Payment processors and merchant of record (2026): Stripe, Paddle, Polar

Founders & Company Structures
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If you sell software or digital products worldwide, the first choice is not which processor but who is the merchant of record. With a payment processor such as Stripe or PayPal, your company is the seller and owns the sales tax and VAT. With a merchant of record such as Paddle, Polar, Gumroad, Lemon Squeezy or Stripe Managed Payments, the platform is the seller and handles that tax for you, at a higher fee. Headline rates checked on 6 October 2026 run from 2.9% + 30¢ (Stripe US cards) to 10% + 50¢ (Gumroad direct sales).

This is a wiki: members can edit this first post to add options, prices and experiences. Please keep it factual and say when you last used a service.

Last checked: October 2026

In short:

  • Payment processor: cheaper (Stripe US is 2.9% + 30¢, plus 1.5% for international cards), but you register, collect and file sales tax and VAT yourself.
  • Merchant of record: the platform sells to your customer and handles tax. Paddle, Polar and Lemon Squeezy all list 5% + 50¢; Stripe Managed Payments adds 3.5% on top of Stripe’s payment fees.
  • Lemon Squeezy was acquired by Stripe in 2024. Its January 2026 update says it plans an easy migration path to Stripe Managed Payments, with no deadline published.

Merchant of record vs payment processor

A payment processor moves the money. Your company is the seller, owns refunds and disputes, and is liable for sales tax, VAT and GST wherever you cross a registration threshold.

A merchant of record (MoR) buys from you and resells to the customer. Paddle says it collects the right tax, tracks filing deadlines and submits returns “so you don’t have to.” Stripe describes Managed Payments the same way: it calculates, collects, files and remits sales tax, VAT and GST in more than 80 countries.

The trade-off is cost and control. Stripe Managed Payments, for example, excludes physical goods, professional services such as consulting or development, and anything with human delivery like live 1-1 coaching.

Comparison table

US-dollar pricing from each provider’s official page, checked 6 October 2026.

Service What it’s for Price from (checked 6 Oct 2026) Notes
Stripe Payments Processor for any business type 2.9% + 30¢ per US card transaction +1.5% for international cards, +1% if currency conversion is needed. You handle tax (Stripe Tax Basic is 0.5% per transaction where registered, no-code)
Stripe Managed Payments Stripe’s own MoR for digital products 3.5% per transaction on top of Payments fees Digital products only. Business must be based in a supported country (US, Canada, most of the EU/EEA, UK, Switzerland, Australia, Hong Kong, Japan, Singapore). Eligibility review applies
Stripe Atlas Delaware C corp or LLC formation with Stripe account $500 one-off, then $100 a year after year one Includes government fees and first-year registered agent
Paddle MoR for SaaS and software 5% + 50¢ per checkout transaction No monthly fee. Bespoke pricing for products under $10
Lemon Squeezy MoR for digital products (Stripe-owned) 5% + 50¢ per transaction Extra fees on some transactions, including non-US ones. Transitioning to Stripe Managed Payments
Polar MoR for developers and SaaS 5% + 50¢ (Starter) Paid plans from $20 a month cut the rate (to 3.4% + 30¢ on Scale). +1.5% for international cards. Payouts pass on Stripe’s fees ($2 a month while payouts are active, plus 0.25% + $0.25 per payout)
PayPal Processor and wallet 3.49% + $0.49 for PayPal Checkout (US) +1.5% for international commercial transactions. Currency conversion spread of 3% to 4%
Gumroad Creator storefront and MoR 10% + 50¢ on direct sales; 30% via Discover marketplace Handles sales tax and VAT worldwide since 1 January 2025

Where you can open a Stripe account

Stripe accounts follow the company’s country, not where you sit. Stripe’s global page lists countries including the US, UK, EU states, Switzerland, the UAE, Singapore, Hong Kong, Japan, Thailand, Malaysia, Mexico and Brazil, with India and Indonesia in preview. Georgia and the Bahamas were not listed when we checked. Founders based elsewhere often use a US LLC (US LLC for non-residents (2026): Delaware vs Wyoming vs New Mexico) or Stripe Atlas.

Known downsides

  • Holds and reserves. Stripe says it places reserves because it is responsible for disputes and refunds when a business can’t fulfil orders. Reserves are either fixed or rolling.
  • MoR fees add up. On a $20 sale, 5% + 50¢ is $1.50, or 7.5%.
  • MoR control. Stripe Managed Payments can refund customers within 60 days in some cases, and if you don’t reply to a support escalation within 48 hours, Stripe may refund without your approval. Customers see “LINK.COM*” on statements.
  • Lemon Squeezy uncertainty. Its own update admits “slower support responses and less frequent product updates.” Plan for a migration.

How to choose

  1. Selling services or consulting: a processor (Stripe or PayPal). MoRs generally won’t take human-delivered services.
  2. SaaS selling to consumers in many countries: an MoR, unless you are ready to register for EU VAT, UK VAT and US state sales tax.
  3. B2B SaaS with larger invoices: Stripe plus Stripe Tax is often cheaper. Price both against your average order value.
  4. Ebooks, courses, templates: Gumroad or Polar for simplicity.

Member experiences

Reply below with which one you use and why: company country, average order value, and any holds or reserves.

Related guides: Wyoming LLC for non-US residents: Form 5472, banking and tax (2026) · US LLC for non-residents (2026): Delaware vs Wyoming vs New Mexico · Best country to incorporate as a digital nomad (2026): 15 options compared · Where to incorporate as a digital nomad: US LLC, UK, Estonia, UAE

Quick answers

Q: What is a merchant of record?
A merchant of record is the legal seller to your customer. It buys your product and resells it, so it collects and remits sales tax, VAT and GST and handles disputes. Paddle, Polar, Gumroad, Lemon Squeezy and Stripe Managed Payments work this way. With Stripe or PayPal, your company stays the seller.

Q: Is Lemon Squeezy shutting down?
No closure date has been announced. Stripe acquired Lemon Squeezy in 2024, and Lemon Squeezy’s January 2026 update says it is building Stripe Managed Payments and aims to give users an easy migration path. It gave no deadline. Its pricing page still lists 5% + 50¢ per transaction.

Q: Can I open a Stripe account if I live somewhere Stripe doesn’t support?
Stripe accounts follow where the business is registered. If your residence country isn’t on Stripe’s list, founders commonly form a company in a supported country, often a US LLC or a Delaware company via Stripe Atlas. Owners of US companies without an SSN or ITIN must provide their local non-US tax ID.

Sources

This is general information from the Nomad Forums team, not legal, tax or financial advice. Rules change; check the official source or a qualified adviser before acting.

Over to you: Did switching to a merchant of record save you more in tax admin than it cost in fees? And has anyone moved from Lemon Squeezy to Stripe Managed Payments yet?