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An Etsy Reserve on Digital Products is rare, but they do happen. These reserves can happen to shops both new and old, and will in most cases mean you are doing something wrong – either intentionally or unintentionally.
Unfortunately, Etsy doesn’t discriminate. If your digital product store has been hit with a payment reserve, there are a few steps you can take that may assist you in lifting the reserve. Please note:
This article is tailored towards digital product sellers only. Physical product sellers will have to approach this situation differently than what is outlined in this article.
What Is A Payment Account Reserve on Etsy?
If you’re reading this article, chances are that you have an Etsy reserve on your digital product shop already. You may not know however, that reserves are almost entirely used in shops that sell physical products. T
hey were introduced for shops that met a number of ‘risk’ criteria, including things such as sudden increase in sales, new sellers, and shops with intellectual property infringement notices. The main reason however, is for shops that do not provide tracking information.
If you get a reserve on your Etsy shop, up to 75% of your payment is held for 45 days. After 90 days, a payment reserve will automatically be removed, unless you violate Etsy’s policies. A reserve on your digital products shop will look something like the image below.
Reasons You May Receive An Etsy Reserve On Digital ProductS
It didn’t take long for Etsy to start extending payment reserves to digital product sellers. Just look at the Etsy forums or any Etsy facebook groups and you will see this popping up all the time. There are a number of reasons why reserves on digital product stores may happen. These are some of the reasons I have seen so far:
Accidentally setting your listing as a physical product instead of a digital product.
Believe it or not, this is actually the most common reason I see for reserves being placed on digital product stores. It makes sense – usually shops are newer, and not quite used to selling on Etsy.
Etsy then expects a tracking number, which digital product sellers cannot provide. A reserve is then placed on the user’s account. Unfortunately, Etsy does not care and in most cases will not take off the payment reserve, especially if you expect to exceed your shipping date.
One thing I have seen work (however have never been in the situation to test myself), was to immediately refund and cancel the order. This must happen BEFORE any expected shipping dates. If you notice you have sold a digital product listed as a physical one, you should do this immediately.
I recommend however, still providing your customer with the files (for free) and explaining the situation. It’s a lesson to learn, but hopefully something you pick up on before the reserve is placed on your account.
Accidentally setting your digital product to ‘Made to Order’
Another mistake I have seen new sellers make is to accidentally set listings to ‘made to order’. Made to order products need to be uploaded after purchase, and you have to select the ‘complete order’ button.
Failing to do so will result in Etsy seeing your product as not delivered, and again can lead to a reserve on your account. If you accidentally set your digital products to this setting, make sure to complete the order as soon as possible. This may or may not result in your payment reserve being lifted.
That is not to say you shouldn’t be using this feature. It just means that you can’t set and forget your digital listings that have ‘Made to Order’ selected. It is a good idea to check your ‘Orders & Delivery’ tab in your Etsy shop manager periodically if you are a new seller. Made to Order items will stay in the ‘New’ tab.
Intellectual Property Infringements
On to a more serious offence, Intellectual property infringements. Often a first time offence will lead to a shop being placed on a Payment reserve. This may be a result of either a copyright or trademark infringement. If your shop has been placed on a reserve because of this reason, there is not much you can do.
You should however, delete EVERYTHING in your shop that violates intellectual property rights. Not only may you lose your shop, you may also be sued and have to pay damages much greater than the income you are making from your shop.
I have seen payment reserves placed on shops without being warned. 99% of the time this is because of intellectual property infringements. Etsy may be building a case against you to ban your shop.
If you receive a payment reserve without warning, you should also follow the steps above and quickly delete everything that you do not own the rights to. However, don’t be surprised if Etsy bans your store and possibly even retains all the money in your payment reserve.
As an example: The seller below was selling unlicensed Disney digital files, which many people pointed out in the comments. When I clicked on the profile, it said ‘no longer selling on Etsy’ – meaning the shop had been banned. It is a good lesson for all, about how quick and ruthless Etsy will be in regards to intellectual property and theft.
An Etsy bot made a mistake
The final reason I have seen is an automatic reserve being placed on a shop by mistake. If none of the above situations apply to you, this may be the case. Like bots on most platforms, Etsy’s make mistakes all the time. It sucks, but it happens.
If this is the case for you, you may be able to reach out and see if there is anything Etsy can do. Sometimes, they will help. Sometimes they won’t. Your first step is contacting seller support and asking for more information. Looking into it, they may see the mistake and remove the reserve. Or not. Again, it is up to them.
What happens if Etsy does not remove my payment reserve?
If Etsy still decides to keep your payment reserve, there is not much you can do. As many Etsy sellers find out – we are at the mercy of Etsy. In exchange for a profitable platform, they have the final say. Despite this, Etsy is still my recomended platform for digital product sellers and my biggest money-maker in 2022!
The good news is, once your 90 days are up, the reserve will be lifted automatically, and you will receive everything currently in the reserve. Consider yourself lucky that you aren’t a physical product seller, having to purchase materials and products without being paid back instantly.
To recap:
The main reasons for being placed on an Etsy payment reserve and the best course of action are:
- Accidentally setting up your digital product as a physical product: Canceling and Refunding the order before expected shipping date
- Forgetting to confirm your completed ‘made to order’ digital product: Completing order as soon as possible and switching listing from ‘made to order
- Intellectual property infringement: Delete all infringing items in your store
- Etsy Bot Mistake: Reach out to Etsy support and let them know the situation or ask for more information about why you have a payment reserve.