Payments and payouts

The founder asked which payment service is easiest to start with for the two-week MVP, including whether Dodo Payments could work, and how an Indian entity should collect money from brands and pay creators. The short answer: Dodo Payments cannot carry the brand-to-creator money flow, because it is built to be the seller of record for a company's own sales, not a marketplace. Brands never pay a subscription to Distribution Club, so there is no subscription, and no other sale, for a merchant of record to bill either; it has no role here at all. Distribution Club is an Indian entity, and Stripe has been invite-only for new businesses in India since May 2024, so Stripe Connect, the reference example used earlier in this spec, is not available from India today. The MVP path instead runs on Razorpay for pay-in, Razorpay Route to hold and split brand funds, RazorpayX or Cashfree Payouts for creators in India, and Payoneer Mass Payouts for creators outside India. This page explains why, and lays out how money is meant to move for a fund, a view read and a payout, matching the numbers on Business model and the flow on How it works.

Draft v0.1 · Last updated 19 September 2026

On this page

1. 1. What the money flow needs
2. 2. The Indian entity changes the rails
3. 3. Why a merchant of record does not fit
4. 4. The options compared
5. 5. MVP recommendation
6. 6. How the flow maps onto the product
7. 7. Creator payout setup: India and abroad
8. 8. Brand pay-in and currency
9. 9. Legal shape: why GST applies only to our 20% cut
10. 10. Fees and who pays
11. 11. Compliance
12. 12. Ledger design
13. 13. The two-week Phase 0 checklist
14. 14. Open questions

1. What the money flow needs

A brand pays money in for a campaign. A creator is paid money out, at a CPM (an amount per 1,000 real views) set by audience geography, platform, category and league (see Rate cards), released as a floor once the posted link passes the platform's four checks and then after each daily view refresh, into a wallet, and the wallet is paid out to a bank account or payout method on a schedule. Between those two movements the money has to sit somewhere for days or weeks while a post is live and being watched. The brief is direct about who is allowed to hold it: the platform must never hold customer money in its own operating account. It has to be collected, held and paid out by a licensed payments partner.

This is not a matter of caution alone. Holding a brand's money and later paying part of it to a creator is, in most countries, regulated money transmission: payment aggregator authorisation in India, state money transmitter licences in the United States, e-money or payment institution licences in the EU and UK, and similar approvals elsewhere. Getting them takes months, capital and audits, so a regulated marketplace payments partner holds the money in its own licensed accounts instead, while the platform controls every movement and sees every balance, which is all the product needs.

That gives the flow five jobs to do, all of which show up again in section 6:

• Pay-in. Take the brand's fund by card, UPI or bank transfer. What the brand needs to deposit is worked out from what one gig takes from the fund, by league; the brand is never billed a separate fee on top.
• Split at deposit. Move 20% of the deposit to the platform as revenue at once, fixed and never refunded. Keep the other 80%, the creator pool, with the payments partner, not with the platform, until it is either released to a creator or spent on a later campaign.
• Release on each view refresh. Move a floor of 20% of a gig's expected earnings into a creator's wallet once the posted link is verified, then move earnings to date (views divided by 1,000, times the creator's CPM, minus what was already released) into the wallet after each daily view refresh for the 14 days the post earns, drawn from the creator pool, up to the maximum payout, which is expected earnings unless the brand has switched on an optional bonus of up to 1.5 times expected. The platform's 20% cut does not move again after deposit, as described on How it works.
• Payout on the 1st. Once a month, send every creator's Available wallet balance of $20 or more (or the local-currency equivalent) to their bank account or supported payout method.
• No refunds. Unused creator pool stays with the brand as fund balance for its next campaign; nothing is returned to the brand's card or bank, and the platform's 20% cut is taken at deposit (founder decision, 19 September 2026).

A single payments product cannot always do all five jobs for every country at once, which is exactly the gap the rest of this page works through: what handles pay-in and release for an Indian entity, what handles payout to creators in India and abroad, and what a merchant of record can and cannot do here.

2. The Indian entity changes the rails

On 4 September 2026 the founder confirmed that Distribution Club is an Indian entity. That is a founder statement, not something this spec can verify, but it changes which payment products are available and it replaces the reference examples used earlier in the brief wherever they conflict.

• Stripe is not the MVP path. Stripe has been invite-only for new businesses in India since May 2024, so Stripe Connect is not available from India today (verify against current documentation). It stays in the comparison in section 4 for context, marked with that note. A US entity set up later through Stripe Atlas is a possible option once the business is bigger, not a two-week one (assumption).
• Pay-in is Razorpay, with Cashfree as the alternative. Razorpay collects card, UPI (Unified Payments Interface, India's real-time bank-to-bank payment system) and net banking payments from brands, with international cards available once that is separately enabled on the account. Cashfree offers the same shape of product and is the fallback if Razorpay's onboarding runs slow.
• Holding and splitting brand funds is Razorpay Route. Route is a licensed payment aggregator's split-settlement product: it holds a brand's payment and splits it out to creators without the money passing through the platform's own bank account, the same job Stripe Connect would have done. If Route approval is not ready in time for the first gig on 21 September 2026, the fallback is to collect into the entity's own Razorpay account and pay creators from the entity's bank account through RazorpayX, at MVP volumes, with the lawyer's sign-off, moving to Route as soon as it is approved (assumption).
• Indian creators are paid by UPI or bank transfer. RazorpayX or Cashfree Payouts send money to a creator's UPI handle or bank account, one payout per creator on the 1st. Tax is deducted at source (TDS) as the chartered accountant confirms; Section 194-O of the Income Tax Act, the provision aimed at e-commerce operators, is the likely regime (verify against current documentation). PAN (Permanent Account Number, India's tax identification number) and bank details are collected before the first payout, not before the first gig.
• Creators outside India are paid through Payoneer Mass Payouts. Payoneer is the reference example because it is what Fiverr and similar marketplaces use to pay sellers abroad (section 5 has the detail). It covers 200+ countries and offers both an API and CSV upload (verify against current documentation). Whether an Indian entity can act as the payer, and the outward-remittance paperwork this needs (purpose codes and FEMA, the Foreign Exchange Management Act rules on money leaving India), must be confirmed with Payoneer and the chartered accountant before promising payouts abroad. PayPal payouts from an Indian business account are the second candidate, also to be verified. Until one is live, a creator outside India can still join and earn: their wallet holds the balance and they are told when payouts open.
• Brands are charged in their own currency. Prices are in US dollars, and the rate card, wallet and ledger stay in US dollars everywhere in the product; a brand is charged in its own currency at that day's rate of the dollar price, an Indian brand in rupees, a German brand in euros, plus GST where it applies (the chartered accountant confirms how the invoice shows the own-currency charge against the dollar price).

The rest of this page keeps the global comparison from brief section 21 for context, in section 4, but every recommendation from section 5 onward is written for the Indian entity described in brief section 32, not the general marketplace case that came before it.

3. Why a merchant of record does not fit

A merchant of record is a company that stands in as the legal seller of a purchase on behalf of a business that sells something online. In plain words: instead of the platform's own company being the seller that a customer's card statement shows, the merchant of record is the seller. It collects the money, works out and pays the sales tax, VAT or GST for that sale in whatever country the buyer is in, handles chargebacks and disputes, sends invoices, and then pays what is left, after its fee, to the one business it has a contract with. That business is the merchant. The merchant of record does not know or care about anyone downstream of the merchant; as far as it is concerned, the sale ends there.

Dodo Payments is one such service, along with other examples named in the brief, Paddle and Lemon Squeezy. Dodo Payments becomes the legal seller and handles sales tax, VAT and GST, chargebacks and invoicing in 220+ countries (verify against current documentation). Its pricing is listed as 4% plus 40 cents for a domestic US card payment, with an extra 1.5% for international cards, and 1.5% capped for ACH and SEPA bank transfers (verify against current documentation). Payouts under $1,000 carry a $5 fee. Crucially, payouts go to the merchant, meaning the platform, not to a third party: its documentation describes payouts to the merchant only. Its own merchant acceptance policy rules out "selling on behalf of others, operating a multi-vendor platform, or taking funds and forwarding them elsewhere," and separately does not allow "selling non-automated services via digital platforms," which is how it describes freelancing-style work.

That policy describes Distribution Club almost exactly: brands fund campaigns, creators are paid out of that fund, and the platform is the middle party, not the seller of the thing being bought. So a merchant of record cannot be the product that collects the fund and pays the creator. This matches brief section 21, item 2, which rules the option out directly for the fund flow.

There is no other place a merchant of record could be used, because there is no subscription, so a merchant of record has no role at all. Brands only ever pay a deposit, worked out from what one gig takes from the fund, whether at the list price or a managed campaign's price, and 80% of every one of those deposits is money that must reach a creator through the fund flow (brief section 33); the other 20% is the platform's own revenue at once. A brand that deposits $10,000 or more in a calendar month gets 5% of that month's deposits added to its creator pool at month end, rather than a lower cut (assumption). None of it is a simple recurring charge to Distribution Club itself that a merchant of record could bill instead. This is also the limit of what a merchant of record can do for tax, per brief section 30: it cannot carry the gig flow, so it cannot take away GST on the platform's own 20% cut on gigs; section 9 covers that cut directly. The platform needs only the one card and UPI processor for the fund flow itself (see section 10); there is no second bill, so there is no case for a second payments vendor, a second dashboard, or a second set of statements to reconcile.

4. The options compared

These are the services relevant to the fund and payout flow for an Indian entity, plus the global reference products named earlier in the brief, compared on what they do, where they reach, how tax is handled, and whether they fit the flow this product needs.

Razorpay and Cashfree are India's two large payment aggregators, each offering pay-in (cards, UPI, net banking), a split-settlement product for marketplaces, and a payouts product for sending money out. Razorpay is the MVP choice because its onboarding for an Indian company is a standard, well-documented path; Cashfree is functionally similar and sits ready as the alternative if Razorpay's KYC (know your customer identity check) or Route approval runs long.

Payoneer Mass Payouts reaches 200+ countries (verify against current documentation) and is the reference example because it is what Fiverr and similar marketplaces use to pay creators and freelancers abroad; section 5 explains that shape in detail. Its onboarding is sales-led rather than instant self-signup, and an Indian entity's eligibility to act as the payer, plus the outward-remittance paperwork, needs confirming before it can be promised to creators.

Stripe Connect remains the clearest example of a single product that does pay-in, holding and payout together, which is why it is kept in this table. It is simply not an option from India today, since Stripe has been invite-only for new Indian businesses since May 2024 (verify against current documentation).

Trolley and Tipalti are the higher-volume mass-payout products named in brief section 21. They remain relevant once monthly payout volume grows past their minimums, most likely alongside or after Payoneer, but they are not part of the two-week MVP plan.

Dodo Payments, and merchant-of-record services generally, are the wrong shape for the fund flow for the reasons in section 3: they pay the merchant, not a third party, and their own policies exclude marketplace and multi-vendor use. The row is included here for completeness, because it directly answers the founder's question, not because it is a candidate for the fund or payout flow.

5. MVP recommendation

Razorpay Route is a launch blocker, not an optimisation. The application goes in on 7 September 2026, the first day of the sprint, because it decides the legal shape of every gig dispatched from launch: with Route approved, Distribution Club runs as a marketplace and GST applies only to the platform's 20% cut (section 9); without it, the MVP has to run the fallback below as a principal, with GST on the full price of those gigs, until the switch to Route. The MVP plan for an Indian entity uses Razorpay for pay-in, Razorpay Route to hold and split the fund, RazorpayX or Cashfree Payouts for creators in India, and Payoneer Mass Payouts for creators outside India, with PayPal as a second candidate for that last group. In order:

1. Pay-in: Razorpay first, Cashfree as the alternative. Razorpay collects cards, UPI and net banking from brands, with international cards available once separately enabled; if Razorpay's onboarding is slow, Cashfree offers the same shape of product.
2. Holding and splitting: Razorpay Route, with a dated RazorpayX fallback. Route holds the brand's fund and splits it to creators as a licensed aggregator, which is the closest match to what Stripe Connect would have done, and it is what keeps the platform on the marketplace side of the legal shape in section 9. If Route is not approved by 21 September 2026, the dated fallback is to collect into the entity's own Razorpay account and pay creators from the entity's bank account through RazorpayX, at MVP volumes, with the lawyer's sign-off, until Route is approved (assumption). Under this fallback the platform is the principal for those gigs: the brand's payment is platform revenue, not a pass-through fund, so GST applies to the full price of those gigs rather than just the 20% cut, to be confirmed by the chartered accountant, and the switch to Route happens the day it is approved.
3. Payouts to Indian creators: RazorpayX (Cashfree Payouts is closed to proprietorships, see the note at the top). One payout per creator to UPI or bank on the 1st of the month. TDS is deducted as the chartered accountant confirms, most likely under Section 194-O. PAN and bank details are collected before the first payout, not before the first gig.
4. Payouts to creators abroad: Karbon or PayPal by hand for now; Payoneer is receive-only from India and PayPal has no bulk product here (see the note at the top). Payoneer covers 200+ countries with an API and CSV upload option. Whether the Indian entity can act as the payer, and the outward-remittance paperwork this needs (purpose codes and FEMA), must be confirmed with Payoneer and the chartered accountant before promising payouts abroad. Until one rail is live, a creator outside India can still join, accept gigs and earn: their wallet holds the balance.
5. Brands are charged in their own currency at that day's rate of the US-dollar price (an Indian brand in rupees, a German brand in euros), while the rate card, wallet and ledger stay in US dollars for the product itself.

The plain-word reasons for this order:

• It is the only path that works from India today. Stripe Connect is not available; Razorpay and Cashfree are the standard, documented onboarding path for an Indian company, and both are built for exactly this pay-in and split-settlement shape.
• A dated fallback exists for the riskiest step. Route approval can take 1 to 2 weeks against a 2-week sprint (assumption), so the RazorpayX fallback, collecting into the entity's own account and paying out with the lawyer's sign-off, means the first gig on 21 September 2026 is not blocked on Route's approval date. That fallback is dated on purpose: it runs as the principal, with GST on the full price of those gigs, only until Route clears, and never as a standing way to avoid the marketplace model.
• Payoneer follows the shape a comparable marketplace already uses. It is the reference example precisely because Fiverr and similar marketplaces pay their sellers abroad this way; see the paragraph below.
• Nobody is left unpaid, even where a rail is not ready. A creator outside India can still earn while Payoneer's eligibility and paperwork are confirmed; their wallet holds the balance until a rail can pay them.

How Fiverr does it. Fiverr's model is the shape this plan borrows: a buyer pays Fiverr up front; Fiverr holds the money and releases it to the seller only after delivery and a waiting period; sellers withdraw what they have earned by PayPal, Payoneer or bank transfer, 14 days after the order is marked complete, and Fiverr takes a 20% commission on what the seller earns (verify against current documentation). Fiverr operates under its own licences and partners, so the details differ, but the same shape for Distribution Club is: Razorpay Route holds the brand's fund, our own ledger releases it as views come in, and RazorpayX, Cashfree or Payoneer pays it out.

This updates brief section 21, items 3 to 5, for the Indian entity described in brief section 32: sign the Razorpay pay-in product and apply for Route first, add RazorpayX or Cashfree Payouts for Indian creators alongside it, and bring in Payoneer once its eligibility is confirmed for creators outside India, with the ledger (section 12) treating every payout the same way regardless of which rail sent it.

6. How the flow maps onto the product

Using the $6,000 example from Business model (a brand called Acme Notes, a note-taking app for developers, with a US developers audience, on Instagram Reels, in the AI tools and SaaS category, about 70 gigs split between the Bronze leagues and Silver 1), the money moves through the following steps. Acme Notes sees the fund and, stated plainly on the campaign form and the billing page, that 20% of it is the platform's share; how the 80% creator pool below is spent creator by creator is internal.

1. Acme Notes deposits a $6,000 fund, paid by card through Razorpay, charged in euros, its own currency as a Berlin company, at that day's rate of the dollar price (an Indian brand would pay in rupees, by card, UPI or net banking), plus GST where it applies (section 9; none for a brand outside India). Acme Notes sees this as about 46 Bronze gigs (about $50.00 average expected earnings each, taking about $65.00 from the fund per gig, about $3,000 in total) and 24 Silver 1 gigs ($100.00 expected earnings each, taking about $127.50 from the fund per gig, about $3,000 in total): 70 gigs, about 940,000 expected views, at an effective CPM of about $6.38. What each gig takes from the fund is the creator's expected earnings plus a flat $2.00 running cost, divided by 0.8; the running cost sits inside that one number and is never shown to Acme Notes as a separate line.
2. As soon as the $6,000 lands, 20% of it, $1,200, moves to the platform's own account as revenue at once, fixed and never refunded. Razorpay Route holds the other 80%, $4,800, the creator pool (or the entity's own Razorpay account, under the RazorpayX fallback in section 5, until it pays out). The running cost of every one of Acme Notes's gigs is paid out of this same $4,800 pool, before creators are; none of it touches the platform's $1,200. None of the creator pool touches the platform's own operating account. Acme Notes is told the 20% share plainly and is never shown how the pool is split among creators.
3. Dispatch begins once the fund has arrived and the brand-safety check is complete. As each creator accepts a gig, that gig's expected earnings are reserved from the creator pool; a cancelled gig's reservation returns to the remaining creator pool.
4. Each gig releases a floor of 20% of expected earnings when the posted link passes the four checks, then releases earnings to date (views divided by 1,000, times the creator's CPM, minus what was already released) after each daily view refresh for 14 days, up to the maximum payout, which is expected earnings unless Acme Notes has switched on the optional bonus. The platform's 20% cut does not move again after deposit. Each release moves from the creator pool into the creator's wallet as Pending, then to Available after the 48-hour fraud hold.
5. On the 1st of every month, Razorpay Route (or RazorpayX and Cashfree for Indian creators, Payoneer or PayPal for creators abroad) pays out the full Available balance of every creator with completed payout setup and at least $20 or the equivalent available, converting to local currency at the point of payout. Balances under that amount roll over to the next cycle.
6. Whatever share of expected earnings creators actually earn across all of Acme Notes's gigs comes out of the $4,800 creator pool. At most, creators are paid $2,300 across the Bronze gigs plus $2,400 across the Silver 1 gigs, $4,700 in total, and the flat $2.00 running cost of all 70 gigs is $140, together about $40 more than the $4,800 pool: the 46 and 24 gig counts above are rounded to whole gigs from the fractional 46.15 and 23.53 gigs the fund actually buys, so the true, unrounded totals fit inside the pool with a little room to spare (assumption, rounding). Whatever a given gig has not earned when its post stops earning, 14 days after going live, stays in the pool, shown to Acme Notes simply as fund balance, usable on another campaign; it is not refunded. The platform's $1,200 revenue was already taken at deposit and is not part of what returns, and running costs are never taken out of it.
7. None of the six steps above are trusted on paper alone. In the MVP sprint, before the wallet and ledger are built, this whole flow is validated end to end with one real small transfer: a brand pays through Cashfree or Razorpay, the funds are held (Route, or the dated RazorpayX fallback from section 5), one creator is paid through RazorpayX, and one creator abroad is paid through Payoneer if a rail is available (assumption). Only once that real transfer clears at every step does the ledger get built on top of it.
8. From Phase 4, a creator can choose an instant payout instead of waiting for the 1st, at a 2% fee paid by the creator, taken by the payments partner at the moment of that payout.

The platform's $1,200 revenue in this example is not a separate money movement shown to Acme Notes; it was taken from the deposit at once and is not tied to any single gig's outcome, as described on Business model. Because running costs are paid from the $4,800 pool and never from the $1,200 revenue, the whole $1,200 is contribution: 100% of revenue, with only fixed costs such as tools and referrals set against it.

7. Creator payout setup: India and abroad

Payout setup is asked for the first time a creator has a Pending balance, and must be finished before their first payout, not before their first gig. The steps differ by whether the creator is in India or abroad:

7.1 Creators in India

1. Identity check. RazorpayX verifies who the creator is before it will hold a payout method for them. Cashfree Payouts would do the same but is not offered to a proprietorship.
2. PAN and bank details. A creator's PAN (Permanent Account Number) and bank account, or a UPI handle, are collected before the first payout.
3. TDS. Tax is deducted at source before the payout is sent, at the rate and under the section the chartered accountant confirms, most likely Section 194-O.
4. Payout. RazorpayX sends the Available balance to the creator's UPI handle or bank account on the 1st of the month.

7.2 Creators outside India

1. Identity check. Until a bulk rail is open to an Indian payer, the creator supplies bank details and an invoice per payout, and Karbon's bank partner runs the checks on each remittance. Payoneer would verify the creator itself but cannot send from India; PayPal can send one payment at a time to a creator's PayPal account, with PayPal doing that creator's checks.
2. Payout method. For now a bank account, paid by SWIFT or local rail through Karbon, or a PayPal balance, paid one at a time from the PayPal Business app. Bulk payouts to either become possible only through a foreign entity or once an Indian provider opens outward bulk payouts.
3. Wallet hold until a rail is live. If Payoneer's eligibility for an Indian-entity payer, or the outward-remittance paperwork, is not yet confirmed, the creator can still join, accept gigs and earn; their wallet holds the balance and they are told when payouts open (assumption).
4. Currency conversion. The wallet and rate card are always in US dollars; conversion to the creator's local currency happens only at the moment of payout, done by whichever rail is paying them, matching the global launch rule in brief section 22.

This keeps the eligibility rule in brief section 5 intact, since payout setup is only required before the first payout, while making sure nobody sees a wallet balance vanish or get paid incorrectly.

8. Brand pay-in and currency

A brand can join from any country Razorpay's pay-in product can collect from, matching brief section 22, item 1. In practice:

• Cards, UPI and net banking for Indian brands. These are Razorpay's default pay-in methods, with international cards available once separately enabled on the account.
• Cards for brands outside India, where Razorpay's coverage allows. A brand outside India is charged in its own currency at the day's rate of the dollar price; the chartered accountant confirms how the invoice shows that charge.
• Invoicing for managed campaigns. From Phase 4, a brand running a managed campaign, priced per campaign with the platform keeping 35% of the deposit and creators getting 65% (assumption), with no monthly fee, is invoiced directly rather than paying by card at deposit time, since a campaign manager from ops is already running the relationship (assumption).
• Brands are charged in their own currency at that day's rate of the dollar price. Prices, the rate card, the fund and the price per gig stay in US dollars inside the product; an Indian brand sees the rupee amount at checkout and a German brand the euro amount, each converted at that day's rate, plus GST where it applies.
• GST on the price the brand pays. Where GST applies, it is added at deposit time and handled through Razorpay and the accountant; section 9 explains what GST covers and what it does not.

The fund, rate card, wallet and price per gig are always expressed in US dollars inside the product, whatever the brand's country; only the brand's own currency charge, and the creator's payout currency, ever convert, and only at the point of charge or payout, as set out in brief section 22, item 3.

9. Legal shape: why GST applies only to our 20% cut

The founder's decision on 4 September 2026 fixes the legal shape of the whole flow, and everything else on this page follows from it. Distribution Club runs as a marketplace, also called an agent, not as a principal. A marketplace facilitates a sale between two other parties and charges a fee for the facilitation; a principal is the seller itself, and the whole sale is its own revenue. Which one Distribution Club is decides whether GST (Goods and Services Tax, India's tax on goods and services) applies to the platform's 20% cut only, or to the whole price a brand pays. Two pairs follow from this, and only one is the standing model, per brief section 34:

• Marketplace plus Route: GST on the 20% cut only. The creator supplies the content to the brand; the platform supplies facilitation and charges its own 20% cut for that, taken the moment the deposit lands. The other 80%, the creator pool, is never the platform's revenue, so it must not be held by the platform: it is held and split by Razorpay Route, a licensed payment aggregator's split-settlement product, which pays creators. Because the platform never becomes the seller of the underlying gig, GST applies only to its own 20% cut. This is the standing model.
• Principal plus holding the money: GST on the whole price. If the platform held the brand's money itself and paid creators as its own contractors, the platform would be the seller of record, the brand's whole payment would become the platform's own revenue, and GST would apply to the whole price, not just the 20% cut. This is the shape of the credits model used by dating and hosting apps that sell their own coins (section 9.4). It is rejected as the standing model, and is used only as the dated fallback in section 5 if Route is not approved in time, for the gigs that run under it.

Route is therefore not just a payments convenience; it is what keeps Distribution Club on the marketplace side of this pair. Without a licensed aggregator holding and splitting the money, the platform would be holding brand funds itself, which is the principal shape, with GST on the whole price and the money-transmission exposure described in section 11.

9.1 The invoice picture

Under the marketplace model, an invoice looks like this: Distribution Club invoices the brand for its own fee (the platform's 20% cut, taken at deposit) plus 18% GST on that fee. The creator's fee passes through the flow to the creator without any platform GST on it, because the creator, not the platform, supplied the content to the brand; whether the creator charges GST of their own is covered in section 9.2. For a brand billed outside India, the platform's fee is an export of services and can be zero-rated under a Letter of Undertaking, a filing that lets a registered exporter bill without charging GST upfront (section 9.3). All of this is to be confirmed by the chartered accountant before the first brand invoice goes out.

9.2 E-commerce operator duties (to be confirmed by the chartered accountant)

Running a marketplace that collects payment on behalf of creators makes Distribution Club an e-commerce operator under GST law, with duties beyond simply charging GST on its own fee:

• Register as an e-commerce operator under GST. This registration is what lets the platform collect TCS on creators' supplies (below) and is separate from any GST registration the platform already holds for its own fee.
• Collect TCS at 1% under Section 52. TCS (tax collected at source) at 1% is collected on the net value of the supplies creators make through the platform, and filed monthly. This is a collection on the creator's supply to the brand, not a tax on the platform's own 20% cut.
• Deduct TDS under Section 194-O. Tax deducted at source on creator payouts, most likely under Section 194-O of the Income Tax Act, the provision aimed at e-commerce operators, is applied by RazorpayX or Cashfree Payouts before each payout, as confirmed by the chartered accountant and described in section 7.
• Most creators do not need to register for GST themselves. A creator whose own turnover is below the 20 lakh rupee threshold is exempt from registering for GST under the notification that exempts service providers below that threshold, even while selling through the platform. The platform asks a creator for a GST number only if they already have one; below the threshold, none is required.

9.3 Exports are zero-rated

• GST at 18% applies to the platform's 20% cut charged to Indian brands. 18% is the rate that applies to the platform's 20% cut on a gig sold to a brand billed inside India, taken at deposit (verify against current documentation).
• The 20% cut charged to brands outside India is an export of services and can be zero-rated. Exporting a service under a Letter of Undertaking is the likely path, to be confirmed by the chartered accountant.
• A merchant of record has no role at all. There is no subscription for it to bill (section 3), so GST on the platform's 20% cut is something the platform itself must account for and pay.
• The US sales-tax mention used elsewhere in this spec is removed. It would only apply if a US entity is created later, which is not part of the two-week plan.
• The brand-facing number stays all-in. A brand never sees a separate processing or platform-cut line; tax is shown on the invoice as the law requires.

9.4 Why the credits model of dating and hosting apps does not bypass this

Dating and hosting apps that sell their own coins look, on the surface, like they avoid GST on a cut the way Distribution Club wants to. They do not, for one of two reasons. Where the coins are closed-loop, meaning they can only be spent on the app's own features and are never transferable or withdrawable as cash, there is no creator being paid at all, so there is no marketplace supply to compare against; it is simply the app selling its own digital goods, principal to consumer, with GST on the whole sale. Where a host or performer can cash out coins for money, the app is acting as the principal that pays that person as a contractor, and it pays GST on the whole amount it charges the buyer, not just its own cut, exactly the pair rejected in the box above. Neither shape gives GST on a 20% cut only. Distribution Club gets GST on its 20% cut only because it is genuinely the marketplace, not the seller, and because Route, not the platform, holds the 80% creator pool; a credits model that looks similar from a screenshot is not the same thing underneath.

This is also why the word "credit" is not used on this site for money at all: the brand dashboard figure for an unspent fund balance held by Route is called the fund balance, spendable only on the brand's later campaigns and never refunded. There is no transferable credit of any kind, and creators never receive "credits": what a creator earns is a fee owed to them by the platform's marketplace flow, paid on the 1st of the month, not a coin or balance sold to them by the platform.

The chartered accountant confirms the e-commerce operator registration, the TCS and TDS treatment, the Letter of Undertaking filing, and how the invoice shows a brand's own-currency charge against the US-dollar price, before the first brand invoice goes out.

10. Fees and who pays

These are the payment-related fees in the flow, matching brief section 21, item 6, updated for the Indian rails in section 2, and the cost lines on Business model. All figures should be verified against current documentation before they are relied on for pricing.

The reason pay-in processing and payout transfer fees are folded into the flat $2.00 running cost, rather than passed to the brand or creator, is that what one gig takes from the fund, at a typical median by league (a US developers audience, Reels, AI tools and SaaS: about $38 for Bronze 1 up to about $4,125 for Diamond), is meant to be exactly what it says: expected earnings plus the running cost, divided by 0.8, with the platform's 20% cut already taken out of the deposit that funds it. A brand funding a Silver 1 gig that reaches its full expected earnings should not have to work out a processing surcharge on top, and a creator's earnings should arrive in full, not minus a transfer charge. The platform does not absorb these costs out of its own 20%: they are paid from the 80% creator pool, inside what a gig takes from the fund, which is why the 20% is net margin. These costs are already counted this way in the unit economics on Business model.

The two blended figures above, about 1.1% for collection and about $0.15 per gig for payouts, come from the published per-method rates below, from Cashfree and Payoneer. All figures should be verified against current documentation before they are relied on for pricing.

Blending these the way the unit economics do: about half of brand deposits arrive by UPI, 40% by domestic card or net banking and 10% by international card, which works out to about 1.1% of the deposit collected. On the payout side, about 80% of creators are in India and each is paid once a month for about two gigs, which works out to about $0.15 per gig blended across Cashfree Payouts and Payoneer Mass Payouts. Both blended figures are used throughout Business model.

11. Compliance

Several compliance questions sit directly on top of the payment flow, and are called out in brief section 12 as things to confirm before launch:

• Money transmission. Razorpay's own payment aggregator authorisation is what lets it hold and move brand funds; whether Distribution Club itself needs any separate licence, given that Razorpay is doing the actual holding and moving of money, is a Phase 0 legal question, to be confirmed by the lawyer.
• Sanctions screening. Screening brands and creators against sanctions lists is done by Razorpay, RazorpayX, Cashfree, Payoneer or PayPal as part of onboarding a brand's pay-in account or a creator's payout account, not built separately by the platform.
• TDS for Indian creators. Tax deducted at source, most likely under Section 194-O, is confirmed by the chartered accountant and applied by RazorpayX or Cashfree Payouts before each payout; see section 7.
• Reporting for creators paid abroad. Any tax reporting Payoneer or PayPal itself carries out for creators outside India (for example a US Form 1099 or an EU reporting rule such as DAC7) is that partner's own process, not something the platform files directly; to be confirmed with the chartered accountant as international creators sign up (assumption).
• Contractor status. Creators are independent contractors, not employees; brands and creators never contract directly with each other, both contract with the platform, and the accepted offer plus the brief acts as the written statement of work. Contract rules differ by country and, inside the United States, by state, to be confirmed by the lawyer.
• Data protection. Only the data needed for payout setup, identity, PAN or tax form, and payout method, is collected, through the payments partner rather than stored directly by the platform where possible, consistent with the data-privacy rights described in brief section 12.

12. Ledger design

A double-entry ledger records every movement of money twice: once as money leaving one place, once as money arriving somewhere else, so the two sides always add up to zero. For this product that means:

• One entry pair per movement. A brand deposit splits at once, so it is two pairs: cash in and platform revenue up for the 20%, cash in and creator pool up for the other 80%. A gig reserves its expected earnings from the creator pool when a creator accepts. A release (the floor once the link passes the four checks, or a daily view refresh) is one pair (creator pool down, creator wallet Pending up). Expected earnings not paid out when the post stops earning, 14 days after going live, go back to the creator pool. A payout is one pair (wallet Available down, sent to bank or payout method). There is no refund pair: unspent creator pool stays as fund balance, and the platform's 20% never moves again.
• A rail field on every payout. Every payout entry records which rail sent it, Razorpay Route, RazorpayX, Cashfree, Payoneer or PayPal, so the ledger treats a payout as a payout no matter which product carried it, matching brief section 21, item 5.
• Daily checks and a monthly reconciliation. Every day, the ledger's totals for money held, released and paid out are checked against the statement the payments partner provides, so any mismatch is caught within a day; the full reconciliation described on the Dependencies page is done after each payout run on the 1st.
• What is stored, and for how long. The ledger keeps every entry permanently, since it is the record of money movement. Video originals are kept for 180 days after a gig completes, then deleted, while the post ID, URL and view snapshots are kept, per brief section 20, item 9. On account deletion, tax and payment records required by law are kept even though everything else is removed within 30 days, per brief section 20, item 10.

13. The two-week Phase 0 checklist

Phase 0 is now the two-week MVP sprint, 7 to 20 September 2026, with the first gig dispatched on 21 September 2026 (brief section 28). Every item below should start on 7 September 2026 and be verified against current documentation, since lead times change:

1. Company and bank. An Indian entity with a bank account must exist before any brand money is collected. If it does not exist yet, incorporation takes about 7 to 15 working days and is the single biggest blocker; until then, no brand deposits, only dogfood gigs paid from the founder's own account (assumption).
2. GST registration. 3 to 7 working days after incorporation; needed before the first brand invoice (assumption).
3. Razorpay account. Activation typically 1 to 3 working days after KYC; international card acceptance is a separate enablement request.
4. Razorpay Route. Requested during onboarding; approval can take 1 to 2 weeks (assumption). Until approved, the RazorpayX fallback from section 5 applies, with the lawyer's sign-off.
5. RazorpayX. KYC and activation, 2 to 5 working days (assumption), needed before the first payout to Indian creators. Cashfree Payouts is closed to proprietorships (confirmed 12 September 2026).
6. Creators abroad. Payoneer India is receive-only (confirmed 11 to 16 September 2026), so the sales-led Mass Payouts path is closed to an Indian payer. Karbon outward remittance by hand is the interim; a foreign subsidiary with Trolley or Stripe Global Payouts is the medium-term route. Until one is live, creators outside India can join and earn; their wallet holds the balance and they are told when payouts open.
7. Chartered accountant sign-off. Confirms TDS treatment (Section 194-O likely), GST on the platform's 20% cut, and the Letter of Undertaking for export zero-rating, before the first payout and the first brand invoice.
8. Lawyer sign-off. Reviews the money-transmission question for Razorpay's role, and signs off on the RazorpayX fallback if Route is not approved by 21 September 2026.

The first payout run is 1 October 2026 (brief section 28, item 9), which is the date every rail above needs to be working by, not merely applied for.

14. Open questions

• Does the Indian entity, with its bank account, exist today, and if not, when does incorporation complete?
• Is Razorpay Route approvable inside the two-week MVP sprint, or will the RazorpayX fallback be needed for the first gig on 21 September 2026?
• Can an Indian entity act as the payer of record for Payoneer Mass Payouts? Answered 16 September 2026: no, Payoneer India is receive-only. Open instead: which outward rail an Indian sole proprietorship can use in bulk, and the purpose code and Form 145 or 146 paperwork it needs.
• Is PayPal a workable second payout rail for creators abroad from an Indian business account? Answered 17 September 2026 by PayPal on the phone: single international payments, yes, from the PayPal Business app; bulk Payouts, no. Open: PayPal's fee and currency spread per payment against Karbon's, and what documentation PayPal India asks for on each outward payment.
• What does the chartered accountant confirm about TDS under Section 194-O, GST at 18% on the platform's 20% cut, and how the invoice shows a brand's own-currency charge against the US-dollar price?
• Does the Letter of Undertaking for zero-rated exports need to be filed before the first export invoice, and how long does that filing take?
• Who signs off on the RazorpayX fallback for holding and paying from the entity's own account, and what limits should apply until Route is approved?
• What is the practical minimum time to get Razorpay's international card acceptance enabled, for brands paying from outside India?
• Does the lawyer conclude that Distribution Club needs any registration of its own beyond what Razorpay's aggregator licence covers?
• How should the product track a brand's deposits across a calendar month, possibly across several separate pay-ins, to trigger volume pricing at $10,000 without a manual check by ops?