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 Paddle is your MoR, they're the seller—handling payment processing, tax compliance, chargebacks, and legal liability. This simplifies your operations but means you don't have a direct financial relationship with customers.

How much more expensive is Paddle compared to Stripe?

Paddle charges 5% + $0.50 per transaction versus Stripe's 2.9% + $0.30. On a $50 subscription, Paddle takes $3.00 (6%) while Stripe takes $1.75 (3.5%). Over a year with 1,000 customers, that's a difference of $15,000 in fees.

Can I migrate from Paddle to StackBE without losing customers?

You can migrate customer data and subscription records, but payment methods stored with Paddle cannot be transferred. Customers will need to re-enter payment details. The best approach is to migrate at renewal time—notify customers their payment method needs updating for the next billing cycle.

Does Paddle's tax handling justify the higher fees?

It depends on where you sell. If you have significant EU revenue, Paddle's automatic VAT handling saves substantial accounting and compliance work. If you're primarily US-based, sales tax is simpler to manage yourself (or via Stripe Tax), and the fee difference adds up.

What happens to my customer data if I leave Paddle?

You can export customer records (emails, subscription history), but payment methods stay with Paddle. Customer relationships in terms of stored cards and billing continuity are not portable. With StackBE using your Stripe account, your customer payment data stays in your Stripe account regardless of what billing layer you use.

StackBE vs Paddle: Merchant of Record vs Own Stripe Account

Feature	Paddle	StackBE
Subscription Management
Payment Processing	Paddle processes	Your Stripe account
Tax Compliance	Fully handled	Via Stripe Tax (separate)
Authentication		Magic links included
Entitlements
Customer Portal
Transaction Fees	5% + $0.50	Stripe: 2.9% + $0.30
Payout Speed	Net 7-30 days	Stripe standard (2 days)
Customer Ownership	Paddle owns	You own
Chargeback Handling	Paddle handles	You handle (via Stripe)

What is Paddle?

Paddle is a Merchant of Record (MoR) for software companies. As the MoR, Paddle is the legal seller of your product—they handle payments, sales tax, VAT, and compliance on your behalf.

Paddle provides:

Payment processing (credit cards, PayPal, etc.)

Global tax compliance (VAT, sales tax calculated and remitted)

Subscription management

Checkout pages

Revenue recovery (dunning)

Fraud protection

The key distinction: when customers buy through Paddle, they're legally buying from Paddle, not from you.

What is StackBE?

StackBE is a subscription backend that uses Stripe Connect to process payments through your own Stripe account. You are the merchant—customers buy directly from you.

StackBE provides:

Authentication (magic links)

Subscription management

Entitlements

Customer portal

Usage tracking

Analytics

With StackBE, you maintain direct customer relationships and control over your business.

The Merchant of Record Model

How Paddle Works

When a customer purchases through Paddle:

1. Paddle collects the payment

2. Paddle issues the receipt (from Paddle, not you)

3. Paddle calculates and remits taxes

4. Paddle handles chargebacks and disputes

5. Paddle pays you (minus their fees) on their schedule

The Tradeoff

You gain: Tax compliance handled, no need for your own merchant account, simplified international selling.

You lose: Direct customer relationship, payment method portability, control over billing experience, immediate access to funds.

Key Differences

Fees

Paddle: 5% + $0.50 per transaction. For a $50 subscription, that's $3.00 per month (6%). Higher rates for high-risk categories.

StackBE: Flat monthly fee plus standard Stripe fees (2.9% + $0.30). For a $50 subscription, Stripe takes ~$1.75 (3.5%). At scale, this difference compounds significantly.

On $10,000 MRR:

Paddle: ~$600/month in fees

StackBE + Stripe: ~$350/month in fees + StackBE subscription

Tax Compliance

Paddle: Fully handled. Paddle calculates VAT, sales tax, and GST for every transaction. They file and remit taxes in all jurisdictions. This is Paddle's strongest selling point.

StackBE: You're responsible for tax compliance. However, Stripe Tax can be added to your Stripe account to calculate and collect taxes automatically. You still need to handle remittance or use a service like Avalara.

Customer Relationships

Paddle: Customers are technically Paddle's customers. Receipts show Paddle's name. Payment methods are stored with Paddle. If you leave Paddle, customers must re-enter payment details.

StackBE: Customers are your customers. Receipts show your business name. Payment methods are stored in your Stripe account. You can switch billing providers without losing stored payment methods.

Payout Schedule

Paddle: Paddle holds your funds and pays out on their schedule (typically net-7 to net-30 depending on your agreement). You don't have immediate access to revenue.

StackBE: Stripe pays you directly on standard Stripe schedule (typically 2 business days in the US). Your money is your money.

Checkout Experience

Paddle: Paddle-hosted checkout. Customizable to a degree, but customers are clearly buying through Paddle. Some customers may be confused or concerned about the unfamiliar merchant name.

StackBE: Stripe Checkout (hosted) or your own checkout flow. Customers see your brand throughout the purchase process.

Authentication & Entitlements

Paddle: No authentication system. No entitlements. You need separate solutions and must sync data between systems.

StackBE: Authentication and entitlements included. One system manages who your customers are and what they can access.

When to Choose Paddle

Paddle is a good fit when:

You're selling globally and tax compliance is your biggest headache

You don't want to deal with chargebacks or fraud

You prefer one vendor handling everything payment-related

The higher fees are acceptable for the convenience

You don't need tight integration between auth and billing

When to Choose StackBE

StackBE is a better fit when:

You want to keep your own Stripe account and customer relationships

Lower fees matter to your business model

You need auth + billing + entitlements in one system

You're primarily selling in markets where tax compliance is manageable (US, for example)

You want faster access to your revenue

The Hybrid Approach

Some businesses use Paddle for international sales (EU, where VAT is complex) and Stripe/StackBE for US sales. This captures the tax compliance benefit where it matters most while keeping fees lower domestically.

The Bottom Line

Paddle trades control for convenience. If tax compliance across dozens of jurisdictions is keeping you up at night, that tradeoff may be worth it.

If you're primarily selling in the US, or you value owning your customer relationships, StackBE with your own Stripe account gives you more control at lower cost.

For more on choosing between payment approaches, see our guide on Stripe Billing alternatives for indie developers.

StackBE vs Paddle