Action Required: PayPal Connect Going Live Jan 1, 2021

Dear Creators,

A couple of months ago, we announced that due to changes in PayPal's terms of service, we would transition to having creators accept payments from customers directly to their PayPal accounts when selling on Gumroad. After months of engineering effort and legal consultations to make this transition minimally disruptive, we're ready to go live with direct PayPal connection. PayPal Connect goes live for all creators on January 1, 2021.

For more about PayPal connect, see https://help.gumroad.com/article/275-paypal-connect.

You do not need to connect a PayPal account to use Gumroad, but you will need to connect a PayPal account if you want your audience to be able to pay you using PayPal. We recommend connecting a PayPal account, offering PayPal as a checkout option materially improves conversion rates, especially for customers outside of the United States. If you choose not to connect a PayPal account, customers will still be able to make purchases by credit card and, when it goes live, Apple Pay.

Making this infrastructure change required changing our fee structure for PayPal transactions. If you have a Gumroad Premium account, your fee for PayPal transactions will be 1% (note that PayPal assesses its own transaction fees as well). For creators without a premium account, the additional 5% transaction fee still applies. However, you do get access to this money instantly, rather than having to wait for your weekly payout.

When we first announced the upcoming switch, creators from around the world let us know their concerns about how this will affect their tax, accounting, and compliance statuses. We're happy to announce that after consulting with a specialist law firm, we can assure you that nothing will materially change.

  • Your weekly payout will include a line item for PayPal instant Payouts.
  • You can still issue refunds to customers who purchased through PayPal.
  • Gumroad's approach to sales tax is unchanged.
  • The Transaction CSV (the immutable record of transactions you can download from the Balance page) has an additional column to see if a purchase was made through PayPal directly.
  • Gumroad still serves as the Merchant of Record in jurisdictions where that matters.
  • Gumroad is still considered the seller for VAT purposes and will continue to collect and remit VAT in the appropriate jurisdictions.
  • We held off on the change until Jan 1, 2021 so that your 2020 records will be entirely uniform.

We'll be making a couple more announcements in the coming month about small tweaks we've been able to make to Gumroad's legal & financial infrastructure and VAT remittance inspired by the work on PayPal Connect. They are all good things, kind of a "silver linings" situation.

For more about PayPal connect, see https://help.gumroad.com/article/275-paypal-connect.

As always, if you have any questions or concerns, please let us know at support@gumroad.com.