The collapse of Silicon Valley Bank (SVB) is sending shockwaves through ecommerce, and some retailers are expecting significant setbacks from the loss of its services. The Department of the Treasury, Federal Reserve and FDIC have promised in a joint statement that all depositors will have access to their money as of March 13 through a newly-created “bridge bank,” though that was not enough to prevent some hiccups in the industry.
Toy ecommerce startup Camp sent an email to customers on March 10 warning that the company had most of its cash assets with SVB. The retailer ran a 40% promotion on all merchandise over the weekend to facilitate sales that would be deposited into a Chase account. The move was aimed at helping Camp generate enough cash to maintain operations until it regained access to the money it had kept with the now-defunct SVB.
Additionally, Etsy has reportedly warned some of its sellers that their scheduled deposits may be delayed, according to CNBC. The marketplace worked with SVB to handle payments made to its users and is now working with other payment providers to issue outstanding deposits.
“We know that you count on us to help run your business and we understand how important it is for you to receive your funds when you need them,” said Etsy in an email seen by CNBC. “Please know that our teams are working hard to resolve this issue and send you your funds as quickly as possible.”
While SVB’s collapse is creating short-term challenges, it remains to be seen if there will be wider ripple effects. The Department of the Treasury, Federal Reserve and FDIC are working to minimize the disruption, including providing “additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.”
“After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors,” wrote the three agencies in their statement. “Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”
Other retail industry players don’t foresee major problems despite the loss of SVB; Poshmark assured its users that the SVB failure would have no impact on its users. “I want to assure everyone in our seller community that all accounts on Poshmark continue to be safe and secure,” said COO John McDonald in a statement. “We do not use SVB to store customer or marketplace funds, and your ability to process payments and redemptions is not affected.”
Additionally, Shopify CEO Tobi Lutke tweeted that SVB was only one of about a dozen banks the platform uses across the U.S. and Canada, and that despite a small portion of its funds being tied up in the collapse, “it should be business as usual.” The solution provider also sent out an email offering to help startups tied up in SVB make payroll while they wait for their deposits to be reimbursed.
Update: First Citizens Bank has entered an agreement to acquire Silicon Valley Bank and assume all customer deposits and certain other liabilities as of March 26. The move preserved existing customers’ accounts and could help prevent the impact of the initial collapse from rippling throughout the retail industry.