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.
Two identical business models (software) should either both be supported or both be rejected. They are pretty clearly playing favourites with their VC funded friends.
Stripe is not at any risk of having services cut by payment processors. They can leverage an excellent case against them if so. It's time they and the others get together and dunk on Mastercard before they decide to eat the whole pie.
Have worked in payments for over 25 years. Yes it's complex. But with the charge rates and volume they absolutely can do better. And no my business not violate the ToS. It was considered high risk due to high value of transactions despite exceptional contracts, client signoff forms etc.
Then time for them to group up and change the game. Not going to make excuses for corps. It's their responsibility to push, not mine to apologize for them.
The game is working out well for them. Why would they want to change it? What's next? Lebron should push for rule changes that make it easier for short guys?
The difficulty of their situation (ie threading the needle on providing value while toeing the line from a reg and stakeholder standpoint) is good for them. They don't want it to change. This is 101 stuff in business.
Nope, I'm not a fraudster, or a porn guy or drug guy or whatever other things currently banned. I'm quite happy with the status quo here. As are most of society.
Deflecting.
You live in a society of powers. You're not an individual free of them and their consequences just because they didn't target you this time.
If you were truly comfortable you would have good reasons to support their decision other than "it wasn't me this time!".
Most of society is not happy with the status quo, why do you think they're so unhappy?
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.
> All you're doing is moving the risk from the business to the consumer
No, most of the merchant's risk with credit cards is from the design of credit cards. You have to give your payment info to every merchant but if any one of them loses it then anyone who gets it can use it at any other merchant. Then some merchant you've never heard of has bad security, criminals get cards from there and use them to buy things from honest merchants and the honest merchants get chargebacks for having done nothing wrong.
Cryptocurrency does not have this problem because you don't have to give your private keys to everyone you pay and even if you fail to protect them yourself (something you, rather than someone else, is in control of), as long as you're not trying to use cryptocurrency as a store of value instead of a payment system, your losses are limited to the e.g. $20 you had in your wallet. Customers have no problem with systems that work like this, like cash.
Chargebacks are only an issue if the customer expects the merchant to be dishonest and the value of the purchase is large. If you pay $3 for something and get ripped off, the ability to do a chargeback isn't that relevant to your life and you're just not going to patronize them anymore.
The reason most customers don't use cryptocurrency is that the government made it high friction for ordinary people to buy it. "Why is this website I don't know asking for my social security number? I'm just trying to make a small purchase."
Presumably at the behest of the existing payments industry which wants to keep their vig.
Starting like that, writing that whole paragraph and you completely misread what I said. "No, merchants have risk with credit cards". That is literally what I said in the post you are replying too. Sloppy and rude.
>Cryptocurrency does not have this problem because you don't have to give your private keys to everyone you pay and even if you fail to protect them yourself
Credit card fraud isn't a problem for consumers because of chargebacks and insurance. If a criminal steals my card and racks up charges I am almost always getting my money back. All the risk is again on the merchants. Consumers like that balance. Trying to convince them to take on more risk just to benefit the merchants is not going to happen ever.
>Chargebacks are only an issue if the customer expects the merchant to be dishonest and the value of the purchase is large. If you pay $3 for something and get ripped off, the ability to do a chargeback isn't that relevant to your life and you're just not going to patronize them anymore.
This is also completely wrong. People do chargebacks all the time because of a poor outcome that has nothing to do with being dishonest. There are also cases like bankruptcy where a chargeback will get you your money back but if you paid in crypto you'd just be another creditor.
The reason most customers don't use cryptocurrencies is because they are stupid and pointless for payments. They make the process worse for consumers unless you're needing to hide your identity. Crypto is like mailing companies envelopes of cash. There is a reason no sane consumer does that anymore.
> "No, merchants have risk with credit cards". That is literally what I said in the post you are replying too. Sloppy and rude.
What you said was that it was moving the risk from the merchant to the consumer, but it isn't moving that risk, it's removing it because the consumer doesn't have to give every merchant something that enables that (very common) form of fraud to occur to begin with.
> Credit card fraud isn't a problem for consumers because of chargebacks and insurance.
It is though, because it raises costs, and therefore prices. This is indirect, but the merchant can make it direct by offering a better price for using a payment method that lowers their costs.
This is one of the reasons the credit card companies try to prohibit that price lowering to the extent that they can -- because they know that otherwise it would happen and be effective in reducing usage of their archaic fraud-prone system with high processing overhead.
> People do chargebacks all the time because of a poor outcome that has nothing to do with being dishonest.
This is called "chargeback fraud" and is dishonesty on the part of the customer. If you buy something which is accurately described and then don't like it, issuing a chargeback should be prevented.
> There are also cases like bankruptcy where a chargeback will get you your money back but if you paid in crypto you'd just be another creditor.
Which is another form of fraud by the customer, because in that circumstance you are a creditor. It's like going back to the store and taking the money you paid out of the till. You're not taking it back from the store, you're stealing it from their other creditors who are entitled to their proportionate share.
"Credit cards are good because they enable customers to commit fraud" seems more like an argument to make them go away.
> The reason most customers don't use cryptocurrencies is because they are stupid and pointless for payments.
They're a payment system you can't practically be denied the use of and isn't operated by an industry dedicated to capturing the government in order to keep you under surveillance and covertly extract a vig from everything you buy.
> They make the process worse for consumers unless you're needing to hide your identity.
What if you do want to hide your identity? It's certainly not a feature to the customer that credit card companies create a list of everything you buy and who you buy it from in the hands of a third party. Why should the customer want there be a third party keeping track of who buys politically sensitive literature or contraceptives or anything that reveals their realtime location?
> Crypto is like mailing companies envelopes of cash.
It's like paying for things in cash generally, which lots of people still do in various circumstances.
People don't typically mail cash because stamps are too expensive to use that for small purchases, there is a cap on claims if you use it for large purchases and the Post Office loses it, and mail is slow.
And even then, people will use it to pay for e.g. Mullvad.
>it's removing it because the consumer doesn't have to give every merchant something that enables that (very common) form of fraud to occur to begin with.
It doesn't remove anything. The consumer is accepting the risk that they pay for something and don't receive it. You are just shifting the risk it is still there.
>This is called "chargeback fraud" and is dishonesty on the part of the customer.
No it isn't. Chargebacks aren't only for fraud or dishonesty on the part of the retailer they are for any situation when you don't believe you received what you paid for.
>Which is another form of fraud by the customer, because in that circumstance you are a creditor.
No because again the bankrupt company hasn't provided the service they took money for. Taking back the money isn't fraud.
>They're a payment system you can't be denied the use of and isn't operated by an industry dedicated to capturing the government in order to covertly extract a vig from everything you buy.
So you can be denied the use of most crypto in practical terms by having you address blacklisted in which case no mainstream exchange will accept your coins.
>What if you do want to hide your identity?
Then use crypto, but that isn't a concern for very many legitimate transactions.
>it's like paying for things in cash generally
It's like paying in cash remotely, hence mailing money. Paying in cash in person is fine because you are right there to collect your goods or confront the thief standing in front of you.
You believe the reason people don't pay for things by mailing cash is because of the cost of postage? Besides being ridiculous maybe check the cost of a bitcoin transaction during modest volume events.
> It doesn't remove anything. The consumer is accepting the risk that they pay for something and don't receive it. You are just shifting the risk it is still there.
The risk the merchant is trying to avoid is actually removed, not shifted to anyone. The risk that the customer pays for something and doesn't receive it is irrelevant for many transactions, because the seller is trustworthy and allows easy returns, so the risk from them isn't any higher than the risk of the credit card company not crediting your payment or sticking you with a surprise fee.
It also isn't inherent to cryptocurrency. There is no reason you can't use escrow if you feel the need to. But you could avoid the cost of that escrow, implicitly built into credit card networks and non-optional there, when you don't feel you need it.
> Chargebacks aren't only for fraud or dishonesty on the part of the retailer they are for any situation when you don't believe you received what you paid for.
> No because again the bankrupt company hasn't provided the service they took money for. Taking back the money isn't fraud.
Taking back money from a company in bankruptcy is typically illegal (and unethical) because their other creditors also have a claim to the money, so you're really taking it from them rather than the company who owes it to you. This is why bankruptcy courts exist; to fairly allocate the bankrupt entity's assets. You're not allowed to skip the line.
> So you can be denied the use of most crypto in practical terms by having you address blacklisted in which case no mainstream exchange will accept your coins.
Anybody can trivially get a new address and transfer their coins to it without the use of an exchange. Blacklisting every address that has received coins from a blacklisted address doesn't work because you don't need someone's permission to send them coins, so it would grant anyone with a blacklisted address the power to blacklist anyone else. Also, a blockchain is global and countries that don't respect the blacklist would cause the number of affected addresses to constitute the entire network within a short period of time.
> Then use crypto, but that isn't a concern for very many legitimate transactions.
Isn't it? Why would I want the credit card companies to even know if I'm buying a toothbrush? Pervasive Monitoring Is an Attack:
> It's like paying in cash remotely, hence mailing money.
That's assuming you're using it remotely. If it wasn't made purposely inconvenient then you could use it to buy coffee or gas.
> Paying in cash in person is fine because you are right there to collect your goods or confront the thief standing in front of you.
People are perfectly willing to pay cash to someone who is bigger than them, or armed, so that can't really be it. Also, confronting them like a vigilante is hardly necessary when you know who they are and they're subject to legal process, which is the same over the internet.
And again this only seems to apply to someone you expect to rob you. Microsoft accepts cryptocurrency. You may not trust them at all, but if you pay them with it for a Windows license, what are you afraid will happen? Anything that couldn't also happen three months later after the chargeback window is closed?
> You believe the reason people don't pay for things by mailing cash is because of the cost of postage? Besides being ridiculous maybe check the cost of a bitcoin transaction during modest volume events.
If you're making a $2 transaction, spending $0.73 on postage and then waiting several days to be credited is ridiculous, not to mention most merchants don't accept it because it requires manual processing and presents an insider theft risk.
Bitcoin has high transaction costs because it's the oldest (and some of the ingroup likes it that way). There are several other cryptocurrencies where the transaction costs are trivial, it's not inherent to the technology.
> If you pay $3 for something and get ripped off, the ability to do a chargeback isn't that relevant to your life and you're just not going to patronize them anymore.
That's true. How about if you're paying $3000? Would you like to pay with Bitcoin or a credit card?
If I'm getting a percentage discount for using Bitcoin so the merchant can avoid the credit card fees and I trust the merchant (or the applicable legal system)? The first one.
Notice also that the argument I'm making isn't "you should never use a credit card", it's that cryptocurrency is sometimes better, and it wouldn't hurt if more places accepted it.
What people? Most ordinary people don't even contemplate cryptocurrency as something they'd use for ordinary transactions because the law inhibits anyone from making a seamless experience to use it that way and then people have no experience with that usage.
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.
You are probably unaware of this, but most foreign countries also have governments that enforce laws. It's not just an American thing, believe it or not.
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.
Terrible idea on what basis? Why would it be bad to require all lawful transactions to be processed by an infrastructure provider?
Private toll roads don't get to discriminate against traffic. Internet providers don't get to discriminate against traffic. Why should payment network providers? Once you're big enough and important enough, you're quasi-state.
On the basis of allowing the people who built the companies to deal with customers they want to deal with, rather than be forced to deal with every type of scumbag on earth.
Toll roads change price based on type of vehicle and don't allow all types of vehicles. Discrimination.
In most jurisdictions internet providers absolutely discriminate on traffic to help resolve congestion, they are allowed to discriminate for VOIP under various circumstances. Discrimination.
Visa and Mastercard don't want a bunch of charge backs, some services are more prone to fraud than others, and they flat out don't want their brand associated with various things. Discrimination.
With few exceptions (race, gender etc etc), discrimination is a net good for the world. People should be allowed to decide who they want to do business with, socialize with etc.
Current-generation blockchain networks also don’t seek to do what “traditional finance” does. The usual list of things that crypto enthusiasts point to tends to be mostly comprised of things that consumers actually want. The entire premise is different. Apples and oranges.
For exactly what? Show the lowest cost provider in "traditional finance" and the cost using some blockchain for an end to end transaction that someone actually wants to do. What you are going to find is that the underlying cost structure for a few updates to a few relational dbs is about zero. The fees paid for some transactions having are a result of using the most convenient method possible. With a little bit of elbow grease you will find very cheap providers of everything in traditional finance, they'll just be a little more annoying to use.
ACH costs zero and some retailers accept it and more and more now with FedNow.
International remittance - atlantic money does $3 or something flat. By the time you get your cash into a crypto exchange and out, you are hosed for more than $3. If you can be bothered to open an account with someone like Interactive Brokers (yes, a traditional online stock brokerage) you can do it for about zero - you get wholesale FX prices and you can deposit/withdraw money from various accounts as long as you have all the paper work in place - annoying, but doable.
Again, a couple entries into relational databases, which is the true underlying cost structure of "traditional finance" is really hard to beat.
Then, go ahead and explain, in some detail end to end, with costs, how to do the things you brought up. You aren't going to beat the underlying cost structure.
> 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.
As someone that isn’t working in payment processing, it’s no surprise that you don’t get all of it.
Every single thing about these lists always reeks of ‘this has been put together reactively, over time, based on experience’. But it’s so cool and trendy and complain about this stuff on HN and similar, everyone just elects to forego critical thinking for a little bit.
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.
Stripe is a payment processor which basically means they process the payments for you, so you do have to figure out the tax part yourself (or use their tax product, but you're still the one responsible for it.)
Lemon Squeezy is a merchant of record which means _they_ act as the merchant and sell the product to your customer. So they'll collect VAT and make sure it lands in the pockets of the right country etc. and will pay you only the remainder (minus their cut).
Since Lemon Squeezy uses Stripe under the hood as their payment processor you had to basically pay a cut to two companies if you used Lemon Squeezy but in exchange you literally have to worry about nothing. You just get a nice B2B reverse invoice and don't have to break your head around world wide (and especially EU) tax laws.
I really hope Stripe will double down on the whole MoR thing, it makes processing payments online so much nicer and less annoying.
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.
In my specific case Bosnia & Herzegovina, but we're far from only ones. They list 46 countries, though I'd describe it more as EU + 19 others: https://stripe.com/global
PayPal, for all its faults, is still a far more universal option, but that means very little if people keep making Stripe-only tools. It has become a habit of mine to immediately look for the FAQ to see if PayPal is supported.
Not the OP, but Stripe disabled verification and payments for new accounts in India. The only way to receive international payments is through an MoR like Lemon Squeezy or Paddle. PayPal should work too but my experience with it is limited.
> 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...
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
>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.
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.
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'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.
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.
Sure--if you're looking to do that, you're probably not taking VC and almost definitely not using YC.
VC does then choke out nascent companies in the "mid-sized, actually employs people" space if they think there's the potential for a quick buck, by driving it to zero, but the founders trying to do as you describe aren't anywhere near Y Combinator in the first place.
I don't know why you're saying midsized companies where what I am saying is that you can become the largest companies on this planet by not selling out.
When it comes to becoming the largest company on the planet, like the Highlander, "there can only be one", and those that fail wind up with their heads chopped off, not thriving in a smaller niche.
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.
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.
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...
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.
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.
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…
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.)
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 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.
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.
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.
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% (!!)
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.
often problems that impact a small segment is blown out of proportion and this is a classic marketing strategy. throw in anonymous social media handles and boom you created the illusion a need for a problem you dont have or likely have
but the reality is if you dont have 1M ARR from EU there really isn't enough on the table to matter. So you owe 1k in Hungary or UAE, they are not getting INTERPOL to bust down your door especially if you dont live in EU or have legal entity in EU.
It's amazing how rampant crowd thinking is among software engineers and its exploited constantly by a gaslighting crowd who show up to spread the fears until it becomes just accepted as a real risk.
I don't consider failing to meet legal and tax obligations to be merely a "problem that impacts a small segment".
It's true that realistically SMEs have a degree of shielding from the consequences because there are plenty of large enterprises to go after first and they have bigger wallets for the tax man and his limited resources to chase.
But those enterprises also have armies of lawyers and accountants to defend themselves and the scale to treat any lost decisions and resulting penalties as just a cost of doing business. To a small business the cost of responding to a formal audit by the tax man alone can be a major expense and have a deep and long-lasting personal impact on the people running the business. Ask anyone in the UK who's been the wrong side of an IR35 investigation - even one they "won" after several years of fighting with HMRC.
As I said before - the trouble with the ostrich argument is that it works until it doesn't. The argument people are making against mine here is essentially that it's OK not to do your taxes if you can get away with it. If software engineers are excessively risk averse in this then maybe entrepreneurs are excessively risk tolerant. We probably never hear about the acquisition that never happened because of something that showed up in due diligence or the startup that never got that far because it did get bogged down in red tape when something went wrong and never recovered.
The real point here is that it's crazy that anyone even has to have this discussion. Governments should get their acts together and reach agreements where international trade below some reasonable de minimis threshold doesn't incur any international compliance or tax obligations at all and only businesses big enough to be turning over significant amounts of money in a particular area need to do anything special. There should be no need for merchant of record services to exist - at least not from the point of view of ensuring tax compliance for small businesses.
> The argument people are making against mine here is essentially that it's OK not to do your taxes if you can get away with it.
For clarity, this is not the argument that I am making.
My argument is that it is obviously impossible for me, a solopreneur, to meet my global tax ‘obligations’.
As in, literally impossible. It’s not that I’m just choosing not to. It would be impossible for me to run a business while registering for and remitting tax to all of the global authorities who, since I sold a $20 PDF to someone in their country, believe that I owe them taxes.
And so if that’s against the law, well so be it. Let them come. There’s nothing I can do short of shutting down my business.
Because whose law, by the way? Serbia’s tax law? I’ll tell you now, sitting in my kitchen in Australia, Serbia’s tax law is not high on the list of things that I fear.
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 :)
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.
