Paddle: Merchant of Record fees and when to use it
Paddle is a Merchant of Record for approved software and digital products. It becomes the seller to your customer and handles payments and indirect tax for covered transactions. It is worth considering when international software sales would otherwise leave your team managing tax across markets.
When would you choose Paddle?
Choose Paddle when you sell eligible software or SaaS and want subscriptions, checkout, and indirect-tax handling through one provider.
Look elsewhere if you sell physical goods, unsupported services, or need your own company to remain the seller on every transaction.
What is included in the seller role?
Your buyer purchases through Paddle. Paddle handles payment collection and the indirect-tax obligations on the covered sale. Your company still builds and supports the product, keeps its books, and handles its own income or corporation tax.
An MoR also has product rules and approval requirements. A country appearing in buyer coverage does not mean every business based there can open an account. Check both business eligibility and your product category before implementing checkout.
Products and country eligibility
Model: Merchant of Record.
Products: SaaS, software, subscriptions, apps, and eligible digital products; product review and prohibited-business rules apply.
Your business: Software businesses are supported in most countries, subject to Paddle's unsupported-country and risk policies.
Your customers: Paddle documents sales in more than 200 countries and territories, with sanctioned and unsupported locations blocked.
Shared eligibility profile reviewed 2026-10-15. Check your country in the picker; approval and payout access still depend on the provider.
What would a $10,000 month cost?
These are the same fee rules used by the payment picker calculator. The example is 200 one-time orders at $50 each, paid with US domestic cards for a US business. No sales tax is collected. It excludes subscriptions, refunds, disputes, payouts, currency conversion, and optional services.
| Provider / plan | Fee rule | Month | Effective rate |
|---|---|---|---|
| Paddle | 5% + $0.50 | $600.00 | 6% |
Paddle: Checkout Recovery, payout fees, and chargebacks are not modeled.
Change your order price, monthly orders, and international-card share in the fee calculator. These figures compare transaction costs; they do not include the cost of managing your own taxes with a direct processor.
What does Paddle cost?
The public pay-as-you-go rate is 5% + $0.50 per checkout transaction. Paddle also offers custom pricing. The worked example uses that public rate and one-time card sales, so you can compare it against the same month at other providers.
Read the fee terms beyond that number. Paddle lists chargeback and pre-chargeback alert fees of $20, £20, or €20 (40 CAD or AUD). The charge is retained even if a dispute is won. Optional recovery services can add costs too.
How do subscriptions fit?
Paddle Billing provides the subscription and transaction system. Your app opens checkout and listens for webhook events to keep product access in sync with the billing state.
Before committing, test your own subscription changes: a trial ending, a plan upgrade, a cancellation, and a failed renewal. A provider can have subscriptions and still handle one of your required workflows differently from your current system.
What remains your job?
Customers still need you when the software does not work. Paddle handling payment disputes does not remove your need to provide evidence or resolve product complaints. Most live-account refunds require Paddle approval, although some qualify for automatic approval.
For an existing business, ask how active subscriptions would move and what history would remain with the old provider. Include payout timing and any reserves in your cash plan rather than treating the transaction fee as the whole cost.
Related comparisons
Official sources
Guide and pricing checked October 27, 2026. Fee totals above cover the stated scenario; use these sources to check the terms for your business and payment methods.