Merchant of Record

General
1

Could Pickaxe consider becoming a merchant of record or partner to accept payments for studios through a merchant of record payment system like LemonSqueezy (recently acquired by Stripe)?

For many small businesses or entrepreneurs, having a merchant of record for payments is critical because the merchant of record handles all sales tax and related compliance (unlike simply setting up payments with Stripe, which requires you to manage this all yourself).

They also support webhooks/APIs and are integrated with the main automation software providers. If Pickaxe were able to integrate a payment system like this, you’d still be able to implement a take rate for studios, open up the possibility of automation for access to studios, and expand the ability for many more entrepreneurs to monetize their Pickaxes in a simplified way, reducing the burden of manual sales tax compliance activities.

Thoughts?

Here is some info on LemonSqueezy/MoR:

2

Could you explain a little more why it is so tough for you to set up the Stripe account to be the merchant of record yourself?

The main issue is that the merchant of record is liable for refunds and chargebacks. At a high level, these studios are not Pickaxe’s businesses. Rather they are our customer’s businesses, set up on our platform. In this case, typically it is better for the business operators to be merchants of record, which is how we currently have it set up.

3

Sure!

One of the primary benefits of acting as a MoR is the streamlined handling of sales tax and compliance issues. For many small businesses and entrepreneurs, navigating complex sales tax regulations can be daunting and time-consuming, or even prevent them from getting started.

In many cases, someone using a Pickaxe may not yet be a full fledged business, or instead may be using your excellent platform to validate an idea with an audience. Partnering with an MoR payment system could significantly reduce the burden on users, allowing them to focus on innovation, validation, and/or their core business activities rather than tax compliance.

This integration would simplify the payment process, making it easier for studios to monetize their offerings. Your point about refund and chargebacks applies here as well. With automated compliance and reporting, users would likely experience less friction during transactions (and at tax time), resulting in higher conversion rates and increased sales.

As more platforms recognize the importance of MoR services, offering this feature or partnering with an MoR could set Pickaxe apart from current or future competitors. Stripe has clearly seen the value of merchant of record payment systems through their acquisition of LemonSqueezy. Ultimately I think it could position Pickaxe as a comprehensive solution for emerging creators, attracting more users who are looking for an all-in-one platform that handles both payments and compliance.

LemonSqueezy’s API support allows for easy integration with existing systems and automation tools. I noticed other comments from users in this community seeking this type of functionality, but those users are currently limited in not being able to integrate in their existing workflows. This capability could lead to features that enhance user engagement and operational efficiency.

While there are challenges associated with becoming a merchant of record, the potential benefits for both Pickaxe and users are significant. Alternatively, I think it could just be possible to partner with LemonSqueezy, an existing MoR, reducing the risk for both Pickaxe and users (while still allowing Pickaxe to benefit from a take rate).

In short, considering an MoR payment system would simplify compliance, enhance user experience, and help complement your outstanding platform with a further competitive edge.

4

But in our current system, even if you don’t have a business set up and are just an individual, truly the Stripe setup process takes about 10 minutes.

And Stripe handles tax compliance, which anyway is for most people just a single form a year…

Why do you personally want this feature?

5

Thanks for the response! I would like the feature for all of the reasons I detailed above. Yes, it is easy to set up Stripe, but the benefit of the MoR is for the tax implications. Using Stripe, it is the responsibility of the business to determine what, if any, taxes apply to the payments they receive and to report and remit the correct tax to the appropriate tax authority. Stripe does not handle tax compliance in that they do not register, remit, or file for you, nor do they make those determinations. They only do the tax calculation aspect as a payment processor. An MoR payment system fully handles those all of those tax details, which is the main benefit.

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