Online Sales: Digital Products

What's the Big Deal?

An author client asked for assistance to determine how to sell pdfs of stories - digital products - as frictionless as possible, preferably without the vendor asking for a customer's mailing address. 

Turns out, it's not as easy as you may think. 

There are a number of laws to consider, especially if you may have international sales, let alone considering different tax laws among 50 states of the US. (eeek!) 

Selling digital products adds yet another layer of complexity.

Keeping It Simple
This post will not go into heavy technical detail to set up your online store. I'm happy to assist you - Let's Chat! - but the intent of this post is to share a few points to ponder and a few resources available, aiming for the most simplicity to get my nonprofits, solopreneurs, and authors heading in the right direction.

Useful Terminology

• Merchant of Record (MoR): According to this Stripe article from January 2026, "refers to the entity that is legally authorized and responsible for processing customer payments—including credit and debit card transactions and digital wallet transactions—for goods or services on behalf of a business. The MoR is liable for the financial, legal, and compliance aspects of transactions, and its work includes dealing with banks, card networks, and regulatory bodies. The MoR is an important actor in ecommerce transactions and can fundamentally shape the process and experience of online payments." Using a platform that will process sales for you, especially sale of digital items, in accordance with a myriad of tax laws, nationally and internationally, is well worth the trouble—your tax accountant will thank you!
• VAT (Value-Added Tax)/GST (Goods & Services Tax): Sales tax for European (VAT) and Australian (GST) customers. Taxes are based on the location of the buyer, not seller. 
• ISO 20022: Global payment standard (initiated in 2004) effective November 2026 where a minimum of city and country will be required for online transactions. Two forms of address verification will be needed - IP (computer) address that's identified behind the scenes and billing address. 
• PDF Stamp: deters people from sharing his stories for free by putting the buyer's email on every page. Lemon Squeezy, Dodo Payments, and Payhip, when enabled, these platforms automatically "burns" or watermarks the buyer's email address (and sometimes a transaction ID) onto the corner of every single page of the PDF upon download.

Online Sales Vendor Options

• Lemon Squeezy: A full-service MoR, they handle 100% of the taxes globally on your behalf. Apple Pay and Google Pay can be used making check-out frictionless for the buyer. Fees are 5% + $0.50 - reasonable. Has additional tools like newsletter creation options. 
• Dodo Payments: A full-service MoR, they handle 100% of the taxes globally as Lemon Squeezy does. Uses a pop-up overlay intended to make check-out as streamlined as possible. Fees are 4% + $0.40.
• Paddle: A full-service MoR, they handle 100% of the taxes globally as Lemon Squeezy and Dodo Payments. Offers a "contacts us" option if you'll be selling items under $10. Fees are 5% + $0.50.
• Gumroad: A full-service MoR, they sell digital products including memberships and courses. Create a website through their platform or connect it to your own website. Fees are rather steep - 10% + $0.50.
• Payhip: You can toggle off the billing address requirement for digital products. Does NOT handle US sales tax - not a full-service MoR. For the US, Canada, and Australia, they only calculate the tax; your client would still be responsible for registering with states and filing those taxes himself making it far more work. 5% fee and PayPal/Stripe fees apply. 
• Sellfy: Sell digital products, physical products, print on demand items, and subscriptions. Your store looks like a website, and you can connect your own domain to it. Email marketing and a few additional features are available. Fees $22/mo + PayPal or Stripe fees, whichever platform you connect. Does NOT handle US sales tax or VAT/GST - seller takes full responsibility for tax collection.

Thinking Ahead - Newsletter Building
Enable an Opt In button on your sales platform which will legally allow you to add name and email of your buyer to your email list. Just because you made a sale, does not give consent to receive ongoing communications, especially per European standards. 

Get to the Point
If you'll be doing online sales and are not a nonprofit (501c3's do not require tax collection if they have gone through the IRS approval process), you have a few things to consider.

• Who will be purchasing: customers in the US only or internationally potentially?
• What are you selling: physical products that may also require shipping or digital items? (this post focuses on digital items as a unique item) Many websites enable connecting Square, PayPal, or Stripe for payments, but you still need to consider taxes/VAT/GST and how you wish to handle that.
• Will you be handling taxes on sales or is it easier to use a platform that will handle it? Be sure to look for a system that will act as your Merchant of Record (MoR).
• Enable Apple Pay and Google Pay: This makes check-out a breeze for your buyers who use those systems.
• Be sure to add PDF Stamp language to digital items you're selling: Possible language - © 2026 [Name]. All rights reserved. No part of this publication (including text, plot, and arrangement) may be reproduced, distributed, or transmitted in any form without the prior written permission of the author.
• Add an Opt In button to all sales: This will enable you to build a newsletter distribution list from buyers who are already your fan!

Your Turn
Have you done any digital sales and worked through this process? Love to hear your experience, what platform you selected, and why - Let's Chat! Or find me on LinkedIn or Substack!

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