HTTPS, the secure version of HTTP, is a protocol that helps keep people secure by encrypting the communications between their browser and your server. Whilst the Paddle checkout is already HTTPS encrypted, if you haven’t done so already, we highly recommend that you switch your site to HTTPS by purchasing an SSL certificate. Staying with HTTP may decrease your conversion rate based on a buyer preference for HTTPS websites.

Whilst you don’t need an SSL certificate to use Paddle, please note our Apple Pay payment method is not supported on HTTP websites.

The Paddle Checkout is localized in the following languages:

• English
• German
• Spanish
• French
• Italian
• Japanese
• Korean
• Dutch
• Swedish
• Norwegian
• Danish
• Polish
• Portuguese
• Russian
• Chinese (Simplified)
• Arabic

The Paddle checkout automatically decides which language to display based on the active language within the user’s web browser.

We’re actively gauging interest in further languages to expand the range of localizations. Feel free to reach out at here with the country and language you are interested in.

You can currently integrate with Wordpress using a free, open source plugin. The repository can be found here.

This is an example plugin to implement the Paddle checkout on a Wordpress site. You may use or modify the code as required, subject to the license included in the repository.

Paddle does not provide technical support or maintenance for this plugin or any derivations of it.

Paddle no-longer supports 3rd party online stores directly.

Feel free to contact us with any questions here.

The Subscription billing model, also known as repeating billing or SaaS, is fully supported by Paddle.

Paddle’s flexible setup allows you to determine billing periods, trials, price modifiers, pro-ration and per-use billing, as well as move users between plans and cancel both via the dashboard and our API.

We have a quick start guide for how to create your first subscription plan, and documentation for subscribing to the relevant webhooks alerts.

You can sign up for a Paddle account and start selling immediately.

Simply create a product or subscription plan to obtain your checkout link. Here is a step by step guide to creating your first product. You will have to add your website domain to your list of approved domains in order to launch the checkout successfully.

Remember to fill in your details and configure your set up in: - Account Settings - Balance Currency Settings - Checkout Settings - Payout Settings - Sales Tax Settings

Please consult our developer documentation for more complex integrations.

We conduct periodic reviews of our sellers to ensure they comply with our terms of use.

Changing your vendor name

You can edit your vendor name in the Account Settings page.

The “Legal Name” should be your company name, it’s usage is explained below. “Contact Name” should be the name of the owner of the account - we’ll use this when a member of the team gets in touch.

If you have previously already received a payout and want to change your legal company name, please contact sellers@paddle.com for assistance.

Where is the Legal Name used?

Your Legal Name is included on your checkout as well as in emails* sent to customers after purchasing your products; helping them to identify their purchase.

*If the “Company Display Name” is set, we will use this within the customer emails instead.

Relating to this, we’d also recommend setting a “statement description”, alongside your vendor name, this is used to help customers identify purchases on their statement.

What are trial subscriptions?

Trial subscriptions are those that have an introductory trial period or initial promotional discount. E.g. ‘free for 30 days’ or ‘half price for your first month’.

Why are there requirements for trial subscriptions?

VISA announced the new regulations in 2020. They require additional communication about when a subscription trial will end and how much will be charged. This means adding extra details to the emails and receipts that trialling users receive.

Free trials and discounts are a common way for SaaS sellers to attract new subscribers. But if the terms of a promotion aren’t clear, buyers are sometimes surprised by the first full payment and raise a costly dispute.

It can also be a bad user experience if they aren’t sure what they will be charged or when. But if the trial & payment flow is well communicated when they sign up, that can send a good message that you care about their experience. Which can in turn increase retention and improve word of mouth for your product.

That’s why catering to these requirements is not only necessary to meet VISA’s new standards, but will help to keep down chargebacks and build goodwill with customers from their first interaction.

What makes trial subscriptions compliant?

Over the course of an introductory trial or promotion, the subscriber must repeatedly be provided with the following points:

• The fact the customer has signed up for a subscription
• The date the subscription started
• The duration of the trial period
• The subscription name
• The recurring price and next payment date
• A link to somewhere they can update their payment method, or cancel their subscription

This is shared across the following emails and transaction receipts:

• Welcome Notification Email: The initial email they receive when signing up, confirming that they’ve joined on a free trial or discounted period
• Welcome Notification Receipt: Linked to from the welcome email is the receipt confirming the amount paid, even if zero (example image shown below)
• Enhanced Notification Email: A mandatory one-off email which tells them their discounted period is ending and they are about to be charged for the first time.
• Initial Transaction Email: An email sent to them after they make the first payment on their subscription after their initial trial/discounted period has ended.
• Initial Transaction Receipt: Linked to from that email is the receipt confirming payment.

Other subscription emails such as the optional pre-billing notifications and recurring subscription receipts are unaffected by these compliance changes.

Which subscriptions does this apply to?

The more detailed receipts and emails discussed on this page only relate to any subscription which:

• has an initial ‘trial’ period at a reduced price, e.g. free for a month
• or has a non-recurring coupon applied to a subscription for an initial period, e.g. first 2 months of subscription is 10% off

All other ‘regular’ subscriptions are exempt and will not show this additional information on emails & receipts, nor will we send non-trial subscriptions the additional emails, such as the enhanced notification or the initial transaction email.

I offer a subscription that does not have a free or promotional trial. Do these changes apply to me?

No, these changes do not apply to you.

Do I have to do anything?

No.

Paddle manages your subscription receipts and email flows so you don’t need to change anything; as your Merchant of Record we handle the necessary compliance and development work for you.

The only exception is if you are providing a trial/promo period on a subscription by using our Charges API. See below for more details on what you need to do in that situation.

What does this mean if I’m using the Charges API to manage subscriptions with an initial trial/promo period?

If you are using the Charge API to manage a promotional or trial subscription yourself, then you will need to send the following required receipts and emails yourself. This is because we won’t be able to determine, for example, when the trial period will expire in order to supply the customer with the enhanced notification. You need to send the:

• Welcome Notification Email: An initial subscription confirmation email, confirming that they’ve joined on a free trial or discounted period. As with our version this should include confirmation of:
• The fact the customer has signed up for a subscription
• The date the subscription started
• The duration of the trial period
• The subscription name
• The recurring price and next payment date
• A link to somewhere they can update their payment method, or cancel their subscription. This can come from our update_url and cancel_url links returned from the List Users API.
• An ‘Enhanced Notification Email’: Your version of our enhanced notification which tells them their discounted period is ending and they are about to be charged for the first time.
• This needs to be sent 7+ days before you charge the customer for their first regular subscription payment (or to notify them if the price or billing period has changed)
• It should also provide a link for them to update their payment method or cancel their subscription.

Also, we are going to add an optional field to the Charges API which you should include when you want to charge the customer their initial full payment (post trial/discount). We’ll then still be able to send on your behalf the final requirement of the:

• Initial Transaction Email: An email sent to them after they make the first payment on their subscription after their initial trial/discounted period has ended.
• Initial Transaction Receipt: Linked to from that email is the receipt confirming payment.

VISA will conduct spot checks and may ask us to block Sellers who are not using the Charges API in a compliant manner, so implementing these flows are important.

What is the enhanced notification? Is it a pre-billing notification?

This email is different from the ‘pre-billing notifications’, which are sent to subscribers ahead of their recurring billing dates if you have them enabled.

The enhanced notification is instead a one-off email sent to a customer who is currently subscribed as part of an introductory trial or promotion. Before their first payment they’ll be sent an email which tells them their trial is about to end and provides them with the upcoming transaction date & amount, plus a link to manage their subscription.

• If the trial is due to last more than 7 days, the email is sent 7 days ahead of payment
• If the trial is due to last 7 days or less, no enhanced notification email will be sent

The enhanced notification cannot be disabled because it’s part of the requirements.

Click here to see an example of the enhanced notification email.

What is the initial transaction email? When is that sent?

As part of VISA’s rules we’ve also added this new email. This is sent when a subscriber makes their first payment on a subscription following a trial or discounted period.

This is the last time we’re required to give them a link to manage their subscription. After this point the subscription emails and receipts do not include any prompts for the customer to update their payment method or cancel their subscription.

Click here to see an example of the initial transaction email.

Could this negatively affect churn?

It’s possible that these emails may prompt customers who did not want to pay a recurring fee to contact you regarding cancellation.

However, for the majority of customers, the increased transparency with subscription details leads to a better customer experience and improved brand perception.

When will these changes be live?

All these changes are live as of July 2020.

On 1 January 2021, the UK left the European Union.

We have been doing plenty of work behind the scenes to ensure we’re fully prepared. So here’s some more information on what the impact is for your business, your buyers, and Paddle.

How does Brexit affect your relationship with Paddle?

Contract / reseller agreement: No impact on your contract with Paddle as contracts are national rather than supranational. Your contract with Paddle is and will remain governed by English Law. Currently, the Rome I and II EU Regulations give contract parties freedom to choose the law that will govern their contractual obligations (this does not have to be the law of an EU Member State). Post-Brexit, the EU courts remain subject to the EU Regulations and will therefore be obliged to respect the parties’ choice of governing law (including choice of English law).

Supplies of software: No impact on sale of software to Paddle and resale to end customers. Under WTO rules, supplies of software fall under the General Agreement in Trade Services (GATS), which means international sales are tariff-free. See this MMC paper on the impact on Brexit on UK tech.

GDPR: The EU-UK Trade and Cooperation Agreement contains a bridging mechanism that allows the continued free flow of personal data from the EU/EEA to the UK after the transition period until adequacy decisions come into effect, for up to 6 months. EU adequacy decisions for the UK would allow for the ongoing free flow of data from the EEA to the UK. We are reviewing our internal policies and processes and putting in place alternative transfer mechanisms (including the use of Standard Contractual Clauses) to ensure continued compliance.

VAT: As Merchant of Record, Paddle takes on responsibility of charging VAT to end customers. Although Paddle’s filing requirements have changed, this has no effect on you as a Seller with Paddle. Your sales to Paddle will continue to be treated as cross-border supplies with no VAT applied. B2C customers will continue to be charged VAT in the EU and the UK (and the other jurisdictions that Paddle covers). See this guidance from the UK Government.

In summary, you will not notice any difference in trading following Brexit.

If you have any other questions, get in touch with our team.

One of the key benefits of selling through Paddle is that we take the entire burden of managing VAT and sales tax away from you. We can do this because we act as a Merchant of Record (MoR).

This means, from a legal point of view, that Paddle acts as a reseller of your product, and is therefore the “seller on record”. This way, Paddle will be responsible for collection and payment of VAT and tax instead of you.

We’ve written more on this topic here. Don’t hesitate to get in touch if you have any questions.

We provide support for sellers offering their own software/applications; allowing them to setup checkouts to deliver their software with a license key/serial number (where applicable) after the customer has purchased.

We don’t currently allow 3rd party licensing to be used in conjunction with our own SDK - which powers trial & in-app purchase/activation functionality on Mac.

If you’re interested in swapping an existing product over to use our in-app purchase/activation SDK, please contact us here. The process is swift and efficient, however we like to offer a one-to-one service on this to ensure none of your existing customers are affected by the transition.

In what ways can you deliver licenses?

If you’re looking to use Paddle’s checkout to deliver your own license code & download to a customer, there are two keys ways in which this can be configured;

• List fulfillment – uploading a plain text document (.txt) file containing a list of licenses (newline-separated) to be delivered individually to paying customers
• Webhook fulfillment - our servers will send a POST or GET request to your provided webhook URL, using the information provided to deliver the customer their license.

If you require any assistance implementing the above with Paddle, don’t hesitate to get in touch with our team.

As a software developer, or content creator, we want you to focus on just that.

For businesses & developers we work with Paddle is an authorized reseller of their products, as opposed to a ‘payment provider’.

As a result, Paddle typically manages all of the following aspects of a sale:

• Order processing and payment.
• VAT/ Sales Tax collection, filing and payment.
• Order/billing related support. (Invoicing, Receipts, Lost Licenses/Delivery Issues)
• Fulfilment & Digital Delivery (typically via download, license key, or webhook notification to provide access to a hosted service)

Because Paddle operates in this way, we carefully monitor the quality of products we are reselling. We’ll often provide feedback, and help with product development & assist with marketing strategy to ensure developers can build incredible software that customers love, without worying about the technical intricacies how they get from a polished product to the devices of users everywhere.

If you have any questions about Paddle as a reseller, don’t hesitate to reach out to us, we’re happy to answer any questions you might have. We also have full Terms & Conditions on how the Paddle <> Developer relationship works from a legal and tax perspective.

Paddle is built to serve digital products, such as software, web apps and digital downloads. If your company offers human services such as consultation, support, or design services Paddle is not a good fit for your needs.

A list of all business categories and practices which are forbidden from using the Paddle service can be found below. Many of these categories are imposed by Card Network rules, or by our payment processors. If you have any questions as to whether your business is included in one or more of these categories please email us.

By creating an account and selling through Paddle, you are confirming that you will not be accepting payments with any connection to the following business categories and practices.

1. Physical products or product that requires physical delivery
2. Human services (including but not limited to consultation, legal or design services)
3. Donations, crowdfunding, advertising and sponsorship (payment processing where there is no bona fide software or service sold)
4. Resale of any product for which you do not hold a valid reseller certificate for a period of 5 years or more, and resellers of products associated with a high number of customers complaints.
5. Social media “click farms” (i.e., the sale of posts/clicks/likes/reviews/endorsements on social media sites) or marketing based social media automation
6. IPTV
7. Sexually-oriented or pornographic products or services, pornographic material, any material of a lewd and lascivious nature, or dating services/applications
8. Video game or virtual world credits (unless you are the operator of the video game or virtual world); video game cheats
9. Betting related products (including but not limited to lotteries; bidding fee auctions; sports forecasting or odds making; fantasy sports leagues with cash prizes; internet gaming; contests; sweepstakes; games of chance)
10. Currency exchanges or dealers
11. Virtual currency or stored value
12. Trading platforms (including cryptocurrency and forex trading platforms)
13. Money transfer and financial services (including but not limited to check cashing, wire transfers, money orders, money transmitters, payment service providers, debt consolidation, insurance services or money service businesses, investment advice)
14. Business opportunities, investment opportunities, mortgage consulting or reduction, credit counseling, repair or protection, or real estate purchases with no money down
15. Credit card and identity theft protection (including age verification)
16. Marketing services (including but not limited to pyramid schemes, network marketing and referral marketing programs)
17. Phone services, telemarketing, SMS marketing and mass email marketing.
18. Any product, service or activity where proof of consent cannot be provided under EU General Data Protection Regulation (GDPR)
19. Centralized travel reservation services or travel clubs; airlines; cruises; timeshares.
20. Competition and event tickets or entries
21. Government services: embassies, foreign consulates, or other foreign governments services (e.g visa application fee), political or social campaigning
22. Mug shot publication or pay-to-remove sites
23. Age-restricted products or services
24. Certification exam preparation packs (including exam dumps), essay mills/paper mills/ghostwriting services
25. Drop shipping; forwarding brokers
26. Any product, service or activity that is deceptive, unfair, predatory, or prohibited by one or more Card Networks
27. Any product or service that infringes upon the copyright, trademark, terms and conditions or trade secrets of any third party
28. Any business or organization that a.) engages in, encourages, promotes or celebrates unlawful violence or physical harm to persons or property, or b.) engages in, encourages, promotes or celebrates unlawful violence toward any group based on race, religion, disability, gender, sexual orientation, national origin, or any other immutable characteristic
29. Funding any of the items included on this Prohibited Businesses list
30. Digital services associated with pseudo-science (such as clairvoyance, horoscopes and fortune-telling)
31. Illegal products/services or any service providing peripheral support or engaging in illegal activities
32. Digital marketplaces enabling non-Paddle Sellers to sell products and services to customers

Restricted

Merchants may only use the Paddle.com checkout into any of the following with the written approval of Paddle. Paddle may withhold or revoke in its discretion where it finds this to pose a risk to Paddle’s business and/or reputation.

1. Web hosting, domain hosting/selling and file storing/sharing services
2. Cyber lockers and cloud storage
3. Virtual Private Network (VPN) or proxy services
4. Copyrighted Software Resellers & Partners (including but not limited to Microsoft Windows & Apple Inc.)
5. Any product resold/distributed under a GNU General Public License (GNU GPL or GPL) where you are not the ultimate rights-holder

In order to help you sell your products throughout the world, Paddle accepts payments in a wide range of currencies:

• Argentine Peso (ARS)
• Australian Dollar (AUD)
• Brazilian Real (BRL)*
• British Pound Sterling (GBP)
• Canadian Dollar (CAD)
• Chinese Yuan (CNY)*
• Czech Koruna (CZK)
• Danish Krone (DKK)
• Euro (EUR)
• Hong Kong Dollar (HKD)
• Hungarian Forint (HUF)
• Indian Rupee (INR)
• Israeli Shekel (ILS)
• Japanese Yen (JPY)
• Mexican Peso (MXN)
• New Taiwan Dollar (TWD)
• New Zealand Dollar (NZD)
• Norwegian Krone (NOK)
• Polish Zloty (PLN)
• Russian Ruble (RUB)
• Singapore Dollar (SGD)
• South African Rand (ZAR)*
• South Korean Won (KRW)
• Swedish Krona (SEK)
• Swiss Franc (CHF)
• Thai Baht (THB)
• Turkish Lira (TRY)
• Ukrainian Hryvnia (UAH)
• US Dollar (USD)

During setup, you must set a product’s base price and default currency of your choice. This is used in two ways:

1. If you choose to support additional currencies, we will automatically convert your product price into these currencies using the base price. Note that the converted price can be manually overridden to a specified price if you wish.
2. If a customer is purchasing from a country whereby we don’t support their local currency, or if the country’s corresponding currency is disabled in the product, the customer will see the product’s base price and default currency.

(Note: A screenshot of the above process can be seen here).

If you’re not sure if you should accept multiple currencies, you can read our guide here for more information.

To request support for other currencies, simply get in touch with a member of the team for assistance.

* The currencies highlighted are synthetic. Synthetic currencies are displayed to the buyer at checkout to allow the buyer to see the order value in their local currency and thus improve conversion. However, the buyer will be charged in the price of your account’s balance currency when completing the transaction. Sellers who want to sell internationally and improve conversion should enable synthetic currencies.

Paddle supports sellers and can payout to anywhere in the world with exception to the sanctioned countries listed below.

In accordance with anti-money laundering and international sanctions regulations, Paddle is unable to support sellers operating from sanctioned countries and may be unable to support sellers from restricted countries. Buyer transactions originating from comprehensively sanctioned countries or geographical regions will be rejected by Paddle. Paddle will also block downloads to buyers located within the same regions.

Sanctioned Countries

• Crimea (Region of Ukraine)
• Cuba
• Donetsk (Region of Ukraine)
• Iran
• Libya
• Luhansk (Region of Ukraine)
• North Korea
• Nicaragua
• Somalia
• Sudan
• Syria
• Venezuela
• Yemen

Restricted Countries

• Belarus
• Burma (Myanmar)
• Cote d’Ivoire
• Democratic Republic of the Congo
• Iraq
• Liberia (Former Regime of Charles Taylor)
• Sierra Leone
• Zimbabwe

These lists are subject to change; our team may from time to time request further information before processing an order or releasing a payment from any location or jurisdiction for risk and compliance purposes.

By selling your product through Paddle, you can immediately accept purchases via:

• Cards (including Mastercard, Visa, Maestro, American Express, Discover, Diners Club, JCB, UnionPay, and Mada)
• PayPal
• Alipay (in Early Access)*
• iDEAL*
• Google Pay (Chrome only)*
• Apple Pay (HTTPS pages on Safari only)*
• Wire Transfers (ACH/SEPA/BACS)*

See our documentation section for more details and restrictions.

You will not need any merchant accounts with any payment gateway, PayPal, or Apple Pay; only your Paddle account. We manage a relationship with PayPal and our payment processors to ensure that all our sellers get the best possible rates, and the most reliable service.

Paddle is the merchant of record for your transactions: find out what that means here.

* Only available for one-time payment products

What are ‘taxable categories’?

‘Taxable categories’ is a feature enabling you to choose designations such as ‘eBook’ and ‘SaaS’ for your products and subscription plans.

With this feature, you will be able to select the right category for your products and enable Paddle to charge the tax rate relevant to the type of product you’re selling. This may mean lowering the price customers pay for your products and improving your conversions. For example, eBooks are often subject to lower tax rates, meaning customers would pay less for your product.

What categories can I select from?

Each product you sell has certain features which place it in a distinct category and make it subject to different tax rates.

Although there are thousands of categories to define different products in different industries, Paddle has five categories for sellers to choose for their products:

1. Standard Digital Goods

‘Standard Digital Goods’ is usually the correct choice. It’s therefore automatically approved and pre-assigned to all products and plans by default.

This category is for software products that are pre-written and can be downloaded and/or installed onto a local machine. An example of this might be something like Microsoft Excel, or an application you download to organize files on your computer. Most will probably be sold with a one-time purchase but can be charged with subscriptions too (so don’t assume subscriptions = SaaS when it comes to tax categorisation).

Examples include:

• Microsoft Excel
• Clean My Mac
• Organisational tools on local machines

2. Digital Goods

These are non-customizable digital files or media (so not software, unlike above) acquired with an up front payment that can be accessed without any physical product being delivered. Examples might be digital artwork or online video tutorials.

Ask yourself:

• Is the item a digital file that is not software?
• Is the item available for download?
• Is the item standard for all users, and not customizable?
• Is it a one-off purchase?

Examples include:

• Online video tutorials
• Digital art work, posters, or graphics

3. eBooks

This is for digital books and educational material which is sold with permanent rights for use by the customer. eBooks are often subjected to the lowest sales tax rates, and in many cases don’t incur tax at all. Examples are digital books sold through Amazon Kindle.

Ask yourself:

• Is it a non-editable book or educational text?
• Is it a one off purchase?

Examples include:

• Amazon Kindle products

4. SaaS

The ‘SaaS’ category has specific criteria for taxation, so be careful; you might consider yourself a SaaS company but your subscriptions might not actually fall into this category!

Software as a Service (SaaS) allows users to connect to and use online or cloud-based applications over the Internet. Common examples are tools such as email, calendaring and office applications, like spreadsheets and word processors.

SaaS provides a software solution that you purchase on a pay-as-you-go basis from a cloud service provider. You rent the use of an app for your organization, and your users connect to it over the Internet, usually with a web browser.

The key differentiation is that all of the underlying infrastructure, middleware, application software, and application data are located in the service provider’s data center. The service provider manages the hardware and software platforms and, with the appropriate service agreement, will grant the availability and the security of the application.

Ask yourself:

• Does the product need to be used online or require an active internet connection/data transfer to use?
• Is the application and/or data hosted in the cloud (even if a downloadable product allows the online service/data to be accessed)?
• Is your product licenced via subscription payments?

Examples include:

• Spotify
• Netflix
• Zoom
• Framer

5. Web Hosting

A cloud storage service for personal or corporate information, assets, or intellectual property.

Ask yourself:

• Is the product a website hosting service where you, as the hosting company, do not perform any services to the web sites themselves?

Examples include:

• Hostinger
• Google Drive
• AWS

How do I select categories for my products and subscription plans?

Currently, all products and subscription plans are categorized under Standard Digital Goods by default. You will need to adjust this selection if your product falls into a different category, such as SaaS or Web hosting. Once you choose the right category and submit a request, our team will review your site(s) and approve or reject requested categories for use.

When you create a new product or subscription plan, you will be able to select previously approved categories for use. You can also checkbox-select the products and plans you would like to change the category for and apply approved categories to them in bulk on the ‘Manage’ tab in Catalog > Taxable Categories.

If you believe your product should be categorized under a different category, you can go to Catalog > Taxable Categories and request a new category to be reviewed and approved by our in-house team.

Please be aware that changing the category for a subscription plan will also change it for existing subscriptions, which could result in a price change for customers.

What is the approval process?

You need to take the following steps in order to request a new category for your products and plans:

• Go to Catalog > Taxable Categories. The first tab - ‘All’ - is where you can see the categories that are approved for use, and request new categories from those available: SaaS, Digital Goods (such as media files), Web Hosting, and eBooks. Standard Digital Goods (downloadable software) is enabled and applied to all products and plans by default
• When you request to ‘Get approval for new category’ you must assign a product or plan that is an example of that category
• Our team will audit your site before approving the category for use
• Once your requested category is approved by our team, it will be unlocked for you to apply it to more of your products and plans
• The ‘Associated Item’ on the ‘All’ tab shows the first product/plan applied to that category, and is what our team assessed when approving the category for you. You can use this category for other products/plans from the ‘Manage’ tab
• Once a category is approved in the ‘All’ tab, click on ‘Manage’ tab to apply it to more of your products and plans, including in bulk
• Note that when a category is approved, it will automatically be applied to the product or plan you associated with it when making the initial request
• If your request is rejected by our team, the tax will remain the same and continue to be calculated as if your products are Standard Digital Goods

Please note that you will not be able to start assigning the categories other than Standard Digital Goods to your products before receiving Paddle team’s approval. Until the new category is approved, your products and subscription plans will continue to be categorized under Standard Digital Goods and subject to the tax rate for this category.

It is important for you to request the category adjustments for your products if you believe they should be categorised under a different category. This may reduce the price customers pay for your products, which could also boost your conversion rates.

How does this impact the sales tax charged and my conversion rates?

In addition to calculating the tax based on location and whether a sale is B2C or B2B, Paddle is able to charge the correct tax rate according to your product type.

In some cases, lower tax means reducing the price of your product which will have a positive impact on your conversion rates. For example, if your products are eBooks and currently categorised as Standard Digital Goods, selecting the right category will lower the amount customers pay at the checkout as eBooks are often subject to less or no sales tax. However, if you fail to adjust the category, the tax will remain the same and continue to be calculated as if your products are Standard Digital Goods.

As mentioned earlier, changing the category for a subscription plan will also change it for any existing subscribers too, so be aware that their recurring payments may change as a result.