Dodo Payments was founded by Rishabh Goel and Ayush Agarwal in 2024. This startup has raised over $2 million in two rounds of funding since its inception and currently has over 50 employees. Based in India, they act as a Merchant of Record managing payments, billing, tax compliance, and more for software developers, creators, and AI companies.
What is Dodo Payments?
Dodo Payments is a Merchant of Record that legally and financially assumes responsibility for the business’s transactions, taxes, and fraud prevention. On this platform, you can sell digital products, software, and subscriptions. However, you won’t be able to sell physical products on the platform. You can accept payments from over 220 countries worldwide.
How does Dodo Payments work?
Since Dodo Payments is a Merchant of Record, they work differently from most ecommerce platforms. When a customer buys your product, Dodo Payments is the legal seller of the transaction. Not only are they liable for the sale, but they also handle all taxes, including calculating, collecting, and remitting them. Plus, they handle checkouts on your behalf.
From a buyer’s perspective, things can get kind of confusing. For example, at the end of the month, when they get their credit card bill, it’s Dodo Payments that appears on the receipt rather than the website they bought it from. So, if they only recognized your brand name, that won’t appear on the statement. Thus, diluting your brand presence. As a result, this can cause chargebacks. Fortunately, Dodo Payments does handle chargebacks on your behalf.
What you need to know about selling on Dodo Payments?
Dodo Payments has transparent fees on its website. However, when you add them all up, the fees can be quite high. For example, they charge 4% + 40 cents for US sales, 1.5% for international, and 0.5% for subscriptions. However, unlike most ecommerce platforms, they don’t offer paid subscriptions once you scale. Paying a percentage of the sale works well for beginners who have low sales volume, as they only pay when they get paid. However, high-volume sellers will lose significant profit as they grow, having to pay a percentage of their sales.
As a Merchant of Record, you won’t be able to benefit from instant payouts like traditional ecommerce platforms. There is some flexibility for when payouts are done. For example, you can choose from bi-monthly, weekly, or monthly payouts. The exact date you’ll be paid will depend on which you choose. By default, users will be set to bi-monthly. You’ll need to have made at least $50 in that period to receive your payout.
You’re limited by what you can sell on the platform. Typically, platforms like Dodo Payments that offer Merchant of Record services don’t allow the sale of physical products. If you’re looking for a platform to manage your warehousing, logistics, or physical shipping, this isn’t the platform for that. Instead, you’ll need to be a seller of digital products, SaaS, and AI tools.
Is Dodo Payments the best platform to sell products?
No, Dodo Payments isn’t the best platform to sell products. A Dodo Payments alternative is Payhip. Payhip provides automatic global tax compliance, relieving you of the burden of calculating, collecting, and remitting taxes. However, you’ll still be the legal seller. Plus, you can receive instant payouts from Stripe and PayPal. In addition, you can sell physical products alongside digital products or software on the platform. They also only charge a 5% transaction fee on their free plan. However, as you scale, you can choose a paid plan to reduce or eliminate transaction fees. To start selling, sign up today for free.