Lemon Squeezy Integration

Lemon Squeezy is a payment platform designed for digital products and SaaS. Its standout feature is acting as a Merchant of Record (MoR), handling VAT and sales tax compliance globally.

Prerequisites

A Lemon Squeezy account (sign up here)
Your ShipFree application running locally or deployed
A verified store in Lemon Squeezy

What is Merchant of Record?

As a Merchant of Record, Lemon Squeezy:

Handles all tax compliance: VAT, sales tax, GST worldwide
Is the seller of record: Your customers buy from Lemon Squeezy, not you
Manages invoicing: Generates proper tax invoices
Handles refunds and chargebacks: Takes on the liability

This simplifies your business but means Lemon Squeezy takes a higher fee (5% + payment processing).

Setup Instructions

Step 1: Set Up Your Store

Log in to Lemon Squeezy
Complete store verification (required for payouts)
Set up your payout method
Configure tax settings (automatically handled as MoR)

Step 2: Get Your API Key and Store ID

Go to Settings → API
Click Create API Key
Copy your API key (starts with eyJ0eXAiOi...)
Note your Store ID (found in Settings)

Step 3: Create Products and Variants

Lemon Squeezy uses products and variants for pricing.

Go to Products in your dashboard
Click Create Product
For each plan (Starter, Pro, Enterprise):
- Set product name and description
- Set product type to Subscription
- Add product image (optional)
- Click Create Product
Create variants for each billing interval:
- Click Add Variant
- Set variant name (e.g., “Monthly”)
- Set price (e.g., $9.90)
- Set billing interval: Monthly or Yearly
- Enable Subscription
- Save and copy the Variant ID (numeric ID)

In Lemon Squeezy, you use Variant IDs (not Product IDs) when creating checkouts. Each variant represents a specific price point and billing interval.

Step 4: Configure Environment Variables

Add these variables to your .env file:

# Payment Provider Selection
PAYMENT_PROVIDER=lemonsqueezy

# Lemon Squeezy API Key (server-side)
LEMONSQUEEZY_API_KEY=eyJ0eXAiOiJKV1QiLCJhbGc...

# Lemon Squeezy Store ID
LEMONSQUEEZY_STORE_ID=12345

# Lemon Squeezy Webhook Secret (from Step 5)
LEMONSQUEEZY_WEBHOOK_SECRET=your_webhook_secret_here

# Lemon Squeezy Variant IDs (client-side, for display)
# Note: In LS, we use variant IDs, not product IDs
NEXT_PUBLIC_LEMONSQUEEZY_PRODUCT_STARTER_MONTHLY=123456
NEXT_PUBLIC_LEMONSQUEEZY_PRODUCT_PRO_MONTHLY=123457
NEXT_PUBLIC_LEMONSQUEEZY_PRODUCT_ENTERPRISE_MONTHLY=123458

In ShipFree’s config, these are named PRODUCT_* but actually contain Variant IDs for Lemon Squeezy. This maintains consistency across providers.

Step 5: Set Up Webhooks

Lemon Squeezy uses webhooks to notify your application about subscription events.

For Local Development

Use ngrok to expose your local server:

Install ngrok:
# macOS brew install ngrok/ngrok/ngrok
Start your development server:
bun dev
In another terminal, start ngrok:
ngrok http 3000
Copy the HTTPS URL (e.g., https://abc123.ngrok.io)
In Lemon Squeezy dashboard, go to Settings → Webhooks
Click Add Webhook:
- URL: https://abc123.ngrok.io/api/webhooks/payments
- Signing Secret: Generate a random string (save this!)
- Events: Select all subscription and order events

Add the signing secret to your .env:

LEMONSQUEEZY_WEBHOOK_SECRET=your_generated_secret

For Production

Go to Settings → Webhooks
Click Add Webhook
Set webhook URL: https://yourdomain.com/api/webhooks/payments
Generate and save a signing secret
Select events:
- subscription_created
- subscription_updated
- subscription_cancelled
- subscription_expired
- subscription_payment_success
- order_created
Add signing secret to production environment variables

Testing in Development

Test Mode

Lemon Squeezy provides test mode for development:

In your dashboard, toggle Test Mode (top right)
Create test products and variants
Use test checkout flows

Test Checkout

Lemon Squeezy provides test card numbers:

Card Number	Scenario
`4242 4242 4242 4242`	Successful payment
`4000 0000 0000 0002`	Declined (generic)

Use any future expiration date
Use any 3-digit CVC

Testing Subscriptions

Start your development server and ngrok:

bun dev
# In another terminal:
ngrok http 3000

Configure webhook in Lemon Squeezy with your ngrok URL

Create a checkout:

import { getPaymentAdapter } from '@/lib/payments/service'

const adapter = getPaymentAdapter()
const checkout = await adapter.createCheckout({
  plan: 'pro',
  userId: 'user_123',
  email: 'test@example.com',
  successUrl: 'http://localhost:3000/dashboard?checkout=success',
})

console.log('Checkout URL:', checkout.url)

Complete the test checkout
Verify webhook events in your application logs

Lemon Squeezy Implementation Details

The Lemon Squeezy adapter is implemented in src/lib/payments/providers/lemonsqueezy.ts.

Key Features

Checkout Sessions

Creates Lemon Squeezy checkouts with:

Variant-based pricing (not product-based)
Customer metadata
Custom redirect URLs
Trial periods (if configured)

async createCheckout(options: CheckoutOptions): Promise<CheckoutResult> {
  const newCheckout: NewCheckout = {
    productOptions: {
      redirectUrl: successUrl || paymentConfig.providers.successUrl,
      receiptButtonText: 'Go to Dashboard',
      receiptLinkUrl: paymentConfig.providers.successUrl,
    },
    checkoutData: {
      email,
      custom: {
        userId,
        plan,
        provider: 'lemonsqueezy',
      },
    },
  }

  const { data, error } = await createCheckout(
    storeId,
    Number.parseInt(price.productId), // Variant ID
    newCheckout
  )

  return {
    url: data.data.attributes.url,
    sessionId: data.data.id,
  }
}

Customer Management

Lemon Squeezy creates customers automatically during checkout:

Customers are created on first purchase
Customer data includes email and metadata
Uses customer lookup by email

async createCustomer(userId: string, email?: string): Promise<CustomerData> {
  if (email) {
    const { data } = await listCustomers({
      filter: { email },
      page: { size: 1 },
    })

    if (data?.data && data.data.length > 0) {
      const customer = data.data[0]
      return {
        id: `ls_${customer.id}`,
        providerCustomerId: customer.id,
        email: customer.attributes.email,
        userId,
        provider: 'lemonsqueezy',
      }
    }
  }

  // Return placeholder - real customer created at checkout
  return {
    id: `ls_pending_${userId}`,
    providerCustomerId: `ls_pending_${userId}`,
    email,
    userId,
    provider: 'lemonsqueezy',
  }
}

Subscription Handling

Provides:

Subscription retrieval by ID
Status mapping to unified format
Cancellation support (always at period end)

async cancelSubscription(
  providerSubscriptionId: string,
  cancelAtPeriodEnd = true
): Promise<void> {
  // Lemon Squeezy only supports cancelling at period end via API
  const { error } = await cancelSubscription(providerSubscriptionId)
  if (error) {
    throw new Error(`Failed to cancel subscription: ${error.message}`)
  }
}

Webhook Processing

Processes these events:

subscription_created, subscription_updated, subscription_cancelled, subscription_expired
order_created

Webhook validation using HMAC:

async validateWebhook(rawBody: string, signature: string): Promise<boolean> {
  const hmac = crypto.createHmac('sha256', process.env.LEMONSQUEEZY_WEBHOOK_SECRET!)
  const digest = Buffer.from(hmac.update(rawBody).digest('hex'), 'utf8')
  const signatureBuffer = Buffer.from(signature, 'utf8')

  return crypto.timingSafeEqual(digest, signatureBuffer)
}

Customer Portal

Lemon Squeezy provides a customer portal accessible via magic link:

const portal = await adapter.createPortal(
  'customer_email@example.com',
  'https://yourdomain.com/dashboard'
)
// Redirect to portal.url

The portal allows customers to:

Update payment methods
View invoices and receipts
Cancel subscriptions
Download tax invoices

Custom Data and Metadata

You can pass custom data in checkouts to track users:

checkoutData: {
  custom: {
    userId: 'user_123',
    plan: 'pro',
    // Add any custom fields
    teamId: 'team_456',
  },
}

This data is returned in webhook events as meta.custom_data.

Going Live

Pre-Launch Checklist

Tax Compliance

As a Merchant of Record, Lemon Squeezy handles:

EU VAT: All 27 EU countries
US Sales Tax: All applicable states
UK VAT
Canadian GST/HST/PST
Australian GST
And more: Check Lemon Squeezy tax coverage

You don’t need to:

Register for tax IDs in different countries
Calculate tax rates
File tax returns
Generate compliant invoices

Security Best Practices

Protect API keys: Keep LEMONSQUEEZY_API_KEY server-side only
Validate webhooks: Always verify HMAC signatures
Use HTTPS: Required for production webhooks
Secure webhook secret: Use a strong random string
Monitor webhook logs: Check for failed events

Troubleshooting

Webhook Not Received

Verify ngrok is running (local dev)
Check webhook endpoint is accessible
Review webhook logs in Lemon Squeezy dashboard
Ensure LEMONSQUEEZY_WEBHOOK_SECRET matches dashboard
Check signature validation logic

Checkout Session Fails

Verify LEMONSQUEEZY_API_KEY is set
Check LEMONSQUEEZY_STORE_ID is correct
Ensure variant IDs exist and are active
Check that products are published
Review error response from Lemon Squeezy API

Subscription Not Created

Check webhook was sent (Lemon Squeezy dashboard)
Verify webhook signature validation passes
Review application logs for errors
Ensure custom_data includes userId
Check database for subscription records

Customer Portal Issues

Ensure customer email is correct
Verify customer exists in Lemon Squeezy
Check customer has active subscription
Try accessing portal directly from Lemon Squeezy dashboard

Lemon Squeezy vs Other Providers

When to Choose Lemon Squeezy

✅ Choose Lemon Squeezy if you:

Want hassle-free global tax compliance
Are selling digital products or SaaS
Don’t want to deal with tax registrations
Prefer simple setup and pricing
Are a solo founder or small team
Want Lemon Squeezy to handle refunds/chargebacks

❌ Avoid Lemon Squeezy if you:

Need to be the merchant of record (legal/branding reasons)
Want maximum control over payment flow
Need extensive payment methods
Require advanced billing features (metered usage, etc.)
Want lowest possible fees

Feature Comparison

Feature	Lemon Squeezy	Stripe	Polar
Merchant of Record	✅ Yes	❌ No	❌ No
Tax Handling	✅ Automatic	⚠️ Manual	⚠️ Manual
Setup Complexity	✅ Low	❌ High	✅ Low
Fees	⚠️ 5% + processing	⚠️ 2.9% + $0.30	✅ Competitive
Payment Methods	⚠️ Good	✅ Extensive	⚠️ Basic
Customer Portal	✅ Good	✅ Advanced	⚠️ Basic
Best For	Digital products	Enterprises	Developer tools

Additional Resources

Support

For Lemon Squeezy-specific issues:

For ShipFree integration issues:

Check the source code in src/lib/payments/providers/lemonsqueezy.ts
Review webhook handling in src/app/api/webhooks/payments/route.ts

​Prerequisites

​What is Merchant of Record?

​Setup Instructions

​Step 1: Set Up Your Store

​Step 2: Get Your API Key and Store ID

​Step 3: Create Products and Variants

​Step 4: Configure Environment Variables

​Step 5: Set Up Webhooks

​For Local Development

​For Production

​Testing in Development

​Test Mode

​Test Checkout

​Testing Subscriptions

​Lemon Squeezy Implementation Details

​Key Features

​Checkout Sessions

​Customer Management

​Subscription Handling

​Webhook Processing

​Customer Portal

​Custom Data and Metadata

​Going Live

​Pre-Launch Checklist

​Tax Compliance

​Security Best Practices

​Troubleshooting

​Webhook Not Received

​Checkout Session Fails

​Subscription Not Created

​Customer Portal Issues

​Lemon Squeezy vs Other Providers

​When to Choose Lemon Squeezy

​Feature Comparison

​Additional Resources

​Support

Prerequisites

What is Merchant of Record?

Setup Instructions

Step 1: Set Up Your Store

Step 2: Get Your API Key and Store ID

Step 3: Create Products and Variants

Step 4: Configure Environment Variables

Step 5: Set Up Webhooks

For Local Development

For Production

Testing in Development

Test Mode

Test Checkout

Testing Subscriptions

Lemon Squeezy Implementation Details

Key Features

Checkout Sessions

Customer Management

Subscription Handling

Webhook Processing

Customer Portal

Custom Data and Metadata

Going Live

Pre-Launch Checklist

Tax Compliance

Security Best Practices

Troubleshooting

Webhook Not Received

Checkout Session Fails

Subscription Not Created

Customer Portal Issues

Lemon Squeezy vs Other Providers

When to Choose Lemon Squeezy

Feature Comparison

Additional Resources

Support