Accepting Payments on Etsy with PayPal and its Alternatives

Etsy PayPal

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.

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 millions of 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.

Store your PayPal transactions with the details provided by Etsy and get a full picture of the business performance by connecting them via Synder – check how the connection works.


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

2. What are Etsy Payments and how do they work?

3. Fees and taxes with Etsy

4. Using Etsy PayPal payment option

5. Pros and cons of Etsy Payments vs direct PayPal account

6. Buy now, pay later: Etsy Klarna

7. Other PayPal alternatives for Etsy

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

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 integrates PayPal and many other payment methods. 

What is Integrated PayPal?

Etsy provides two types of PayPal payments: Integrated PayPal and Standalone PayPal. Integrated PayPal means that payments are integrated with Etsy Payments, and all PayPal transactions are credited to the seller’s Etsy payment account and not a separate PayPal account. This makes handling payments on Etsy much easier.

What is Standalone PayPal?

Standalone PayPal is supported in countries that don’t yet offer Etsy Payments (with some exceptions). Hence, it’s not really a matter of choosing Integrated or Standalone Paypal as it depends on the processing system availability and requirements for sellers in selected countries. 

Selling in countries with and without Etsy Payments

To open a new Etsy store in a country where Etsy Payments are eligible (and accept PayPal payments under the umbrella of Etsy Payments to a debit bank account), you’ll need to set up Etsy Payments during your onboarding. That means that all new sellers are required to set up Etsy Payments where it applies. 

If you already have an Etsy store in a country where Etsy Payments are available, you’ll also need to switch to Integrated PayPal. However, you might still be allowed to receive payments directly into your PayPal account, at Etsy’s discretion, but for a limited time.

For some countries, where PayPal doesn’t 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. 

does etsy take paypal

What are Etsy Payments and how do they work?

First, let’s find out what Etsy Payments are and how they influence 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. 

Sellers enroll in the program and, as a result, let Etsy tackle all the procedures related to accepting, and 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 accounts. 

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 payment methods that Etsy Payments offer

  • Credit cards;
  • Debit/bank cards;
  • Etsy Gift Cards and Etsy Credits;
  • Apple Pay;
  • Google Pay;
  • PayPal;
  • Klarna Financing (United States);
  • Klarna installment payments (Australia, Canada, Spain, United Kingdom, United States);
  • Klarna Pay in 30 days (Germany, Netherlands, Sweden, Austria, Switzerland, Denmark, Finland, and Norway );
  • iDEAL (the Netherlands);
  • Sofort (Austria and Germany).

Fees and taxes with Etsy

Etsy seller fees can be grouped into different categories, to see a full list of fees, click here. Let’s look at the most common types of fees that you’ll be required to pay when selling goods on Etsy. 

Listing fees

You’re listing a product when you add it to your shop, regardless of any sales made. The standard flat charge is $0.20 USD per listing. Etsy also gives you several options: automatic renewal once an item is sold, multi-quantity listing, or even private listing so that you can tailor them to your needs. Each of those additional listings is covered by the same standard fee of $0.20 USD per listing, so for multiple items sold, the respective amount of fees is being debited. 

Transaction fees

Etsy seller fees can be grouped into different categories, to see a full list of fees click here. Let’s look at the most common types of fees that you’ll be required to pay when selling goods on Etsy.

Etsy transaction fee is based on the order amount of the items sold. It’s 6.5% of the total order amount which is calculated based on all costs of the item (including shipping and gift wrapping, if applicable) and shown in the currency that the listing was made in.

Payment processing fees

Each time a buyer uses Etsy Payments, a seller will be required to pay a payment processing fee. Therefore, if the credit card processing happens through Etsy Payments or other payment method supported by Etsy Payments (like PayPal), the seller pays a payment processing fee. It includes a set rate and the percentage that’s calculated based on the total amount of the item sold (including shipping and applicable taxes) and varies by country.

How is tax paid with an Etsy seller account? 

As a business owner and Etsy seller, you need to ensure that all your taxes are adequately filed and paid. Subject to the applicable tax laws, Etsy might calculate, collect and remit tax sales on your behalf. However, this may only apply to some of your customers, depending on their place of residence. 

This becomes even more complex, if you’re using other payment methods like Stripe, or selling goods on additional platforms such as Amazon, Shopify, or many other. That’s why having a system that automatically integrates and collects all your payments is crucial not only for your tax season but for the smooth running of your business. Synder provides you with this solution. Since it uses very detailed information about your orders like time stamps, billing address, payment method, and others, it ensures that the filling system is accurate and without any duplicates. 

Depending on your country of residence, you might need to display taxes according to specific guidelines, so verify with the appropriate government body. Also, make sure to accurately classify your products on Etsy, or other sites so that appropriate taxes can be placed on specific groups of products.

Etsy complies with local laws and regulations regarding its involvement in the seller’s tax. It’s best to consult your accountant to find out which rules apply in your country of residence.

Using Etsy PayPal payment option

PayPal has been the most natural way of selling and buying things on Etsy over the years. 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. 

For the buyers, PayPal payment looks like a separate mode of transaction just as it has always been. However, for the sellers, Integrated PayPal creates a simplified and unified system with Etsy Payments. Additionally, only the Etsy Payments payment fee is charged without any additional fees from PayPal.

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, this system has both advantages and disadvantages.

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


1. Sellers using Etsy Payments don’t need to have an account on PayPal or 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 manage 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 enjoyable relief. 

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


1. If your country isn’t eligible for Etsy Payments, you temporarily won’t be able to open an Etsy store, even if you have a PayPal account. It’s not disclosed 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’re 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’s available to Etsy sellers and is definitely worth mentioning is Etsy’s partnership with Klarna.

It’s a payment provider that, in selected countries, offers specific buy-now-pay-later payment schedules:

  • Klarna Financing (United States);
  • Klarna installment payments (Australia, Canada, Spain, United Kingdom, United States);
  • Klarna Pay in 30 days (Germany, Netherlands, Sweden, Austria, Switzerland, Denmark, Finland, and Norway).

Under Etsy Payments, there’s no necessity for merchants to have a Klarna account to use this solution. 

Buyers can pay for certain items in a few installments after the purchase. Here are the options available in the US:

  • 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, and afterward, 1 installment every 2 weeks, until the whole amount due is paid. There’s no interest fee on this payment schedule, as long as all payments are made on time.
  • Klarna financing is a monthly schedule 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’re “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. 

In such cases, it might be wise to use a reliable accounting solution that will help you monitor your cash flow. Synder will always have your back when it comes to simplifying accounting for e-commerce businesses. With the software’s attention to details, you’ll 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 the 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, or 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, and Shopify-Etsy Integrations

Here’s a tip on how to get the most out of connecting Amazon, eBay and Shopify to Etsy: try Synder!

Synder accounting software allows e-commerce companies to add multiple sales platforms to their accounting at no additional cost.

It means if you have online stores on Etsy, Amazon, Shopify, or eBay you can get all sales data from each source automatically synchronized into your accounting system, and it won’t eat a hole in your budget. No manual work involved. You’ll know how many sales you’ve made, what channel brought you the largest number of sales, and what the net and gross amounts are. The customer, vendor, merchant fees, and shipping data will be correctly reflected as well. It’ll be much easier to track inventory and even pay taxes, as all your financials will be securely recorded in one place.

Have your financial reporting and strategic planning under control by connecting your online stores to Synder – create a free account.

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. 

Modern 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, and American Express, 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 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 this time. Having trustworthy software like Synder for all your merchant payment data and accounting in one place is the key to the financial success of your online business. 

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