Paddle's 5% or Stripe's 3.4%: What a Merchant of Record Actually Buys

If you sell software or digital products to consumers across borders, here is the short answer: a merchant of record like Paddle or Lemon Squeezy takes 5% plus 50 cents of every sale and makes global sales tax mostly not your problem; running your own Stripe account with Stripe Tax costs roughly 3.4% plus 30 cents but leaves registration, filing and remittance on your desk. The gap works out to about 1.6 percentage points, and the whole decision is whether that spread is cheap or expensive for the compliance work you would otherwise buy or do. All prices below are list prices, checked July 25, 2026. The table first, then the arithmetic, then decision rules by seller profile.

The comparison

Methodology note: fees are from each provider's public pricing page, opened on the date above; the DIY column assumes US-domestic consumer card payments as the baseline, with international surcharges called out separately.

Sources: Paddle pricing, Lemon Squeezy pricing, Stripe pricing and Stripe Tax pricing.

What the 1.6 points actually buy

A merchant of record resells your product: legally, the MoR is the seller on the transaction, so consumption taxes on covered sales are its registrations, its filings, its remittances and its audit exposure, not yours. With Stripe Tax, you stay the seller. The tool is genuinely good at the mechanical parts: it calculates and collects in over 100 countries, monitors when your volume crosses registration thresholds and alerts you. But threshold monitoring is a smoke alarm, not a fire department; when the alert fires, someone still has to register you, file returns on schedule, and send the money.

How heavy that is depends on where your buyers are. In the EU, the One Stop Shop means one VAT registration can cover consumer sales across all member states rather than a registration per country, and it is open to non-EU businesses selling digital services to EU consumers. The European Commission itself pitches OSS as cutting red tape "by up to 95%", which tells you both that it helps and that the remaining 5% is still quarterly filings with your name on them. In the US, thresholds are per state and the map changes as you grow. None of this is impossible for a solo seller; all of it is recurring, deadline-driven work in the same category as the payment plumbing costs most sellers underestimate.

The arithmetic for a $3,000 month

This math is ours. Say you sell 100 units of a $30 product in a month, $3,000 of revenue:

• Merchant of record: 5% x $3,000 + 100 x $0.50 = $150 + $50 = $200, an effective 6.7%.
• DIY, all US-domestic cards: Stripe processing 2.9% x $3,000 + 100 x $0.30 = $117, plus Stripe Tax no-code at 0.5% on registered sales, at most $15. Total $132, an effective 4.4%.

The spread is $68 a month at this volume. That $68 is the entire price of not doing tax compliance: not registering anywhere, not tracking thresholds, not filing OSS returns, not holding the liability. Two adjustments before you conclude DIY wins. First, if half your buyers pay with non-US cards, Stripe's 1.5% international surcharge adds about $22 on that half, and currency conversion another 1% where it applies, narrowing the spread toward $40. Second, the DIY number assumes your filing costs are zero; a single accountant invoice for a quarterly VAT return, or a Tax Complete subscription at $90 a month, erases the spread entirely at this revenue. The honest crossover: below roughly $5,000 a month with international consumer sales, the MoR premium is usually cheaper than any real-world compliance setup. Well past that, the fixed costs of DIY amortize and the 5% starts looking like the most expensive line on your P&L.

One more piece of arithmetic sellers of cheap products should run: fixed fees dominate small carts. On a $5 sale, the MoR's 50 cents is 10% before the 5% even applies (Paddle explicitly routes sub-$10 products to custom pricing), while Stripe's 30 cents is 6%. If your product is priced like a coffee, the fee structure matters more than the fee headline.

Decision rules by seller profile

US-only audience, or B2B-heavy. Go DIY: Stripe plus Stripe Tax Basic no-code at 0.5%. Your obligations map is one country, thresholds are monitored for you, and US filing can run from the Stripe Dashboard. Business buyers change the tax picture in many markets, though the rules are jurisdiction-specific, so confirm for the ones that matter to you before assuming B2B means exempt.

Global consumer sales of digital products. Default to a merchant of record until the math above flips. Between the two, Paddle publishes deeper tax-operations language ("full tax registration, filing and remittance") and suits invoicing needs via sales; Lemon Squeezy is the faster self-serve setup with 16 payment methods including PayPal, with the caveat that its own pricing page reserves small additional fees on some non-US transactions.

Already on Stripe, going international. You do not have to migrate. Turn on Stripe Tax, let threshold alerts tell you where obligations are forming, and price the OSS registration for the EU before your first serious European quarter. Keep in mind the operational risks that come with being your own seller of record, including the account holds that land on merchants directly, and note that platform-style alternatives carry their own tax handling, as we covered for app store fees.

The rule that survives all three profiles: count the fee spread in dollars per month, not percentage points, and compare it to the real cost, in money and deadlines, of being the seller of record. At $500 a month the spread is pocket change and the MoR is obviously right; at $30,000 a month the spread is $500 or more and funds an accountant with room to spare. Somewhere in between, you will cross over, and now you know the numbers to watch for it.