Stripe Acquires Lemon Squeezy: A Major Move in the Merchant of Record Space

Image Credits: Emma Gibbs / Getty Images

In a significant development in the fintech world, payments giant Stripe has announced its acquisition of Lemon Squeezy, a four-year-old competitor specializing in merchant of record services. This move, announced on Friday, marks Stripe's latest effort to expand its capabilities in the digital payments ecosystem.

What is Lemon Squeezy?

Lemon Squeezy has made a name for itself as a merchant of record, primarily serving SaaS and software businesses. Its key offering? Calculating and paying global sales tax for digital products, while handling legal processing and fees across different countries. This service has been crucial for businesses navigating the complex landscape of international digital sales.

The Acquisition

While the terms of the deal remain undisclosed, the acquisition has been confirmed by both companies. Stripe's CEO, Patrick Collison, took to X (formerly Twitter) to welcome Lemon Squeezy, stating, "We're going to scale merchant of record selling in a big way." This sentiment was echoed by Stripe's Chief Product Officer, Will Gaybrick, who highlighted the demand for merchant of record services among Stripe's user base.

Lemon Squeezy's Journey

JR Farr, co-founder and CEO of Lemon Squeezy, shared insights into the company's growth in a blog post. Since its public launch in 2021, the 13-person company has:

• Received multiple acquisition offers and Series A term sheets
• Reportedly turned down a $50 million Series A offer
• Surpassed $1 million in annual recurring revenue within nine months of launch

Interestingly, Lemon Squeezy has been processing payments on Stripe since its inception, making this acquisition a natural progression of their relationship.

Stripe's Acquisition Streak

This isn't Stripe's first acquisition in recent times. Earlier this year, they completed an "acqui-hire" of Supaglue, an open source developer platform for user-facing integrations. Last summer, Stripe also acquired Okay, a startup developing low-code analytics software for engineering team performance.

What This Means for the Industry

Stripe's acquisition of Lemon Squeezy signifies a growing focus on comprehensive payment solutions, particularly in the merchant of record space. As digital commerce continues to evolve, we can expect to see more moves aimed at simplifying global transactions and tax compliance for online businesses.

Stay tuned for more updates on how this acquisition will shape Stripe's offerings and the broader fintech landscape.