Merchant of record for SaaS — handles tax, compliance, and global payments
Paddle operates as merchant of record (MoR), meaning Paddle is the legal seller of record. They collect tax (VAT, GST, US sales tax) on your behalf, handle compliance, manage subscription billing, and pay you net of fees. For SaaS companies serving customers in 30+ countries, MoR eliminates the operational cost of registering for tax in every jurisdiction. Trade-off: Paddle take rate (~5%) is higher than direct payments processors like Stripe (2.9%). For products under $5M ARR with global customer bases, the tax-handling alone usually outweighs the percentage difference.
We shipped EU sales 30 minutes after signup. Paddle handles VAT entirely.
Setting up Stripe for global SaaS means hiring a tax consultant and registering in 27 EU member states. Paddle replaced that whole thing with "they handle it." The 5% take is cheap compared to the alternative.
Below $1M ARR, MoR is free money in time saved.
I sell a $79/yr product to global indie devs. Compliance + tax + chargebacks would eat 20% of my time on Stripe. Paddle does all of it. The 5% fee is the price of getting my weekends back.
At $8M ARR the math flipped. We migrated to Stripe + Avalara.
5% on $8M is $400K. Stripe + Avalara + a part-time tax accountant is $80K. Paddle is the right call up to maybe $3-5M ARR, then migration math wins.
Methodology
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