Sell a subscription to someone in Germany and you owe German VAT. Sell to Ontario and GST or HST kicks in. Cross a revenue threshold in a growing list of US states and a sales tax registration is due there too. None of it is optional, and a two-person SaaS team rarely has the legal footing to handle it alone. That is the whole reason a merchant of record exists, and I wrote a longer breakdown of the category on DevToolLab after digging through what each platform actually charges.
The category got a lot more interesting in the last two years. Stripe bought Lemon Squeezy on July 26, 2024, then turned around and shipped its own competing product, Stripe Managed Payments, into public preview in February 2026. When the company that already processes a huge share of the internet's card payments decides it needs to buy its way into a niche before building a competitor, that niche is not optional infrastructure anymore.
The Fee Comparison That Actually Matters
Every platform advertises something close to "5% + 50 cents," but running real numbers through each one's own published formula tells a different story. On a $49 sale, Paddle, Lemon Squeezy and Polar's free Starter tier all land at $2.95 in fees, a 6.0% effective rate. Polar's $20 a month Pro tier drops that to $2.26, or 4.6%, which pays for itself once a store clears about $180 a month in sales. Stripe Managed Payments works differently: it adds a 3.5% surcharge on top of Stripe's standard 2.9% + $0.30 processing rate, which came out to $3.44 on the same sale, the most expensive option in the comparison.
Paddle and Lemon Squeezy: The Same Rate, Different Owners
Paddle has been a dedicated merchant of record since before the category had a name, and its whole pitch is one flat 5% + $0.50 fee covering checkout, tax, compliance and support, with no monthly charge and no tiers.
Lemon Squeezy charges the identical headline rate, but it is the platform Stripe bought to enter this market, and two years later it is still shipping its own updates rather than being folded away. The catch is in its own FAQ: recovery features like abandoned cart and failed payment recovery add another 10% to 30% on top, which can make the "same" rate meaningfully more expensive depending on what you turn on.
Polar's Tiers and Stripe's New Entrant
Polar is the only one of these with public pricing that gets cheaper as you grow. Four tiers run from a free Starter at 5% + $0.50 down to 3.4% + $0.30 once you are paying $400 a month for the Scale plan, and anyone who signed up before May 27, 2026 keeps a legacy 4% + $0.40 rate for as long as they stay on the free tier.
Stripe Managed Payments is built for teams already deep in the Stripe ecosystem who want tax liability handled without a full migration. It is the newest product here, still in public preview, and it is structurally the most expensive of the group because its 3.5% fee stacks on top of Stripe's existing processing rate instead of replacing it. The full comparison on DevToolLab breaks down all five platforms side by side with a table, a persona-by-persona pick, and every fee traced to the vendor's own pricing page.
Why Nobody Has Open Sourced This
Every other infrastructure category eventually gets a self-hosted answer. Merchant of record has not, and it is not for lack of trying: being one means being the legal seller registered to collect and remit tax across dozens of jurisdictions, which is a regulatory status a company earns, not a repository you can clone. Lago is a real, MIT-licensed open source billing engine, but it stops at invoicing. The tax liability never leaves your business. The only honest DIY path is Stripe Billing paired with a dedicated tax tool, which only makes sense once you can justify hiring the expertise a merchant of record exists to replace in the first place.
Picking One Without Redoing the Work Later
Run your own last quarter of sales through each platform's actual formula rather than trusting the homepage percentage, since the ranking can flip depending on your average order value. If most of your volume already runs through Stripe, price a real Paddle or Lemon Squeezy migration before assuming Managed Payments is the expensive option. And read the fine print on recovery fees and disputes before signing anything: Lemon Squeezy's surcharges and Polar's flat $15 dispute fee can turn a competitive headline rate into the priciest one in practice.
If you are quoting international customers while you evaluate any of this, a VAT calculator makes it easy to check what a European buyer actually owes before a merchant of record adds its own line item on top.
References
- Best Merchant of Record Platforms in 2026, on DevToolLab - the full comparison with every rate sourced and dated, plus a persona-by-persona recommendation.
- Paddle pricing
- Polar fees documentation
- Stripe Managed Payments
- Lago, the open source billing engine referenced above
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