Feature Friday: Etsy Gift Cards

It might seem strange that a service that is seven years old would just be getting around to gift cards, but Etsy did not have its own payment service until this year. Paypal was the default payment system on Etsy for the first seven years of its life. Sellers can still accept payments via Paypal and for international sellers, Paypal is still the only payment option on Etsy.

One big benefit of having its own payment system, called Direct Checkout, is that Etsy can now offer gift cards which can be used to purchase from sellers on Direct Checkout. The majority of Etsy sellers in the US now accept Direct Checkout so that means hundreds of thousands of sellers will accept payment with Etsy Gift Cards.

As you might imagine, sending and receiving a gift card on Etsy is a beautiful experience.


So if you have a friend or loved one who enjoys buying on Etsy but you can't decide what to get them this holiday season, head on over to Etsy and buy them a gift card. I plan to do that a fair bit this year.


Comments (Archived):

  1. Dave Pinsen

    Did Etsy start working on this payment system before USV invested in Dwolla? Seems like there could have been some synergy between two of your portfolio companies there.

    1. jason wright

      why have one when you can have two for twice the price?

    2. fredwilson

      They have been working on it for a while

  2. William Mougayar

    Memo to self: For my US friends, send them an Etsy gift card at Christmas because it doesn’t work outside the USA.

    1. fredwilson

      I bet it will next year.

      1. William Mougayar

        That’s 2 strikes in a row. Tomorrow’s video better be one we can view outside the US 🙂

        1. Dave Pinsen

          There was a short-lived alt-rock station in the ’90s that broadcasted out of “New York’s northern suburbs”, so not everyone in the NYC metro area could get their signal. Their slogan was, “if you can’t get us, move.”

          1. William Mougayar

            LOL. That’s funny. I didn’t realize it’s also a start-up tactic.

          2. Wavelengths

            How do I Google “Number of people leaving Canada to be able to participate in USV-backed enterprises”?

        2. JimHirshfield

          On the internet no one knows you’re a dog. But they know you live in Canada.

          1. Abdallah Al-Hakim

            very good point!

      2. Richard

        In the US alone there are federal regulations and 50 sets of states regulations for gift cards. Here are californai’s: No expiration dates allowedGift cards are redeemable for cash if value is $9.99 or less.Gift cards do not escheat to the State of CaliforniaCalifornia offers a consumer-centric gift card law webpageCalifornia has legally defined the notion of a gift cardCalifornia has legally specified whether or not gift cards escheat.

  3. Fernando Gutierrez

    I guess it’s more polite to give a gift card than just money, but I prefer the later. I read in Seth Godin’s blog that around 8 billion USD were wasted in gift cards on 2006 (easy to Google, second result when typing seth godin gift card. I don’t provide link to avoid spam filter). That must be great for issuers, but I can’t like it.

    1. JimHirshfield

      Right. No breakage with cash.

    2. Abdallah Al-Hakim

      there are some online services that buy the gift cards for a reduced price and resell them at a discount. There are a lot of unused gift cards!

  4. chrispa

    I think there is probably an interesting blog post around the idea that Etsy was able to grow so large/well/quickly while still having Paypal as it’s payment engine. I know there weren’t many (or any) options 7 years ago, but considering how wonderful the Etsy user experience is, the Paypal piece seems to stick out like a sore thumb. Sounds like sentiment is reflected in the fact that within 1 year the majority of Etsy sellers moved to Direct Checkout.Not sure if I have a brilliant insight to add – but interested if others had a similar reaction.

  5. awaldstein

    Online payment systems and flexible POS system for brick and mortar inventory pull are a beast of a challenge.A post or some guest posts on payment systems would be super useful for just about everyone.In fact, this would make a great one-two day conference if focused and done correctly.

    1. Tom Labus

      What were thoughts on AMZN’s entry to the wine business?

      1. awaldstein

        Side subject that will bore the community I think.Short answer:They’ve tried twice before. I don’t see this as different from the other ones honestly. Only impacts domestic vineyards in the mid tier that already have their own POS systems.Wine doesn’t get bought for the most part, it gets sold. Amazon is a catalog. They don’t market and sell anything. That’s the big deal why wine online is an issue.

        1. Abdallah Al-Hakim

          I am not bored 🙂 I think this is valuable input

        2. Anne Libby

          To your latter point, the last time I looked at their “fashion” offering, I had a similar thought.

          1. awaldstein

            Some things need to be sold. Wine for certain. Fashion is a bit easier as you can ‘try on thing’ you can’t taste things though online.

      2. kidmercury

        i’m the self-proclaimed biggest amzn fanboy, but even i’m a little skeptical here. i’m also a member of a wine club and i don’t see how amazon can compete well here; i still plan on buying my wine online through a wine club, not through amzn.

        1. awaldstein

          The details of their offering are not very compelling.What wine club do you use? Don’t know much about the economics but the numbers I’ve heard is that about $2-300M of the $37B in annual wine sales come through them.Have considered building a piece into theLocalSip that will enable bloggers to autobuild their own wine clubs by handling the connection to the inventory of the shops. Might however be a great idea without a market;)

          1. kidmercury

            i use these guys: https://www.laithwaiteswine… i find it to be an excellent deal, decent wine (in my opinion, or at least by my standards) at great prices. for people who drink wine regularly or like exploring different wines i think wine clubs are a great deal. great for discovery, great for price. i expect amazon to eventually go this route but can they pull it off? i don’t know and i’m a bit skeptical. i think niche wine experts have a real advantage here. accordingly i think your idea for wine bloggers auto-building their own wine club is fantastic. that’s going to be the challenge for amzn, in my opinion — can they get real wine experts to comment, give reviews, create lists, etc and can they source all the wine at the right price. at this point i’m not convinced and i think new entrants/startups have the edge here.

          2. awaldstein

            Great info, thanks.Really interesting building a marketplace from the ground up, self funded and bootstrapped.I’ve proven the b side. I have 35 shops using it weekly. Next is to focus on building the c side exponentially.This is work at the street level. The web is really bad at the local neighborhood level but useful as a bridge not as the core.I like models that are hard to get in sync. Once you do, they can keep moving for a long time.

          3. RichardF

            ha didn’t know laithwaites had expanded into the US

          4. Jim Ritchie

            invino does a nice job for higher end wines. https://www.invino.com/Also, hate to change the subject on a Fun-Feature Friday, but what did you think of Ron Paul’s farewell speech? I thought it was brilliant and should be required reading for all Americans. http://washingtonexaminer.c

          5. Matt A. Myers

            You could slowly help build a market if there are some unique benefits to such a system, incentivized somehow.

        2. Tom Labus

          Bezos told Charlie Rose that they considered retails stores but have not figure out how to do with their style.

          1. Jeff Sepp

            They tested out drop-off locations (711 I think)

      3. andyidsinga

        I’ll have to go check out their selection of boxed wines :)speaking about etsy and boxed wine – this is cute: http://www.etsy.com/listing

    2. Carl Rahn Griffith

      It is a massive topic indeed, Arnold – and with so many options available now it’s pretty confusing as to what is the best strategy to adopt for many – I am trying to get an associate of mine to comment here on it – he knows it inside out. In fact you will know of him via my introducing you to Petra re: Austria/Vienna recommendations – it’s Robert. Let’s see if he comments… 😉

      1. awaldstein

        Yup, we’ve connected.Great topic. More minds are better.

    3. William Mougayar

      How about Square? They turn an iPad or iPhone into a cash register.

      1. awaldstein

        To my knowledge square is an offline system for buying and selling in IRL. Doesn’t tie into online POS systems.

    4. PhilipSugar

      Yes, and if you add dealing with legacy systems the challenge is exponential.

      1. awaldstein

        Yup.Huge area of interest and one that will open up new commerce possibilities if someone can crack it I think.Be great to get an expert and create some strawperson examples and see ways to tackle the problem.

  6. ShanaC

    I wonder what the breakage is for gift cards where there is no actual store…

  7. Abdallah Al-Hakim

    my wife discovered Etsy all by herself last week (she is not active on the social web with the exception of Pinterest which is how i suspect she found about Etsy). I was thinking of surprising her with a gift card but then read @wmoug:disqus comment and now have wait 🙁

  8. Brandon Marker

    Etsy is nerd heaven. I have to set a time limit when I start browsing…

    1. fredwilson

      Yup. So true.

  9. kenberger

    I need to get someone on Etsy to make me a custom Galaxy Note 2 belt clip.You need to get out and get that phone today! onsip will port over your Tmo number and you can have that fwd to your phones. Grab the AT&T version, or see my other notes I emailed you.Fun flying with you yesterday.

    1. fredwilson

      I may just leave tmo and go to att to get it

      1. Wavelengths

        The dog ate my Tmo Galaxy yesterday. Can I take yours off your hands if you decide to port? :-)(I didn’t know they were chewable.)

  10. takingpitches

    That spike in sales on etsy over the last two weeks is due to my wife buying anything and everything elephant-themed over the last couple of weeks – paintings, mobiles, pillows. :-)If the economics works, etsy should look at partnering on the gift cards with Amex membership rewards. MR drives a ton of gift card sales for Home Depot, Amazon, Saks..and Amex is big on having a digital gloss. Along with Amazon, it has partnerships with FB, 4sq, Twitter, etc, so my guess is they would love to team with etsy.

    1. fredwilson

      Interesting suggestion

    2. Richard

      any idea what the revenue split is with thirds party gift cards selles?

      1. takingpitches

        Amex offers as an option for which you can trade your Membership Reward points. If someone wants to do that – as is a popular option – Amex pays the retailer for gift card. Not sure what is typical in terms of payment but it is a negotiation so some variation.

    3. jason wright


  11. David Lin

    There seems to be the trend of gift cards for on-line e-commerce retailers. Facebook just expanded their gift cards program, now Etsy. I just can’t imagine myself printing a giftcard to be used.I wonder whether the unused rate of online gift cards are higher than traditional gift cards…

  12. Dave W Baldwin

    Since the subject is Etsy, I’d like to offer a Public Service Announcement regarding something being sold that is taking away from a very worthwhile cause.International Crisis Aid (ICA) is an organization helping young ladies who have been subject to sex slavery. According to their website http://www.crisisaid.org/us…, since 2001, there have been between 100,000 and 150,000 sex slaves in the U.S.A safe house is being finished an opening very soon in St. Louis, a hub for sex trafficking. A major source of funding has been the sale of bracelets made of soda tabs and colored stretch cord. 100% of the sales has gone to finishing this safe house.Unfortunately, several have seen this bracelet, copied it and selling them through Etsy, Ebay and Justice Just for Girls along with instruction re building these bracelets on Youtube and Pinterest.I found out about this due to a Staff Editorial in our local high school magazine last week. There is a strong push from our area and I’m proud of our kids taking a stand.Please let your young ones know of the issue and you can correspond with the website included in this comment if you’d like to help out.

  13. jason wright

    a $25 will do.Can the gift cards be branded for affiliate websites, with Etsy as the invisible clearing house?

  14. leigh

    Might use some as client gifts. 🙂

  15. Prokofy

    My daughter loves Etsy. I swear we get a package from there every week. I may get the card, but it is so fun choosing the funky stuff on there that I might do that instead!

  16. Travis Bochenek

    Certainly a crucial move for them. Etsy is such a fantastic resource for both local artisans selling their creations, as well as those who have always aspired to do so. Creativity has been all but lost in the super sizing of retail stores and their suppliers so its great to see this platform doing so well! Thanks for this update Fred.

  17. Techman

    This is a bit off topic, but anyone else keep getting that E-Card spam? I wish that crap would just go away.