Here’s what consumers have asked with answers from Etsy staff and previous consumers.
Yes, it certainly is. I've also been selling for many years, never had a problem. Using PayPal is great if you ever should have a problem, as you're protected in the event of theft. If you were hacked somehow would be the only way it would be a concern for me, so I am careful about using good passwords and changing them often (Etsy password) I would not worry about the safety of Etsy direct at all.
Etsy cannot give you any information about a seller. Each seller has their own shop, policies, and is not controlled by anyone, though there are policies and terms of service for each shop to follow in using the website. They are simply using the website to sell their product. In order to check reputation, look at the shop owners feedback. Ask questions. See how long they have been opened for business, then be sure to read their policies regarding loss, replacement, returns, etc. Stay away from those that say No returns allowed. That's a bad policy, as a buyer should have recourse if they are unhappy or something is lost/damaged.
Business checking isn't necessary (the banks now charge a monthly fee for a small business checking). You can pretty much set up a regular checking account
You would contact that individual shop owner where it says on their front page "Contact Shop Owner". Each shop has their own policies so it's good to read them. Explain the situation and ask for their return shipping address. You most likely will have to pay to cover the postage which is expected anywhere online.