Paddle is a Merchant of Record (MoR) payment platform built for SaaS and digital products — meaning it doesn’t just process your payments, it becomes the legal seller of record and handles global sales tax/VAT compliance on your behalf. Here’s what that distinction actually means and who needs it.
What “Merchant of Record” Actually Means
With a standard payment processor (Stripe, PayPal), you are the seller — you’re responsible for calculating, collecting, and remitting sales tax and VAT in every jurisdiction where you have customers, which gets complicated fast once you sell internationally. As a Merchant of Record, Paddle legally sells on your behalf and handles tax compliance itself, in exchange for a higher per-transaction fee than a standard processor.
Who Actually Needs This
- SaaS companies selling globally — international VAT/GST compliance is the main reason to pay MoR fees over standard processing.
- Small teams without a finance/tax function — outsourcing tax compliance entirely can be worth the extra fee if you don’t have in-house resources to manage it.
- Digital product sellers — subscriptions, licenses, and downloads are Paddle’s core use case.
If you’re selling only domestically, or you already have accounting infrastructure to handle multi-region tax, a standard processor like Stripe is usually cheaper.
Paddle vs. Standard Processors
| Paddle (MoR) | Stripe / PayPal (standard) | |
|---|---|---|
| Tax compliance | Handled by Paddle | Your responsibility |
| Fees | Higher per transaction | Lower per transaction |
| Setup complexity | Lower ongoing compliance burden | More flexibility, more compliance work |
FAQ
Is Paddle more expensive than Stripe?
Per-transaction fees are typically higher, but that premium covers tax compliance work you’d otherwise have to do yourself.
Is Paddle only for SaaS?
It’s built primarily for software/digital products, though its subscription billing tools apply to other digital-goods businesses too.
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