Accepting Payments

Leave a Comment / Toolkit / By

For your product, you can accept one-time payments or subscription payments via

  1. Payment Gateways
  2. Merchant of Records (MoR)
  3. Via Platforms/Indirectly

Payment Gateways

  • Payment gateways such as Stripe and Razorpay (and many others) allow you to create one-time payment links, subscription checkout pages and various other integrations to accept payments. Stripe is one of the most preferred payments gateways globally owing to its superior service and super clean interface and integration options.
  • If you are from India, Stripe does not allow you to accept payments in UPI which may be a deal breaker. Razorpay, Cashfree and Phonepe are good alternatives. You will also not be able to accept International payments if you dont have a propreitership, partnership, LLP or a Pvt Ltd in India.
  • We would recommend setting up an entity in Delaware using Stripe Atlas/Firstbase/Doola and get a US Stripe account which will make it very easy for you to accept international payments. Non US Stripe Accounts may face a higher failure rate from US and European countries.
  • Recommendations: Stripe for International Payments, Razorpay for

Merchant of Records

  • As discussed in the Taxation section, you are supposed to collect sales tax/VAT/GST locally (for certain countries) and submit it to the local government, depending on place of sale.
  • Managing local taxation can be cumbersome – Imagine collecting the right amount of Tax depending on the location and then remitting it to the local government, It can be daunting.

This is where a Merchant of Record (MoR) helps. A MoR is a payment gateway + local taxation solution. The MoR automatically collects local taxes and remits it to the local government.

  • MoRs send you one payment at a predefined frequency after aggregating all the payments within that period and removing the local taxes and their fees
  • Lemon Squeezy, Paddle and Gumroad are some popular MoRs
  • Lemon Squeezy and Paddle are great for accepting SaaS payments
  • Gumroad and Lemon Squeezy are great for accepting one time payments for resources/ebooks
  • The only downside is that MoRs may be a tad bit expensive in fees compared to payment gateways (5-10% in fees vs 2-6% in fees)

Via Platforms/Indirectly

  • If you run lifetime deals or deals on platforms such as AppSumo, Pitchground or some other platform – they will collect payments on your behalf and send you a lump sum amount based on their payout conditions. The payment will be made to your bank account directly.

Special Notes for Accepting Payments in India

  • You dont need a GST number if you are only doing domestic sales not exceeding INR 20L
  • If you have a GST number, you have to charge GST irrespective of your sales
  • You need a GST number along with a LUT certificate for export of services (to serve SaaS customers outside of India) but you will charge 0% GST to those customers as exports are not taxed in India
  • So if you are building a tool that will have International Customers, it is best to get a GST along with a LUT Certificate. You can use a combination of Lemon Squeezy/Stripe and Razorpay to accept payments outside and within India.

Leave a Reply