Stripe Merchant of Record: The New King of SaaS Payments?

If you’re building a SaaS product in 2025, you’ve probably heard the term “Merchant of Record” (MoR) thrown around. Until recently, you had two choices: use Stripe and handle all the tax headaches yourself, or use a dedicated MoR like Paddle or Lemon Squeezy and pay a premium for peace of mind.

But the landscape just shifted. Stripe has officially launched its own Merchant of Record service, and frankly, it changes everything.

First, What Actually is a Merchant of Record?

Before we dive into the tools, let’s simplify the concept.

When you sell software globally, you are liable for sales tax (VAT, GST, etc.) in every country where you have customers. If you sell to a customer in Germany, you owe German VAT. If you sell to someone in Japan, you owe Japanese consumption tax.

Without an MoR: You (the merchant) are the legal seller. You have to register for taxes in 30+ countries, calculate the right rate, collect it, and file returns. It’s a nightmare.

With an MoR: The MoR is the legal seller. They buy the product from you and resell it to the customer. They are liable for the taxes. They handle the compliance. You just get a payout.

For years, founders flocked to Paddle and Lemon Squeezy for this exact reason. But now, the 800-pound gorilla has entered the chat.

Stripe Managed Payments: The Game Changer

Stripe’s new MoR offering, Stripe Managed Payments, is the result of a massive strategic shift. In July 2024, Stripe acquired Lemon Squeezy, the beloved MoR for indie hackers and SaaS startups.

This wasn’t just an acqui-hire. JR Farr, the co-founder of Lemon Squeezy, is now heading up MoR at Stripe. This is a huge signal. It means Stripe isn’t just building a corporate compliance tool; they are building a developer-first, design-centric experience that Lemon Squeezy was famous for.

Why Stripe Wins

Native Integration: If you’re building a SaaS, you’re likely already looking at Stripe’s docs. Managed Payments is just a flag you turn on. No separate accounts, no weird redirects.
Pricing: While official pricing is dynamic, it’s competitive with the industry standard of ~5%. But remember, you’re cutting out the middleman.
The Ecosystem: Stripe isn’t just payments. It’s Atlas for incorporation, Radar for fraud, Capital for loans, and now MoR for compliance. It’s the operating system for the internet.

The Competitors: Polar.sh, Lemon Squeezy, and Paddle

Even though Stripe is the new default, it’s worth understanding the landscape.

Lemon Squeezy (Now Stripe)

The Vibe: Beautiful, developer-friendly, “Apple-esque” design.
Key Features: They built incredible features on top of payments, like Affiliate Marketing (a huge pain to build yourself), email marketing, and hosted storefronts.
The Verdict: Since they are now part of Stripe, using Lemon Squeezy is effectively betting on Stripe. You get the best of both worlds: Lemon Squeezy’s features with Stripe’s infrastructure.

Polar.sh

The Angle: Built specifically for developers and open source.
Key Features: Polar is fantastic if you are monetizing a GitHub repo. They have deep integrations with GitHub issues, funding, and rewards (like giving Discord access to backers).
Pricing: Aggressive pricing at 4% + 40¢.
The Verdict: If you are a pure open-source maintainer, Polar is a great niche tool. But for a general B2B SaaS, it lacks the breadth of Stripe.

Paddle

The Old Guard: The original big player in the MoR space.
Key Features: They have been doing this the longest. They have robust enterprise features and handle B2B invoicing well.
Pricing: Generally around 5% + 50¢.
The Verdict: Paddle is solid, but they are in a tough spot. They are a layer on top of payment networks, whereas Stripe is the payment network. With Stripe now offering the same MoR capabilities natively, Paddle’s value proposition is shrinking.

Why You Should Just Use Stripe

Here is the brutal truth: Platform risk is real.

Building your business on a third-party MoR that sits on top of Stripe adds a layer of dependency. If that MoR gets acquired (like Lemon Squeezy) or changes pricing, you are stuck.

By going direct with Stripe Managed Payments, you are cutting out the middleman. You get:

Better Reliability: Fewer hops for your money to travel.
Faster Features: Stripe ships faster than anyone.
Unified Data: Your MoR data lives alongside your subscription data, your fraud data, and your banking data.

With JR Farr leading the charge, Stripe has effectively signaled that they care about the user experience just as much as the infrastructure. They have taken the “Lemon Squeezy DNA” and injected it into the global financial backbone of Stripe.

For a new SaaS in 2025, the decision is simple. Go with Stripe.

Struggling to understand your Stripe data? Even with an MoR, you need to know your numbers. Connect your Stripe account to Mowt to get clear, actionable insights into your MRR, churn, and growth.