Paddle

What is Merchant of Record?

With Paddle as Merchant of Record, customers technically buy from Paddle, not from you. Paddle issues invoices, collects payment, handles VAT, and then pays you. Your customer sees your brand in checkout, but legally Paddle is the seller. This shifts all sales tax compliance to Paddle.

Paddle vs Stripe: When to Choose Each

• Choose Paddle when: Selling in many countries, no tax/finance team, want simplicity
• Choose Stripe when: Lower fees are priority, want full control, have finance resources
• Paddle advantage: Zero VAT compliance work, one invoice to process monthly
• Stripe advantage: Lower fees (1.5% vs 5%), more payment customization, faster payouts

Countries and Tax Coverage

Paddle handles VAT/GST in 200+ countries and US sales tax in all states. For German SaaS selling internationally, this means no more worrying about EU VAT thresholds (€10,000), US nexus rules, or UK VAT post-Brexit. Paddle calculates the correct tax rate based on customer location and handles all filings.

Paddle Billing for Subscriptions

• Subscription management: Plans, trials, upgrades, downgrades, cancellation
• Usage-based billing: Metered pricing for consumption-based models
• Dunning: Automatic retry of failed payments with smart logic
• Customer portal: Self-service subscription management for customers
• Proration: Automatic calculation for mid-cycle plan changes

True Cost Comparison

Paddle's 5% + €0.50 looks expensive versus Stripe's 1.5% + €0.25. But calculate the true cost: accountant time for VAT, VAT registration fees per country, compliance software, risk of audit. For a €100/month subscription sold in 20 countries, Paddle's simplicity often wins when total cost is considered.