What does 'merchant of record' mean?

A merchant-of-record platform like Paddle or Lemon Squeezy legally sells on your behalf and handles global sales tax/VAT compliance for you, unlike Stripe's default setup.

Is Stripe or Paddle better for a new SaaS?

Stripe gives more flexibility and lower fees but leaves tax compliance to you; Paddle and Lemon Squeezy trade some fees for handling that compliance automatically.

What is Plaid used for?

Plaid connects apps to users' bank accounts, commonly used for fintech features like verifying bank details or pulling transaction data.

Best of

Best Payment Platforms for Online Businesses in 2026

Payment platforms split by how much tax/compliance responsibility they take on. Stripe is developer-first infrastructure where you remain the merchant of record. Paddle and Lemon Squeezy are merchant-of-record platforms that handle global sales tax and VAT for you, trading some fees for less compliance overhead. Plaid and Recharge round out the category for bank connectivity and subscription billing respectively.

StripeDeveloper-first payments infrastructure for the internet.

PaddleMerchant of record for SaaS that handles global sales tax for you.

Lemon SqueezyEasy merchant-of-record checkout for digital products and SaaS.

GumroadThe simplest way to start selling digital products.

PlaidConnect apps to bank accounts. The fintech data layer.usage based

RechargeThe subscription engine behind thousands of DTC brands.paid

FAQ

What does 'merchant of record' mean?: A merchant-of-record platform like Paddle or Lemon Squeezy legally sells on your behalf and handles global sales tax/VAT compliance for you, unlike Stripe's default setup.
Is Stripe or Paddle better for a new SaaS?: Stripe gives more flexibility and lower fees but leaves tax compliance to you; Paddle and Lemon Squeezy trade some fees for handling that compliance automatically.
What is Plaid used for?: Plaid connects apps to users' bank accounts, commonly used for fintech features like verifying bank details or pulling transaction data.

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