Merchant of record

A merchant of record is the company that legally sells to the customer. When it is Paddle, Lemon Squeezy or Polar, the vendor, not you, appears on the receipt, collects the tax such as VAT, files the returns and deals with payment disputes. You receive the sale proceeds after fees. With a normal payment processor, you remain the seller and take on those duties yourself.

Selling software or digital products to customers in many countries means dealing with local tax rules, which is slow and easy to get wrong. A merchant of record takes that off your desk. It matters most for small teams selling digital goods across borders. It matters less if you sell mainly in one country, already have an accountant who handles tax, or sell physical goods. The trade-off is usually a higher fee and less control over the customer relationship.

• Which countries and tax types does it cover, and who files the returns?
• Who handles refunds and chargebacks, and who bears the cost?
• How and when are payouts made, and in which currencies?
• Are there product types or industries it does not accept?