Stripe has a history of shutting down legit businesses and blocking payouts of their rightfully earned income, whilst also profiting off those frozen funds by investing it.
Stripe has a history of cutting off payments to businesses which are violating the TOS. Stripe's TOS is largely a result of rules in place by banks and credit card companies. If Stripe don't shut them off, they get shut off.
To the extent they've made errors, I'd like to see you do better. The scale is enormous, there are fraudsters coming at you left and right. It's not an easy game to play.
The number one justification for cryptocurrency in my book, even if it's less safe or convenient or even has small fees. Your business being subject to the whims of payment processors is ludicrous.
Even with this being the justification, they could just say they won't be working with the customer in the future, not literally steal their customer's already earned money.
All you're doing is moving the risk from the business to the consumer with crypto which is why it will never succeed. Consumers like all the things businesses hate about credit cards because they can get their money back if something goes wrong and when it comes to payments the customer decides who wins.
Well said. We've offered for many years to our customers to pay by CC, bank transfer or Bitcoin. Exactly 0 people wanted to pay by Bitcoin, while the other two options are at about 50/50.
I don't want to go into details here, but it is something very traditional and unexciting that all kinds of people buy. We offered Bitcoin payment just as prominent as other forms of payment, but nobody was interested.
How are you taking Bitcoin payments? Every time I'm forced to pay for something using crypto it ends up making me want to self-harm and I've been a dev for 40 years. When I have to try and talk friends and relatives through crypto payments it is insanely painful.
Just the other day I was buying an NFT and I realized I bought the currency on Ethereum instead of Polygon. Coinbase didn't differentiate. Imagine trying to explain all this shit to your grandma.
LOL. Being able to reverse transactions and freeze funds is a feature not a bug. With crypto you have no recourse when a criminal does criminal things or you make a mistake. Ransomware only started being a thing thanks to crypto, but governments could easily ban it (serious governments like US, China, Germany, that is)
Crypto is useless for anyone but criminals. If you can't use the real, state controlled financial system, then you also can't use the real, state controlled property rights system. Who cares about being able to prove you own some bits if you are not protected by the law when you buy any actual tangible goods with those bits, like a house or a car or a business?
Crypto is only useful when it's not needed (ie, you can use the state to enforce your physical property rights) and becomes useless once it's needed (you live in a corrupt or anarchist state that won't enforce your property rights over anything you can actually buy with the crypto)
Crypto is becoming a form of government blind-eye-turned corruption, for carrying out corrupt financial practices with less immediate oversight and more ways to overcomplicate the logistics. It will probably cause a financial crisis one day, like in 2008, for the exact same reason complex derivatives did.
I never take crypto jobs so my resume will stay clean when the house of cards falls down.
Instead you should advocate for payment network neutrality. Visa and MasterCard should be required by US law not to discriminate against transactions, and enforcement should move from the private sector to, well, law enforcement. Like with ACH/FedNow. That might actually get us somewhere productive.
> Stripe has a history of shutting down legit businesses and blocking payouts of their rightfully earned income, whilst also profiting off those frozen funds by investing it.
Almost every case I've seen, it's almost always because they were dabbling with NSFW, Cannabis, or another card-network-restricted category. And when you confront them about their story, they almost always respond with weasel wording: "It wasn't really NSFW, or it was only a little NSFW, or it's not my responsibility if my users use it for NSFW..."
It's also not like this is buried in the Terms of Service with ambiguous legalese. Stripe has a pretty beautifully-formatted page clearly saying what they are not OK with.
I mean, OK, but by the time it's called VAT in their universe they're already treating you as 'overseas' and your total payment processor fee is pushing 10% because "not in the US" apparently carries a 100% surcharge
Also wondering this. I was planning on making the jump to LS soon but if Stripe will be offering MoR services then I'd rather stay within Stripe's stack.
I suspect (hope) Stripe Tax will soon offer a MoR service. I imagine this acquisition is mostly for their tax expertise & perhaps internal tools that do all the hard work behind the scenes.
It’s scary how big stripe is becoming. Instead of competing just buy up other companies. Might be another company that will require regulatory intervention and break them up (same as when the govt broke up the railroads)
As someone from a country not supported by Stripe, it is annoying how frequently I find some tool that I might want to use, only to discover Stripe's the only payout option.
> Nine months after our public launch in 2021, we surpassed $1M in ARR and never looked back.
Stripe is buying a lucrative business, but more importantly it is buying the complex knowhow of running an international tax-compliant merchant of record. They can then integrate this into their product. I switched to LemonSqueezy primarily out of concern for EU-wide tax ramifications (EU strikes again). Is there a reason to choose LemonSqueezy over Stripe if you are located in the US? There hasn't been a single VAT-compliance case to my knowledge and the need for MoR is unclear.
I've never understood the notion that US based companies have it easier. They still to pay applicable tax in every country/state that their customers reside.
If anything, EU companies have it slightly easier because they can file all of their EU-based taxes using One Stop Shop.
You can do Non-Union OSS as a US company as well. I’d say the most annoying thing about the EU is their minimum transaction to start filing is very low compared to US Nexus rules.
Why don't they then? I've been trying to tell US merchants they can literally get free EU customers by registering for IOSS and the most I've gotten is a shrug.
Many of us are willing to pay for shipping and taxes up front just so their products don't get caught in the "free money for us" exploitation racket that is EU customs.
> Is there a reason to choose LemonSqueezy over Stripe if you are located in the US? There hasn't been a single VAT-compliance case to my knowledge and the need for MoR is unclear.
It's not just the EU that charges VAT (or VAT-like taxes).
Most countries (and in the US's case, subregions within) charge some form of sales tax that's a pain to manage yourself if you're not a huge operation.
Always good to comply with tax laws (if not for the obviously good moral/ethical reasons, then definitely for legal reasons!)
In addition to the overall benefits of not having non-compete agreements, California's software startup ecosystem also benefits from not having to deal with charging sales tax when selling SaaS[1][2]
If they are selling SaaS to an entity in California. Which is the same for anyone selling SaaS to an entity in California, regardless of where the seller is located. I do not see why this would give California a competitive advantage in where a business's employees are located.
US states have a minimum threshold of $100,000 and upwards so you can be compliant without having to worry about it until you start making larger revenue. Most startups never reach these generous thresholds in the first place.
As I understand it the threshold is usually $100,000 in revenue or 200 transactions (following the Wayfair decision), the latter of which is easily reached...
>Nine months after our public launch in 2021, we surpassed $1M in ARR and never looked back.
>Along the way, we received many acquisition offers and (Series A) term sheets from investors. But despite the allure of these opportunities, we knew that what we had built was truly special and needed the right partner to take it to the next level.
Wow. This is quite the smart and ballsy move. Congrats to the team. Looks like y'all knew what you were doing.
Currently using Paddle, and would love to switch to Stripe. I'm concerned about the additional hidden fees mentioned elsewhere in this thread, as well as lack of B2B invoicing features. Though Paddle's invoicing features are pretty barebones (like you can't easily send someone an estimate/pricing before a purchase, only an invoice after one.)
Totally and this is the problem with startup founders of today. Their minds are filled with liquidity and an exit event. Steve Jobs had famously said how pathetic that is. And Zuckerberg, love or hate him, turned down billion dollars.
Selling your startup is not a good plan. Make it big, change the world, and swim in money.
If you have a swimming pool worth of money, or a pond, or a canal, or a river, or maybe an ocean - you can swim in all these. Some founders maybe don't want to turn 58 trying to reach that perfect cubic m. volume of water to be able to swim. They might rather want to start swimming when they are kinda younger (30s maybe?). Who knows. And while already swimming they might want to get another pool, maybe an olympic size later and so on, instead of keep waiting for that "perfectly sized water body for them".
> change the world
Oh ffs. Really? Is that even a thought on the distant horizon of startup founders? Haha.
I found these surprising as I didn't see them mentioned on the pricing page near "Transaction fees ... 5% + 50¢" (https://www.lemonsqueezy.com/pricing).
Yes, Lemon Squeezy was not competitive with Paddle at all. They try to upsell users by offering more "nice to haves" like newsletter builders and ecommerce tools but for most SaaS founders Paddle is a much better deal.
Good to see M&A get back on track -- PC, whom I would trust much more than any living economist, must be somewhat positive about the near future? Congrats to the lemon squeezy team!
I like to root for the home team (tech entrepreneurs like my former self getting paid out for taking a risk makes me happy)
M&A activity is a positive sign for the economy. Stripe wouldn’t be buying companies if they thought the economy was about to fall off a cliff, and Stripe is full of smart people (disclosure: I am a former Stripe).
If there were no acquisitions happening, starting (another) company would be much tougher to justify to my wife and my self.
It's not a simple "acquisitions are good" or "acquisitions are bad" discussion. There is an ideal amount of M&A activity in an economy which is more than "no startup ever gets acquired" and less than "every startup is bought out by big tech". In recent years we have been closer to the first extreme, and very few startups have had exits of any kind.
A startup made for the purpose of acquisition was never a competitor. If you are willing to sell to the big player in your industry you are not competing, you are an opportunist. A startup that wants to compete will run very differently from a startup that wants to be purchased.
A big whale company that gobbles up some of the fifty startups that only have like 2% of the market total is not a competitive market at all.
>A startup made for the purpose of acquisition was never a competitor
You cannot get acquired unless you represent a percentage of market share, have IP which will lead to greater market share, and/or have employees who can expand market share for a product.
>A big whale company that gobbles up some of the fifty startups that only have like 2% of the market total is not a competitive market at all.
A big whale company performing that many M&As to little startups is essentially fueling future competitors. If I was an investor I would see that market as valuable for the unicorn breakthrough possibility or at least an eventual acquisition exit event.
> A big whale company performing that many M&As to little startups is essentially fueling future competitors.
What an absolute load. They are stamping out competition, concentrating market power, and making red oceans even redder. If you were an investor I wouldn’t give you my money to gamble with.
It does make sense if and if the following apply: (a) you have touched the brand and trust it over other offerings (b) are tech-literate but semi-technical or non-technical or simply don’t want to do anything more than a couple of clicks implementation (c) you are early enough in your journey that sales and revenue matter more than cost of revenue (d) any of the above originally but you solved those problems and now intertia/tech debt somewhere more urgent.
That’s a huge number of aspirational digital product vendors.
5 + 50 vs stripe’s lower direct take (for me 1.5 + 20). I just did a quick calculation on a really basic/modest digital product business. Sell something at €25 and sell €50k - 2000 customers. That’s going to be €7k with LSqz over a year, and with Stripe it’s going to be €1.15k
The difference is €16 a day.
The business makes you €137 a day.
If you spend a day each month sorting out admin and taxes because of stripe direct plus a few days paying a developer (you’re non-technical remember!) then that could easily be a cost of €5500 a year. Total cost including card processing is €6150 and it’s only €850 less than LemonSqueezy.
Why would you move?
And in particular why would you move sooner than 3 years if you are predicting similar revenue each year.
this! im selling a subscription with this pricing model and it’s quite painful to swallow. having that said i really enjoy using lemon as my payment processor
It's not specific to stripe, it's acquisitions in general. It's consolidation. It's a move towards monopoly. It's a step away from a competitive market. Even the most hardened capitalist cannot claim with a straight face that this is a good thing.
Merchant of Record is a cool feature to have-- Stripe Tax works well but the pricing structure is horrible. Paying a flat fee for dedicated tax handling would be considerably better!
Now if only we could somehow get MoR for marketplaces...
I would love to use only Stripe, but MoR provides for me more than calculating how much tax I need to report per country. It takes a couple of days per month to prepare documents for my country's fiscal authority to report VAT and other taxes from customers inside and outside the EU. This is because in case of MoR I only have a couple of invoices per month but from a single company (the MoR) that is from one country. So there is little reporting done.
MoR for marketplaces basically means merchant of record for Stripe Connect and you, as the platform, take the tax liability via the MoR functionality automatically for your sellers (connected accounts), right?
Mind sending me an email at kevinpeters at stripe dot com? Would love to hear about the use case.
MoR has become a definitive advantage at least here in the UK - to the point where I'm not sure any other arrangement currently makes sense for the kind of tech startups we often discuss here on HN.
For one thing we have the Making Tax Digital VAT reporting rules as soon as we cross our domestic VAT registration threshold (which is lower than £100k of annualised revenue within the scope of UK VAT so something a high growth startup is going to want to cross pretty quickly). To comply with those rules we need a 100% automated system for transferring VAT records from any services we use to collect payments into our MTD-compliant VAT reporting software. I'm still waiting for anyone to show me an easy and cost-effective way to do that properly with any non-MoR payment service provider. AFAIK none of the PSPs I've ever used has any documentation on how to do this, nor do any of the VAT reporting systems I've used since MTD came in. I'm not sure all of the approved reporting systems have the kind of API available that you'd need to implement this kind of data transfer even with significant programming/integration effort.
And that's only the easy case of domestic collection and reporting. Internationally there are several services that will accurately calculate the required tax for you based on whatever rules apply wherever your customer is and whatever they are buying (you hope) but again that's only the relatively easy part. You also need to handle all the registration, tax reporting, possibly specific customer invoicing requirements, and tax remittance obligations everywhere they might apply. Obviously that's completely impractical for any SME that isn't a tax specialist because no business at that scale has lawyers and accountants in every relevant part of the world to advise them and manage those relationships with the local tax authorities. In sensible places there are again thresholds for local sales where you don't have to do anything about tax until you're also doing a significant amount of business there that isn't going to happen overnight but who wants to try to work out everywhere in the world that isn't sensible like that?
Merchants of record usually charge pretty hefty fees compared to vanilla payment service providers but they're essentially a combination of automating a lot of pain and an insurance policy. Apparently the global tax system is now sufficiently opaque and risky that the market estimates the compliance overhead to be around 6-7% of all relevant trade worldwide.
There's so little competition in the payments space, and this acquisition means that there's even less. I know LemonSqueezy already relied on Stripe, but before the acquisition, there was still a potential path for them to break that dependency.
I tried out LemonSqueezy a bit last year and had a mediocre experience, but it was at least nice to see a payment provider focused on simple, straightforward use cases. Stripe and Paddle have so many different customers and flows that it's hard to use them for simple, standard things. I was hoping to see LemonSqueezy fill that niche, but now Stripe is folding LemonSqueezy into the rest of their complex systems.
I'd be a little suprised. No one should take Guillermo's claims on things like performance as an unbiased fact. They do make some very impressive things at Vercel, but G is a salesman first and foremost.
I don't mean to say he isn't a skilled developer at all, I phrased my comment poorly if it read that way.
He played a big role in early NextJS development and did great work. My comment was meant as a remark on his public persona, he is very willing to over promise and embelish on how something actually works.
Valuing a VC backed company like Vercel really is a bit of a crap shoot. Even major, publicly held companies aren't valued based on things like annual revenue, profits, or anything that shows up on a P&L.
Vercel is worth exactly what the last person paid for it. There's no real way to come up with another valuation until there's another liquidity event.
Another way to look at it, the last round of investors are valuing in-predictions for future value and have access to potentially private information and financials. From the outside it's not really possible to come up with a valuation to compare to there's, we'd be working with a totally different set of data.
I would actually be less worried. The support at paddle is much better than what I've seen from both stripe and LS. LS had decent support a year ago, but has really dropped off. Moving to stripe makes me excited about their product, but more worried about the support.
> Rest assured, we’ll continue delivering the same fantastic product and reliability you’ve come to trust. We’ll be in touch as we work through this process with any updates as they come along. We’re excited about finding the best ways to combine Lemon Squeezy and Stripe.
That sounds somewhat promising but not entirely committed.
It's a good PR statement, but founders who get acquired have zero authority to make such guarantees. You have a boss now, and they can change their mind whenever they want. They will do what's best for their business and customers, not yours.
Same old pattern, M&A’s are normally destructive of the acquired firm’s value, but remove risk from the acquirer that something new and good is active in the market…
I'm hoping this means Stripe Tax will finally get the capability of actually filing the appropriate paperwork & taxes in the geographies it's required.
I am working on Stripe Tax, but do not know Lemon Squeezy so well yet. But something Lemon Squeezy does different are the following: the KYC works different and is more restrictive. One of the differences to Stripe considering we still give you as a merchant the responsibility to be tax-compliant after all (you need to add tax registrations into stripe explicitly). Also think about maybe fraudulent cases, LS must be much more restrictive otherwise their payment provider is blocking them.
One thing which is weird about tax is physical presences in some cases. In some countries, you actually might need a representative to file your taxes. Plus you need to learn how to register in those countries and how to file taxes.
There are probably more things that you need to look up, but that’s what I remember.
LemonSqueezy itself or Paddle. Both are merchants of records. At least paddle (maybe LS too) allows reverse invoice which is important for some home grown startup saas as they simplify taxes to single customer (paddle), one invoice and one tax jurisdiction usually.
And about Stripes internal inability to deliver on the actual product. Lemon Squeezy is laser focussed - Stripe is not.
Smart founders will be looking carefully and observing how Stripe fails to retain clientele and think about creating something that fits the Lemon Squeezy gap in the market.
These ISV's are really squeezing the juice out of their customers with those rates aren't they? Even Stripe's rates are horrible, but 500 basis points and 50c/tx is really something... but to be fair ISV's are by definition vertical integrators and have more feature offerings.
I find the whole aspect of having MoR a fear mongering tactic to get you to pay extra transaction fees
99% of SaaS won't reach the MRR needed to justify MoR
Of the 1% those breaking through 7 digit MRR can simply hire in house to manage tax remittance and not confuse their customers with invoices labelled with MoR's branding
All in all this seems like the fear campaign has worked beautifully for Paddle and Lemonsqueezy but some of us saw right through it and never really felt the need to pay 5%~11% (!!)
Maybe this works well for anyone outside EU or maybe it is country specific, but in my country I have to report the invoices and if they are from inside EU or outside EU.
In case of invoices from EU as I am living in an EU country and the business is registered in an EU country I have to take into account collecting or not VAT and what percentage of VAT needs to be collected. There is OSS VAT and some other facilities, but all this takes days per month from my time to handle. And I prefer to spend those days coding something.
Moreso if they are inside EU there is a mechanism to cross-check if the other side reported the invoice (either sent or received) so to be compliant if you sell to multiple countries you have to report invoices.
The same goes for selling to US specially in case of ebooks - there are treaties in place that define royalty percent when the final customer is an US citizen.
So maybe if you are small and have the business registered in EU, the fiscal authorities will not come for you, but if they come the penalty is big enough to get me out of business. Thus I use MoR where for the income I get one or two invoices per month from LS and that is the only thing to report. Better as they are registered in US the reporting is simpler :)
The problem with the ostrich argument is always that it works until it doesn't. Governments have talked about more international cooperation on tax reporting and collection forever. One of these days they're going to start including serious measures for these things as a routine part of trade deals or other big agreements. They have increasingly easy targets as so many online sales now go through a relatively small number of payment systems like Paypal and Stripe that are distributed enough that they could effectively be compelled to cooperate with any new reporting obligations. Then it's going to be a case of small businesses selling internationally commit an average of N offences per day somewhere in the world because it's impractical not to so if you're the unlucky one they decide to make an example out of then that's going to really spoil your day.
As someone who wants to do the right thing but would also like their business to actually do something useful and not spend 95% of its time doing admin work this is the kind of thing that stops me sleeping well at night. It's also why I've become something of an advocate of MoRs and a critic of basically all other traditional payment service providers. I fear the reckoning is a matter of when and not if and so passing the buck to an organisation that actually has a fighting chance of complying may be the only reasonable survival strategy. Of course then I lie awake worrying about the lack of competition in the MoR space - not helped by today's announcement in all honesty - and the dangers of being so heavily integrated with a specific third party service that can't easily be replaced and yet is critical to the sales process. What a time to be running a business in a world where this kind of international sales should be thriving.
Now I need to find a new payment provider. Stripe has burned too many people with too little remorse to ever risk something as critical as payments on them again.
Sad to see lemon squeezy acquired by stripe.
To the extent they've made errors, I'd like to see you do better. The scale is enormous, there are fraudsters coming at you left and right. It's not an easy game to play.
Even with this being the justification, they could just say they won't be working with the customer in the future, not literally steal their customer's already earned money.
Just the other day I was buying an NFT and I realized I bought the currency on Ethereum instead of Polygon. Coinbase didn't differentiate. Imagine trying to explain all this shit to your grandma.
Crypto is useless for anyone but criminals. If you can't use the real, state controlled financial system, then you also can't use the real, state controlled property rights system. Who cares about being able to prove you own some bits if you are not protected by the law when you buy any actual tangible goods with those bits, like a house or a car or a business?
Crypto is only useful when it's not needed (ie, you can use the state to enforce your physical property rights) and becomes useless once it's needed (you live in a corrupt or anarchist state that won't enforce your property rights over anything you can actually buy with the crypto)
Crypto is becoming a form of government blind-eye-turned corruption, for carrying out corrupt financial practices with less immediate oversight and more ways to overcomplicate the logistics. It will probably cause a financial crisis one day, like in 2008, for the exact same reason complex derivatives did.
I never take crypto jobs so my resume will stay clean when the house of cards falls down.
In some cases they are legally obliged to hold onto funds. The don't get to keep them.
You are putting yourself at risk of a lawsuit.
I don’t care for so much consolidation though.
Almost every case I've seen, it's almost always because they were dabbling with NSFW, Cannabis, or another card-network-restricted category. And when you confront them about their story, they almost always respond with weasel wording: "It wasn't really NSFW, or it was only a little NSFW, or it's not my responsibility if my users use it for NSFW..."
It's also not like this is buried in the Terms of Service with ambiguous legalese. Stripe has a pretty beautifully-formatted page clearly saying what they are not OK with.
https://stripe.com/legal/restricted-businesses
I suspect (hope) Stripe Tax will soon offer a MoR service. I imagine this acquisition is mostly for their tax expertise & perhaps internal tools that do all the hard work behind the scenes.
Empty words.
Zuck has shown the way.
Stripe is buying a lucrative business, but more importantly it is buying the complex knowhow of running an international tax-compliant merchant of record. They can then integrate this into their product. I switched to LemonSqueezy primarily out of concern for EU-wide tax ramifications (EU strikes again). Is there a reason to choose LemonSqueezy over Stripe if you are located in the US? There hasn't been a single VAT-compliance case to my knowledge and the need for MoR is unclear.
If anything, EU companies have it slightly easier because they can file all of their EU-based taxes using One Stop Shop.
Many of us are willing to pay for shipping and taxes up front just so their products don't get caught in the "free money for us" exploitation racket that is EU customs.
It's not just the EU that charges VAT (or VAT-like taxes).
Most countries (and in the US's case, subregions within) charge some form of sales tax that's a pain to manage yourself if you're not a huge operation.
Always good to comply with tax laws (if not for the obviously good moral/ethical reasons, then definitely for legal reasons!)
[1] https://www.taxjar.com/blog/saas-california-sales-tax [2] https://www.cdtfa.ca.gov/lawguides/vol1/sutr/1502.html
>Along the way, we received many acquisition offers and (Series A) term sheets from investors. But despite the allure of these opportunities, we knew that what we had built was truly special and needed the right partner to take it to the next level.
Wow. This is quite the smart and ballsy move. Congrats to the team. Looks like y'all knew what you were doing.
From branding to the all UVP, it was a fast exit because it was meant to be.
Still a massive achievement
Selling your startup is not a good plan. Make it big, change the world, and swim in money.
If you have a swimming pool worth of money, or a pond, or a canal, or a river, or maybe an ocean - you can swim in all these. Some founders maybe don't want to turn 58 trying to reach that perfect cubic m. volume of water to be able to swim. They might rather want to start swimming when they are kinda younger (30s maybe?). Who knows. And while already swimming they might want to get another pool, maybe an olympic size later and so on, instead of keep waiting for that "perfectly sized water body for them".
> change the world
Oh ffs. Really? Is that even a thought on the distant horizon of startup founders? Haha.
they are looking at quick exits especially in this high interest rate environments and so are the backers
Very few entrepreneurs are looking to create companies that will provide its workers with forever jobs
It's sad but those few that are grinding it out and creating jobs, helping economies in those countries run proper are the unsung heroes.
Time will tell where this American greed will take Americans but so far, its not looking good.
I found these surprising as I didn't see them mentioned on the pricing page near "Transaction fees ... 5% + 50¢" (https://www.lemonsqueezy.com/pricing).
I like to root for the home team (tech entrepreneurs like my former self getting paid out for taking a risk makes me happy)
M&A activity is a positive sign for the economy. Stripe wouldn’t be buying companies if they thought the economy was about to fall off a cliff, and Stripe is full of smart people (disclosure: I am a former Stripe).
If there were no acquisitions happening, starting (another) company would be much tougher to justify to my wife and my self.
A big whale company that gobbles up some of the fifty startups that only have like 2% of the market total is not a competitive market at all.
You cannot get acquired unless you represent a percentage of market share, have IP which will lead to greater market share, and/or have employees who can expand market share for a product.
>A big whale company that gobbles up some of the fifty startups that only have like 2% of the market total is not a competitive market at all.
A big whale company performing that many M&As to little startups is essentially fueling future competitors. If I was an investor I would see that market as valuable for the unicorn breakthrough possibility or at least an eventual acquisition exit event.
What an absolute load. They are stamping out competition, concentrating market power, and making red oceans even redder. If you were an investor I wouldn’t give you my money to gamble with.
Reduce the price to Stripe pricing + 1%, and this will be the default for everyone!
That’s a huge number of aspirational digital product vendors.
5 + 50 vs stripe’s lower direct take (for me 1.5 + 20). I just did a quick calculation on a really basic/modest digital product business. Sell something at €25 and sell €50k - 2000 customers. That’s going to be €7k with LSqz over a year, and with Stripe it’s going to be €1.15k
The difference is €16 a day.
The business makes you €137 a day.
If you spend a day each month sorting out admin and taxes because of stripe direct plus a few days paying a developer (you’re non-technical remember!) then that could easily be a cost of €5500 a year. Total cost including card processing is €6150 and it’s only €850 less than LemonSqueezy.
Why would you move?
And in particular why would you move sooner than 3 years if you are predicting similar revenue each year.
Now if only we could somehow get MoR for marketplaces...
I would love to use only Stripe, but MoR provides for me more than calculating how much tax I need to report per country. It takes a couple of days per month to prepare documents for my country's fiscal authority to report VAT and other taxes from customers inside and outside the EU. This is because in case of MoR I only have a couple of invoices per month but from a single company (the MoR) that is from one country. So there is little reporting done.
MoR for marketplaces basically means merchant of record for Stripe Connect and you, as the platform, take the tax liability via the MoR functionality automatically for your sellers (connected accounts), right?
Mind sending me an email at kevinpeters at stripe dot com? Would love to hear about the use case.
For one thing we have the Making Tax Digital VAT reporting rules as soon as we cross our domestic VAT registration threshold (which is lower than £100k of annualised revenue within the scope of UK VAT so something a high growth startup is going to want to cross pretty quickly). To comply with those rules we need a 100% automated system for transferring VAT records from any services we use to collect payments into our MTD-compliant VAT reporting software. I'm still waiting for anyone to show me an easy and cost-effective way to do that properly with any non-MoR payment service provider. AFAIK none of the PSPs I've ever used has any documentation on how to do this, nor do any of the VAT reporting systems I've used since MTD came in. I'm not sure all of the approved reporting systems have the kind of API available that you'd need to implement this kind of data transfer even with significant programming/integration effort.
And that's only the easy case of domestic collection and reporting. Internationally there are several services that will accurately calculate the required tax for you based on whatever rules apply wherever your customer is and whatever they are buying (you hope) but again that's only the relatively easy part. You also need to handle all the registration, tax reporting, possibly specific customer invoicing requirements, and tax remittance obligations everywhere they might apply. Obviously that's completely impractical for any SME that isn't a tax specialist because no business at that scale has lawyers and accountants in every relevant part of the world to advise them and manage those relationships with the local tax authorities. In sensible places there are again thresholds for local sales where you don't have to do anything about tax until you're also doing a significant amount of business there that isn't going to happen overnight but who wants to try to work out everywhere in the world that isn't sensible like that?
Merchants of record usually charge pretty hefty fees compared to vanilla payment service providers but they're essentially a combination of automating a lot of pain and an insurance policy. Apparently the global tax system is now sufficiently opaque and risky that the market estimates the compliance overhead to be around 6-7% of all relevant trade worldwide.
There's so little competition in the payments space, and this acquisition means that there's even less. I know LemonSqueezy already relied on Stripe, but before the acquisition, there was still a potential path for them to break that dependency.
I tried out LemonSqueezy a bit last year and had a mediocre experience, but it was at least nice to see a payment provider focused on simple, straightforward use cases. Stripe and Paddle have so many different customers and flows that it's hard to use them for simple, standard things. I was hoping to see LemonSqueezy fill that niche, but now Stripe is folding LemonSqueezy into the rest of their complex systems.
And probably just a great compliant to their TaxJar acquisition from 2021 (+ entry into Paddles space).
https://stripe.com/newsroom/news/taxjar
He also happens to have found ways to profit from that.
He played a big role in early NextJS development and did great work. My comment was meant as a remark on his public persona, he is very willing to over promise and embelish on how something actually works.
How much are they worth now? I can only imagine their valuation has dropped. Does anyone use Vercel beyond free / low plans?
Vercel is worth exactly what the last person paid for it. There's no real way to come up with another valuation until there's another liquidity event.
Another way to look at it, the last round of investors are valuing in-predictions for future value and have access to potentially private information and financials. From the outside it's not really possible to come up with a valuation to compare to there's, we'd be working with a totally different set of data.
When did this happen?
That sounds somewhat promising but not entirely committed.
I hope not, this time, but if I were a betting man…
I don't sticking with a product you've been working on for only 3 years is a big priority
What’s the barrier to entry for starting up a similar business?
One thing which is weird about tax is physical presences in some cases. In some countries, you actually might need a representative to file your taxes. Plus you need to learn how to register in those countries and how to file taxes.
There are probably more things that you need to look up, but that’s what I remember.
What's the barrier to entry for starting up a similar business?
The merchant of record model.
Smart founders will be looking carefully and observing how Stripe fails to retain clientele and think about creating something that fits the Lemon Squeezy gap in the market.
99% of SaaS won't reach the MRR needed to justify MoR
Of the 1% those breaking through 7 digit MRR can simply hire in house to manage tax remittance and not confuse their customers with invoices labelled with MoR's branding
All in all this seems like the fear campaign has worked beautifully for Paddle and Lemonsqueezy but some of us saw right through it and never really felt the need to pay 5%~11% (!!)
Looks like Stripe will shut down MoRs one by one
In case of invoices from EU as I am living in an EU country and the business is registered in an EU country I have to take into account collecting or not VAT and what percentage of VAT needs to be collected. There is OSS VAT and some other facilities, but all this takes days per month from my time to handle. And I prefer to spend those days coding something.
Moreso if they are inside EU there is a mechanism to cross-check if the other side reported the invoice (either sent or received) so to be compliant if you sell to multiple countries you have to report invoices.
The same goes for selling to US specially in case of ebooks - there are treaties in place that define royalty percent when the final customer is an US citizen.
So maybe if you are small and have the business registered in EU, the fiscal authorities will not come for you, but if they come the penalty is big enough to get me out of business. Thus I use MoR where for the income I get one or two invoices per month from LS and that is the only thing to report. Better as they are registered in US the reporting is simpler :)
Didn’t care about my supposed tax liability in Saudi Arabia. I think I owe those guys $7. Come and get it.
Or in Serbia. Or the EU, more broadly. Or in the province of Saskatchewan. All of which I theoretically owe sales tax.
I’m registered for GST in Australia. I live in Australia. I will slavishly follow Australian law and submit my GST on time.
The rest of it? For a one-person business? Utterly unfeasible.
As someone who wants to do the right thing but would also like their business to actually do something useful and not spend 95% of its time doing admin work this is the kind of thing that stops me sleeping well at night. It's also why I've become something of an advocate of MoRs and a critic of basically all other traditional payment service providers. I fear the reckoning is a matter of when and not if and so passing the buck to an organisation that actually has a fighting chance of complying may be the only reasonable survival strategy. Of course then I lie awake worrying about the lack of competition in the MoR space - not helped by today's announcement in all honesty - and the dangers of being so heavily integrated with a specific third party service that can't easily be replaced and yet is critical to the sales process. What a time to be running a business in a world where this kind of international sales should be thriving.
> Lemon Squeezy has been processing payments on Stripe since our inception.
They're not your competition if you are already their most important supplier.