Traditionally buyers paid via PayPal directly to the seller's account without Etsy seeing the money. This is still a supported option for grandfathered sellers and for sellers in countries where Etsy Payments does not operate, it is called "standalone PayPal".
A couple of months ago, for those sellers that use Etsy Payments, Etsy actually switched to deducting the fees from the sales like you suggest. But that still doesn't cover the cases where buyers want a refund afterwards, or if the seller had no sales to cover the listing fees.
Some platforms work like this (Amazon) and some have fees you have to pay after the fact (eBay). Big reason why eBay works like this is it has listing fees for high volume sellers and they have to be paid even if the item doesn't sell. Also, in the early days payment wasn't handled by eBay itself, it was decided entirely between buyer and seller. eBay auto is still like this (as far as I know).
But even with Amazon you have to have a credit card on file and they'll charge it if your seller account goes negative. Your seller account can go negative if you have a return or if you paid for FBA shipping and haven't made sale since or paid for FBA removal.
