Klarna, debit and credit card issuers, such as Visa, MasterCard, AmericanExpress, and produce in-home solutions like branded Gift and Credit Cards. 

To make payment processing simpler and more secure, Etsy offers a unified payment gateway for all merchants, which is called Etsy Payments. It helps merchants get paid without having to deal with any of the separate payment processing platforms directly.

Marketplaces’ payment policies keep evolving during the time. To have a trustworthy software backup for all your merchant payments data in one place is key to the financial success of your online business. Synder will help you keep the mess out of your business’s accounting. 

Olga Shvets

Olga Shvets

Olga is a FinTech writer with a degree in communications and business experience in e-commerce. Passionate about all things connected with money and the principles of human behavior. Financial psychology and trends of global markets are her favorite topics to investigate.

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