Fee for Indian merchants:
Shopify Lite and digital products
One of the things that I most like about Shopify as an e-commerce platform is the way that it facilitates the sales of digital products.
Selling digital products can be a more complicated affair than it might seem, because if you sell them to consumers living in the EU, and generate more than €10,000 in revenue per year from them, then you are required to apply VAT to those products (even if you are not a VAT-registered business).
‘Shopify Lite’ pricing
At $9 per month, ‘Shopify Lite’ represents one of the cheapest ways into selling products online — but you need to be aware that it doesn’t provide you with a standalone, fully-functional online store.
Rather, it allows you to
- sell an unlimited number of products on an existing website
- sell on Facebook
- use Shopify as a point of sale (POS) system for selling products in physical locations (market stalls, concerts, retail outlets etc.)
One limitation of the Facebook integration to be aware of is that you can’t use it to sell digital products, as I found out when trying to sell an e-book on the Style Factory Facebook page.
This is due to the fact that Facebook only permits you to sell something that can be shipped, thus ruling sales of digital products out — i.e., it’s not technically a Shopify feature omission.
‘Shopify Lite’ is a reasonably good option for those who sell in physical locations and need a solution for processing payments and managing their inventory.
It allows you to accept payments via your smartphone using a card reader and the Shopify app; and every time you make a sale, Shopify will take a note of this and update your inventory accordingly, meaning you’re unlikely to run out of stock when you need it most.
Transaction fees are charged by the company you use to build your online store, and credit card fees are charged by your ‘payment gateway’ provider.
A payment gateway is basically the software used to process credit card payments.
There are no transaction fees to worry about with ‘Shopify Lite’, so long as you are prepared to use Shopify’s own payment processing option — Shopify Payments — as the payment gateway.
There is a bit of a catch here for some users however, as Shopify Payments is not yet available in all countries. At time of writing, the supported countries are currently as follows:
- Hong Kong
- New Zealand
- United Kingdom
- United States of America (note: unavailable to US territories except Puerto Rico.)
If you’re on the ‘Lite’ plan and using Shopify Payments, credit card fees in the USA are 2.9% + 30c if a purchase is made online (for example, using a Shopify Buy button) and 2.7% + 0c if a purchase is made using the Shopify point of sale card reader and a mobile device.
If you use a third party payment gateway, you can expect to pay a 2.0% transaction fee on each sale made via the ‘Lite’ plan, plus whatever your credit card fees your payment gateway provider charges.
What about transaction fees and credit card fees in other countries?
Shopify’s credit card fees vary by country — the ones listed in this article are for the US, but considerably different rates are available in other territories. For example, the UK credit card rates for the ‘Lite’ plan are much cheaper than the US ones: 2.2% + 20p for online transactions and 1.7% for in-person ones.
Stripe developer chat:
Selling B2C in the EU
As a European business selling B2C, you charge VAT to all customers. But the rate of VAT you charge depends on how much you’re selling within the EU.
If your business stays below €10,000 in cross-border sales of digital goods per year, throughout the EU, then your situation is different. You are not required to register for VAT MOSS. If you don’t, then you can charge the VAT rate of your home country on all those cross-border sales.
Once you pass the €10,000 annual sales threshold, you must register for VAT MOSS and charge the VAT rate of your customer’s country.
Non-European businesses selling in the EU
Simple rules apply for you! For B2B you should verify the buyer’s VAT number and then reverse-charge VAT. In B2C transactions, always charge the VAT of the customer’s country.