What is a Merchant of Record and why does it matter?

A Merchant of Record (MoR) is the legal entity that sells to the customer. When you use Paddle or LemonSqueezy, they're the seller—handling tax compliance, chargebacks, and disputes. With Stripe or StackBE, you're the merchant and responsible for these things yourself. MoR simplifies compliance but means higher fees and less control over customer relationships.

Can I switch billing providers later without losing customers?

Yes, but it requires planning. Export your customer data (emails, subscription status) and recreate them in the new system. For payment methods, you typically can't migrate stored cards—customers need to re-enter payment details. The best approach is to migrate new customers first while grandfathering existing ones, then migrate existing customers at renewal time.

Do I need to handle sales tax and VAT myself with Stripe?

Yes, if you're the merchant. Stripe offers Stripe Tax (additional fees) to calculate and collect taxes automatically. Alternatively, you can use services like TaxJar or Avalara. With Paddle or LemonSqueezy, tax compliance is included—they handle calculation, collection, and remittance as the Merchant of Record.

What's the real total cost comparison between these platforms?

For a $50/month subscription: Stripe DIY costs ~$1.75 (3.5%). Stripe Billing adds 0.5%, so ~$2.00 (4%). Paddle/LemonSqueezy costs ~$3.00 (6%). StackBE costs ~$1.75 Stripe fees plus your monthly plan fee divided by customers. At scale, percentage-based fees (especially MoR fees) add up significantly.

Should I use a Merchant of Record to simplify VAT compliance?

It depends on where your customers are. If you're primarily selling to US customers, handling sales tax yourself (with Stripe Tax) is straightforward and cheaper. If you're selling globally to EU customers, the VAT complexity might justify MoR fees. Calculate your expected revenue by region and compare total costs.

What happens to my customer relationships if I use a Merchant of Record?

Technically, they're the MoR's customers—the MoR handles billing, receipts, and payment disputes. Practically, your customers interact with your product and consider themselves your customers. The main implications: receipts show the MoR's name, chargebacks go through the MoR (removing your control), and you can't easily access stored payment methods to migrate later.

Stripe Billing Alternatives for Indie Developers and Solo Founders

You Need Subscriptions. Which Platform Should You Use?

You've built something people want to pay for. Now you need to actually collect money.

The landscape of billing solutions is confusing. Stripe is the default, but it's not the only option—and depending on your situation, it might not be the best one.

This guide compares the major options for indie developers and solo founders, with honest assessments of each.

What Indie Developers Actually Need

Before comparing solutions, let's define what matters for solo developers and small teams:

Must-haves:

Simple integration (hours, not weeks)

Hosted checkout (no PCI compliance headaches)

Subscription management (trials, upgrades, cancellations)

Customer portal (let customers manage their own billing)

Reasonable pricing (you're not at scale yet)

Nice-to-haves:

Tax handling (VAT, sales tax)

Multiple payment methods

Usage-based billing

Multi-currency support

Affiliate/referral programs

Probably don't need (yet):

Enterprise-level customization

Revenue recognition tools

Custom invoicing workflows

Advanced fraud detection

With that context, let's look at your options.

Option 1: Stripe (DIY Integration)

What it is: The most popular payment processor for developers. Stripe provides the building blocks; you assemble them.

Pricing: 2.9% + $0.30 per transaction. No monthly fees.

Pros:

Industry standard. Excellent documentation.

Full control over the checkout experience

Massive feature set (subscriptions, invoicing, Connect, etc.)

Great dashboard and API

Cons:

You're building the billing system yourself

Webhook handling is complex and error-prone

Customer management is minimal

No built-in authentication

Tax compliance is your problem

Verdict: Stripe is a payment gateway, not a complete billing solution. You'll spend weeks building subscription logic, webhook handlers, and customer management. Great for teams with engineering resources; overkill for solo developers.

We've written extensively about this in Stripe is a payment gateway, not your billing system.

Option 2: Stripe Billing

What it is: Stripe's subscription management layer on top of their payment gateway.

Pricing: 0.5% on recurring revenue (on top of standard Stripe fees). So ~3.4% + $0.30 total.

Pros:

Native Stripe integration

Hosted customer portal

Built-in dunning and retry logic

Revenue recovery features

Subscription analytics

Cons:

Still requires significant integration work

Webhook handling still complex

Limited customization of customer portal

No authentication—you still need a user system

Entitlements/feature gating not included

Verdict: Better than raw Stripe, but still requires substantial development. Good for teams that want to stay in the Stripe ecosystem but need more than the basics.

Option 3: Paddle

What it is: A Merchant of Record (MoR). Paddle handles payments, taxes, and compliance. They're the legal seller; you're the vendor.

Pricing: 5% + $0.50 per transaction. Higher rates for high-risk categories.

Pros:

True tax compliance worldwide (VAT, sales tax handled)

No need for your own Stripe account

Paddle handles chargebacks and disputes

Simpler legal/compliance setup

Good for selling globally

Cons:

Higher fees eat into margins

Less control over the checkout experience

Slower payouts (Paddle holds your money)

Limited payment method support in some regions

Can feel less "professional" than your own merchant account

Verdict: Excellent for global sellers who don't want tax headaches. The higher fees are worth it if you're selling internationally and want someone else to handle VAT. Less ideal for US-focused businesses.

Option 4: LemonSqueezy

What it is: A newer Merchant of Record focused on digital products and SaaS. Similar model to Paddle.

Pricing: 5% + $0.50 per transaction.

Pros:

Modern, developer-friendly experience

Built for digital products and SaaS

Tax compliance included

License key generation built-in

Nice affiliate program features

Cons:

Same high MoR fees as Paddle

Newer platform, less battle-tested

Slower payouts

Limited customization

Smaller ecosystem/community

Verdict: Good option if you're selling digital products (courses, templates, desktop software) and want simple tax handling. The 5% fee is significant at scale.

Option 5: StackBE

What it is: A billing backend specifically for micro-SaaS. Combines auth, subscriptions, entitlements, and customer management in one API. Uses Stripe Connect for payment processing.

Pricing: Flat monthly fee based on tier. Standard Stripe processing fees (2.9% + $0.30) go to your own Stripe account.

Pros:

Authentication included (magic links)

Entitlements tied to plans (not feature flags)

Customer portal included

You keep your own Stripe account (your customer relationships)

Built for developers—API-first design

One integration for auth + billing + entitlements

Cons:

Newer platform

You handle tax compliance (use Stripe Tax or similar)

Requires Stripe Connect setup

Verdict: Best for indie developers who want a complete backend without building one. Lower effective fees than MoR solutions. You maintain direct customer relationships and your own payment processing.

We built StackBE because we faced these exact decisions when building our own SaaS products. The full story is here.

Comparison Table

|---------|------------|----------------|--------|--------------|---------|

| Total Fees | ~2.9% | ~3.4% | 5%+ | 5%+ | ~2.9% + flat |

| Tax Handling | DIY | DIY | Included | Included | DIY |

| Auth Included | No | No | No | No | Yes |

| Customer Portal | DIY | Basic | Yes | Yes | Yes |

| Your Stripe Account | Yes | Yes | No | No | Yes |

| Merchant of Record | No | No | Yes | Yes | No |

Decision Framework

Choose Stripe DIY if:

You have engineering resources

You need maximum customization

You're building a platform that requires Stripe Connect

Choose Stripe Billing if:

You're already deep in the Stripe ecosystem

You have time to build integration

You want Stripe's reliability

Choose Paddle or LemonSqueezy if:

You're selling globally and tax compliance is a headache

You don't want to manage chargebacks

The higher fees are acceptable for simplicity

Choose StackBE if:

You're a solo developer or small team

You want auth + billing + entitlements in one system

You want to keep your own Stripe account

You'd rather pay a flat fee than percentage of revenue

The Hidden Cost: Your Time

Every comparison focuses on transaction fees, but the real cost is your time.

Building on raw Stripe takes weeks of development and ongoing maintenance. Every edge case in subscription handling, every webhook retry scenario, every dunning email—that's code you're writing instead of building your product.

The question isn't "which has the lowest fees?" It's "which lets me ship fastest and maintain least?"

For most indie developers, the answer isn't the cheapest option. It's the one that handles the complexity so you don't have to. As we've argued in stop building billing, your time is better spent on what makes your product unique.

Our Recommendation

If you're an indie developer or solo founder building a SaaS:

1. Start with StackBE if you want auth + billing solved in one integration

2. Use Paddle/LemonSqueezy if you're selling globally and want zero tax headaches

3. Use Stripe Billing if you have engineering resources and need deep customization

Avoid building on raw Stripe unless you have a compelling reason. The flexibility isn't worth the maintenance burden for most small teams.

Whatever you choose, ship something. You can always migrate later when you have paying customers and real data about what you need.

You Need Subscriptions. Which Platform Should You Use?

What Indie Developers Actually Need

Option 1: Stripe (DIY Integration)

Option 2: Stripe Billing

Option 3: Paddle

Option 4: LemonSqueezy

Option 5: StackBE

Comparison Table

Decision Framework

The Hidden Cost: Your Time

Our Recommendation

Frequently Asked Questions