Payments provider for the directory discussion

This is something on my roadmap, no real ETA but I have started thinking about it. The issue is we are likely going to be leveraging Stripe to handle accepting payments and paying out developers.

This concerns me, because I would want it to be generally available and not cut off developers in countries Stripe doesn’t yet support. @anon95694377 would you mind DMing me your country so I can look into Stripes connected accounts for where you are?

Done.

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@wadestriebel - stripe is not supported in more than half the world I just saw here https://stripe.com/global
Paypal is more available https://www.paypal.com/us/webapps/mpp/country-worldwide (200 versus 44 countries)
This one seems the most covered globally:
https://www.2checkout.com/global-payments/
But I am not sure it suites the needs

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Stripe is by far the easiest payment processor to work with. A workaround might be to have all payments made to ClassicPress via Stripe, then payout to developers via either Stripe or PayPal (or maybe even Venmo).

Discussing payments providers for the directory is a new topic, so I gave it its own thread.

This would be an ideal situation. However, it would be the most complex in terms of accounting and I’m not sure exactly how a non-profit would fit into this scenario. One potential problem I see with CP making payments is tax liabilities in various countries. For example, in the US, developers would be treated as 1099 contractors (I assume) so CP would need to get developers to complete W-9 form, send out 1099 form if developer makes at least $600, and file paper work with the IRS.

Now that’s just the US. We would need to do this for any and all countries that have these type of requirements. Plus, local taxes (sales tax, VAT, HST/GST, etc.).

We would need to hire an accountant to consult on planning this out who understands marketplaces and how they work, and then also figuring out bookkeeping/accounting once it’s rolled out.

We probably would want to start with the main countries first and introduce countries as revenue and user base grows.

The easiest option would be to integrate Stripe and PayPal, maybe other payment providers, and allow developers to select their desired provider and input their credentials. So we would act as a “shopping cart” basically. Just like Classic/Woo Commerce uses plugins to add payment options. And we could charge a small flat fee or percentage to help cover CP’s costs, maintenance, and development.

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This isn’t quite the easiest option, it is from a user standpoint but not from the directory side.

As far as I know, PayPal has no nice way of using their API to send payments.

The reason I like Stripe is:
a) super easy to implement and accept payments
b) super easy to payout developers to debit cards or bank accounts, and for the US does the 1099 forms for us automatically

Just to clarify, what I’m referring to here is that CP acts like a hosted shopping cart and CP doesn’t touch developer’s money at all. Developer would input his own payment processor details and sales would go to his/her account directly. This way CP wouldn’t have to do anything. Developer would pay some sort of service fee to use integrated shopping cart, be it % or flat fee.

When I say “easy” my primary focus is global tax/legal compliance for CP.

I love and use Stripe, just wish they were available in more countries.

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Oh sorry I misunderstood, ya we could go the Chrome Apps route, a one-time fee to use the service and help avoid any spam/fraud.

I am going to look into some other options, I know there are a few startups trying to re-disrupt the space so maybe there is one that fits well.

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I am not sure this is actually necessary. Plugin and theme authors would be independent contractors and generally responsible for self-reporting their taxes in their jurisdiction. CP would only be required to report within the jurisdiction it is registered in.

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what about using Payoneer for payouts?

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This is not always true and depends on the contractor’s country and the relationship they have with CP. I don’t know all the details, that’s why getting an accountant who knows about this is a must.

For example, in Spain, if a contractor receives 75% or more of his income from one client they are entitled to benefits. In Romania, companies still have to pay the same payroll taxes as hiring an employee.

Since CP isn’t “hiring” them, technically, but moves money for them - I would think there would be some additional laws that could apply that are designed to prevent financial crimes and money laundering.

The more successful CP is, the more money it would move across the world, which would attract more scrutiny. That’s why we would need tax and legal advice to ensure everything is done correctly.

That’s why I think the easiest option would be to not touch the money at all and have users pay developers directly by creating a hosted shopping cart experience in the directory. Developers would use their own payment gateway credentials and choose from a list of supported payment gateways.

I agree with @ashgoodman. You are over-complicating the issue, @viktor. Those selling on Amazon Marketplace, for example, aren’t employees of Amazon, even though Amazon collects the money and passes (most of) it on (in return for a commission).

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That’s just an example. But Amazon Marketplace is a great example. Amazon collects and pays sales taxes in all countries they do business in and in all states in the US because they have sales nexus.

At minimum, we would have to send out 1099s to US developers. Amazon provides 1099-K if sellers meet certain threshold like $20,000 in gross sales, 200 transactions, etc. Also, even non-US sellers must provide information to Amazon to get exempted from IRS taxes. So there’s a lot of moving parts, in a lot of countries, this also includes proper GDRP compliance since CP non-profit is in the US.

My main point here ins’t to be right, but to bring awareness to the possible hurdles we would have to overcome to move money for developers across the world. This is something that would need professional help with to understand all the compliance issues.

But we won’t be doing taxes for anyone. It would be just a pass-through operation.

I don’t think that matters if we’re collecting money on behalf of developers. Its ClassicPress that would be making sales and money would be in our payment processor’s account, deposit it into our bank account, and then distributed to developers in whatever way we choose to. So it would be our responsibility to collect proper taxes and comply with whatever laws we need to comply with. There is a reason why Stripe does business in 44 countries only.

Look at the Stripe Connect platform, which Wade wanted to use originally. In case of a chargeback, ClassicPress as a platform would be responsible for that amount. CP account would be debited. We’re not passing through money, we’re responsible for it. And we would pay developers their share of profits, keeping a portion as a service fee.

If we look at PayPal, for example, it has similar reporting guidelines as Amazon in the US.

This is why I suggested we act like a hosted shopping cart instead and allow developers to use their own credentials for payment gateways. So money would go to their own accounts and CP wouldn’t be in the middle moving money for them.

Don’t mess with the IRS :smiley:

I mean it as a fun thing to say but actually it is not that fun. I think Viktor is right, we need to be extremely cautious when it comes to money passing thru any or to any US American instance.
Even the Swiss make you sign those documents he mentions when you live abroad and have money in their banks (me as a Swiss needed to sign them, because I live abroad and “might” collect money from Americans or do services for Americans)

They have some peculiar laws where if you do “business” with Americans you automatically become taxable, and business here really means “provide a service”. It is not even necessary to be a paid service, you still need to declare stuff (as in a “I did not make paid business” declaration for example).
I am no law expert but I would steer clear from any monetary interaction or even else provision of service unless we can safely exclude complications with IRS.
And being CP a US registered charity or what the name is, I think we need to be even more careful.

As far my little knowledge goes, as soon you in some way interact with an American more than about being friends you kind of are forced to declare your things. This being exchange of goods, service provision, money exchange, work, journalism, photography, website construction or even just a consultation, technically does not matter.
And if CP provides a selling/payment processor we clearly fall in the category

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Yes, if that was their client. But a plugin or theme author’s client is not CP. CP would just be the marketplace. The clients would be the buyers who purchase the themes and plugins.

As for trying to satisfy the laws of every jurisdiction/finding an accountant who would know every jurisdiction, this is would be practically impossible. And, ultimately what any given jurisdiction has to say about CP wouldn’t have any legal or financial impact unless CP were a registered entity in that jurisdiction.

Does this not exactly justify whey we should not do this?
Because the jurisdictions wont care a dot if we knew, or tried, or didn’t care for.
They will simply pursue their interests and they do have those experts who can get you in your country (inclusive high castles like banking paradise CH.)

As soon you move money for someone, you are doing business, no matter what. And in some countries (with this mainly I mean USA), this means you are a tax citizen. You have to declare this, even if you do not have to pay. They may not get to you now, or next year, but as soon someone gets even slightly “pissed” at you and starts putting his nose into your business, these are exactly the kind of things they hang you later.

You accidentally are affiliated with organisation XY and enter the states and by accident the officer looks up if there is some note somewhere, and bang you are in the lottery system justifying why you personally have nothing to do with this “possible fraud”

My personal suggestion - keep the fingers away from shipping around money for people.
At the end inadvertently we ship money for someone we really do not want to be affiliated with.

I think Viktor is right, this is not something we have either the basis for nor the needs.
If developers want to sell their software they should do so thru their own channels and CP should even declare clearly that it is no way affiliated or somehow involved in this financial transaction or facilitating it in any way.

This may not be an issue as long we stay “small” an no one thought to puke on us with some silly call to some bored officer, but as soon you make the wrong people angry in this world, this is exactly how they get to you :frowning:

No, what it justifies is a clearly-written set of terms and conditions that make it clear both what we would be providing (essentially a matchmaking forum) and what we would not be providing (employment or agency).

If we charged any fees or commission, those would of course need to be reported to the IRS. But as they would be going to the Initiative (our nonprofit), they wouldn’t be taxable.

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