Update 2016:

Stripe and Braintree have launched in couple of countries in APAC now.

Businesses in Singapore can start using Stripe, Braintree and eWay, apart from WorldPay.
Startups in Malaysia have the option of Braintree and eWay.

Many startups in India and other APAC countries, tend to incorporate in USA due to lack of proper payment gateway availability in their country. Recurring billing being such a pain for SaaS companies, it is only logical to take this step.

Update 2016: Stripe has now launched a program called Stripe Atlas. As of Aug 2016, the program is in beta. Though the overheads of managing multiple entities continue to remain, this package should make it easier for you to setup a US incorporation from any part of the world along with a template to follow.

Several Indian businesses consider incorporating in USA or Singapore, for lack of good payment gateway optionswith recurring billing in India and RBI regulation that is killing the subscription model for Indian startups.

Here is one such discussion in pluggd.in forum where people are exploring decent options to collect dollar payments as well as cater to Indian customers.

Incorporating in US (Delaware) will cost about $2000 USD and an additional $1000 USD per year for franchisee tax, federal tax, agent fees etc., Not a huge amount, if we make sufficiently good amount of money via our product / service. But for starters incorporating in another country, managing 2 entities is an overhead & a distraction.

Question is: How do we launch our product without too much upfront costs and get to a stage where we have tested our business model & are ready to scale-up? The key is also to spend less time learning everything about legal aspects of having operating multiple entities.

2checkout & SAASY are two options available for international transactions. But it comes with very steep percentage charges & potential lock-in of customer information. By lock-in, I am referring to the storage of card information with 2Checkout and SaaSy and they may not be portable to another provider, which means that you need to ask your customers for payment information again if you wish to migrate.

Even if you are considering incorporating elsewhere, here is what I recommend to most SaaS startups in their early days:

  • Test business viability, by focusing on making your application amazing.
  • Get to stage where you have 20 to 30 customers.
  • Use a solution like 2Checkout or SaaSy directly though it may be costly.
  • When it is time to scale-up, register in US / Singapore depending on your preferences (takes less than 10 days including merchant account).

Is payment checkout the real reason why you haven’t been able to get the first 50 paying customers?

Of the several thousand visitors, and in turn, several hundred trials each month, is there a significant drop-off in the checkout? If this is true, then you should incorporate elsewhere, get a decent payment gateway that enables you and get running.

Many a times, startups get stuck in discovery stage where not many even know that you exist. If that is the case, addressing that issue is very important than trying to solve a non-existent problem yet. My strong recommendation is to get some paying customers, validate the product before you incorporate elsewhere.