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Racknerd using a third party for collecting Paypal payments?

Originally Posted by plal
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A couple of hours ago, I signed up for a WHT deal with Racknerd. When it came to the payment portion, I noticed my final amount of $31.98 changed to a larger amount when I chose Paypal. Questions posed to support revealed that they use a third party for Paypal payments, the reply being: “We process our PayPal payments through a third party payment processor called FastSpring. They do collect sales tax / VAT within certain countries/areas – for more information on this, please see: RackNerd does not have much control over this, as we outsource our payment processing to FastSpring. If you have any questions about this you can contact FastSpring directly via email at:”

This is perplexing as Racknerd is US based and what authority do they or Fastspring have to charge the sales tax or VAT of any given country out of the US. I have experience with scores of hosts (mostly US ones) but this is the first time I am coming across a host allowing this. I also suspect Fastspring may not actually be handing over the tax collection to the authority of the government where the said tax is being charged.

Is it unusual? I complained to support and they said if I use my credit card, it would be tax-free. In my mind, I’m telling myself no such thing. In any case, I want to use my Paypal as I have plenty US$ funds there.

They should just provide a Paypal email address so that payment can be made but they insist on going through Fastspring for some reason.

I later tried using my sister’s US address and a US Paypal account, but obviously Fastspring declined my order (must have found my location through my IP).

So now I have 2 unpaid invoices. Yes, I can just tell them cancel I suppose but I just wanted to ask here if this is the norm and why they insist on making a simple thing complicated.

Hi @plal — hope all is well! There are a myriad of benefits for us from a company perspective from utilizing a merchant of record service, not only from a compliance standpoint, but from a risk/automated fraud protection standpoint.

We find this to be quite the norm for those who utilize a merchant of record service such as FastSpring. As FastSpring is the Merchant of Record, FastSpring is responsible to collect, file, and remit taxes for sales through their platform. At times, depending on your country, sales tax/VAT may be applicable. FastSpring calculates taxes in real time based on customers’ location. FastSpring automatically applies these taxes at checkout, as required by local regulations in the customer’s country.

If/when taxes are applied, this is fully transparent and the amount is made aware to you before actually completing the payment/check out process.

I should also point out, not all countries or locations have VAT applied (only some). A breakdown of the regions can be found in the FastSpring documentation for those curious.

As a heads up – we do support a variety of other payment methods that are not processed through FastSpring as well, you can choose your desired payment method on your RackNerd invoice, there should be a drop-down on the right hand side to switch between different payment options.

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