Merchant of Record vs Stripe + GoodVat: What Your SaaS Actually Pays
Paddle, Lemon Squeezy, Polar and Stripe Managed Payments cost 6–8% of revenue once the surcharges are added. Here's the real maths, and what changes when you move to Stripe + GoodVat.
A Merchant of Record (MoR) such as Paddle, Lemon Squeezy or Polar becomes the legal seller of your software. It charges your customers, deals with sales tax and VAT everywhere, and pays you what’s left.
That’s a good deal when you’re starting out. Once you have real revenue, it gets expensive. The headline rate is 5% + 50¢, but after the surcharges for non-US cards and subscriptions, most SaaS companies pay 6–8% of revenue. Plain Stripe costs about 4–5%. The difference is what you’re paying someone to handle your tax.
The short answer: for a SaaS business doing $1M a year, a Merchant of Record costs $60,000 to $83,000 a year. Stripe + GoodVat costs $49,200: $48,000 in Stripe fees and $1,200 for GoodVat. Below about $100,000 a year the two cost the same, so stay on your MoR. Above that, switching saves more every year.
| Merchant of Record | Stripe + GoodVat | |
|---|---|---|
| Who the customer buys from | The MoR (Paddle, Lemon Squeezy, Polar, Stripe Managed Payments) | Your company |
| Who’s registered for tax | The MoR | Your company. GoodVat registers you and files your returns |
| All-in cost | 6–8% of revenue | 4–5% of revenue + $100/month |
| Cost at $1M a year | $60,000–$83,000 | $49,200 |
| How the cost grows | A percentage of every dollar | Stripe’s percentage plus a flat GoodVat plan |
What an MoR really costs
Take a subscription business doing $1M a year, with a $50 average charge and 40% of revenue on non-US cards. That’s a normal mix for SaaS.
| Setup | How it's priced | Cost per year | Share of revenue | |
|---|---|---|---|---|
| Stripe Managed Payments | 2.9% + 30¢, +3.5% MoR fee, +1.5% non-US, +0.7% Billing | $83,000 | 8.3% of revenue | |
| Lemon Squeezy | 5% + 50¢, +1.5% non-US, +0.5% subscriptions | $71,000 | 7.1% of revenue | |
| Polar | 5% + 50¢, +1.5% non-US | $66,000 | 6.6% of revenue | |
| Paddle | 5% + 50¢ | $60,000 | 6.0% of revenue | |
| Stripe + GoodVat | 2.9% + 30¢, +1.5% non-US, +0.7% Billing, + GoodVat $100/mo | $49,200 | 4.9% of revenue |
Stripe + GoodVat costs $10,800 to $33,800 less a year than a Merchant of Record. That’s $48,000 to Stripe and $1,200 to GoodVat.
Published list prices, checked October 2026. All payments are subscriptions charged in USD. GoodVat is the Scale plan ($100/month, 2,500 transactions); tax registrations and filings are quoted per country.
And that’s before the fees the chart leaves out:
| Merchant of Record | Fees not in the chart |
|---|---|
| Lemon Squeezy | 1% on payouts to a non-US bank; 1.5% on PayPal payments; 5% on recovered abandoned carts; 3% on affiliate sales |
| Polar | Stripe’s payout fees ($2 a month, plus 0.25% + 25¢ per payout); $15 per chargeback, win or lose |
| Stripe Managed Payments | The 3.5% MoR fee comes on top of standard Stripe processing, and Billing is charged separately |
Cost at different revenue levels
The MoR fee is a percentage, so the gap grows with your revenue. Same business mix: $50 average charge, 40% on non-US cards.
| Yearly revenue | Merchant of Record | Stripe + GoodVat | You keep |
|---|---|---|---|
| $100,000 | $6,000–$8,300 | $6,000 | up to $2,300 |
| $250,000 | $15,000–$20,750 | $13,200 | $1,800–$7,550 |
| $500,000 | $30,000–$41,500 | $25,200 | $4,800–$16,300 |
| $1,000,000 | $60,000–$83,000 | $49,200 | $10,800–$33,800 |
| $2,000,000 | $120,000–$166,000 | $97,200 | $22,800–$68,800 |
Merchant of Record range covers Paddle, Polar, Lemon Squeezy, Stripe Managed Payments. $50 average subscription charge, 40% on non-US cards. List prices checked October 2026.
You’re paying $12,000+ a year for tax compliance
Take the card processing out and look at what’s left. In the example above, Stripe on its own costs $48,000. Paddle costs $60,000. So $12,000 a year is what Paddle charges to handle your sales tax and VAT, along with fraud screening and chargebacks:
| Setup | Total per year | Card processing (plain Stripe) | What you pay for tax handling |
|---|---|---|---|
| Stripe Managed Payments | $83,000 | $48,000 | $35,000 |
| Lemon Squeezy | $71,000 | $48,000 | $23,000 |
| Polar | $66,000 | $48,000 | $18,000 |
| Paddle | $60,000 | $48,000 | $12,000 |
| Stripe + GoodVat | $49,200 | $48,000 | $1,200 |
GoodVat does the tax part for $100 a month on its Scale plan, which covers up to 2,500 transactions a month. This business makes about 1,700 charges a month.
The gap also grows with you. An MoR’s fee is a percentage of every dollar you make. GoodVat is a flat monthly plan. If you sell AI or anything compute-heavy, it hurts even more: at a 50% gross margin, a 7% MoR fee takes 14% of your gross profit.
What changes when you switch
You become the seller. Customers buy from your company, your name is on their card statement, and Stripe pays you every few days instead of on the MoR’s schedule.
You’re also responsible for your tax again. That’s the part GoodVat takes off your hands:
- We tell you where you owe tax. We track your sales against every US state’s threshold and every country’s rules for digital services, and warn you before you cross one.
- We register you. Before you switch, we register your business everywhere you need to be, including the EU and UK schemes that apply from your first sale.
- We calculate tax on every charge. Each customer gets the right rate for where they are. Businesses with a valid VAT number are reverse-charged automatically.
- We file your returns. Sales tax, VAT and GST returns go in on time, and your customers get compliant invoices.
You connect Stripe once, and we take care of the rest. You don’t need a tax team.
When to stay on an MoR
- You make less than about $100,000 a year. At that size, Paddle and Stripe + GoodVat cost about the same: $6,000 a year each in this example. Spend your time on the product.
- You don’t want your company registered for tax anywhere. With an MoR, the MoR holds the registrations, not you.
Past that point, the gap only grows. The MoR’s cut rises with every dollar you make, and GoodVat’s price stays flat.
FAQ
How much does a Merchant of Record cost?
Paddle, Lemon Squeezy and Polar advertise 5% + 50¢ per transaction, and Stripe Managed Payments adds a 3.5% fee on top of standard Stripe processing. After surcharges for non-US cards and subscriptions, most SaaS companies pay 6–8% of revenue. For a $1M-a-year business with a $50 average charge and 40% of revenue on non-US cards, that’s $60,000 (Paddle) to $83,000 (Stripe Managed Payments) a year.
Is Stripe + GoodVat cheaper than Paddle or Lemon Squeezy?
Yes, above about $100,000 a year in revenue. For a $1M-a-year SaaS business, Stripe + GoodVat costs $49,200 a year (4.9% of revenue), against $60,000 on Paddle, $66,000 on Polar, $71,000 on Lemon Squeezy and $83,000 on Stripe Managed Payments. That’s $10,800 to $33,800 a year saved.
How much of a Merchant of Record’s fee pays for tax compliance?
Subtract what plain Stripe would cost and the rest is what you pay the MoR to handle sales tax and VAT, plus fraud screening and chargebacks. For a $1M-a-year SaaS business that’s $12,000 a year on Paddle, $18,000 on Polar, $23,000 on Lemon Squeezy and $35,000 on Stripe Managed Payments. GoodVat costs $1,200 a year ($100/month on the Scale plan).
When should a SaaS company stay on a Merchant of Record?
Below about $100,000 a year in revenue, when Paddle and Stripe + GoodVat cost about the same ($6,000 a year each in the example), or if you don’t want your company registered for tax anywhere, because the MoR holds the registrations.
What do I have to do about tax if I leave a Merchant of Record?
You become the seller, so the tax registrations are yours: EU VAT from the first sale to an EU consumer if you’re outside the EU, UK VAT from the first UK consumer sale, US states once you pass their thresholds (usually $100,000 a year), and digital-services registrations in countries such as Australia, Canada and Japan. GoodVat tracks the thresholds, registers you, calculates tax on every Stripe charge and files your returns. For the full breakdown, see SaaS Payments: Merchant of Record vs Stripe + GoodVat.