In this guide · 7 sections
Short answer
The merchant of record is the business legally selling to the customer. With a gateway like Stripe, it's you: you handle tax, refunds and disputes. An MoR service (Paddle, Stripe Managed Payments) resells your digital product and takes on global sales tax and disputes for about 5% + 50¢ a sale or more.
Merchant of record vs payment gateway
A payment gateway moves money: it takes the card or PayNow payment and pays it out to your bank. The merchant of record carries the legal and tax responsibility for the sale. Paddle describes itself on its pricing page as the merchant of record handling payments, tax compliance, fraud, chargebacks and buyer support in one price.
| Responsibility | Payment gateway (Stripe, HitPay) | Merchant of record (Paddle, Lemon Squeezy, Stripe Managed Payments) |
|---|---|---|
| Legal seller to the customer | You | The MoR |
| Sales tax, VAT and GST in other countries | You (Stripe Tax can calculate it) | The MoR registers, collects and files |
| Refunds | You decide and pay | The MoR processes, under its policies |
| Chargebacks and fraud | You respond and bear losses | The MoR handles them |
| Customer billing support | You | The MoR for payment questions |
| Price | Lower | Higher, all-inclusive |
Our payment gateway comparison covers the gateway options for local businesses.
What a merchant of record does for you
The main reason sellers choose an MoR is tax. If you sell software or digital downloads to consumers worldwide, many countries expect the seller to register for their VAT or sales tax, sometimes from the first sale. Stripe's Managed Payments documentation says its MoR handles sales tax, VAT and GST compliance in more than 80 countries, along with fraud prevention, dispute management and transaction-level customer support.
- Calculates, collects and files tax in each country where it sells for you.
- Shows localised prices, currencies and payment methods at checkout.
- Handles fraud screening, chargebacks and payment-related customer questions.
- Pays you the net amount, often with one invoice from the MoR to your business.
Fees: what MoR services charge (October 2026)
MoR pricing is usually one all-in percentage plus a fixed fee per sale, higher than a gateway's card rate. Figures below are from each vendor's pricing page, in US dollars, approximate, as of October 2026.
| Service | Published fee | Notes |
|---|---|---|
| Paddle | 5% + 50¢ per transaction | No monthly fee; covers payments, tax, fraud and buyer support |
| Lemon Squeezy | 5% + 50¢ per transaction | Some payments subject to additional fees, per its fee docs |
| Stripe Managed Payments | Standard Stripe fees + 3.5% per successful transaction | Includes global indirect tax, fraud and dispute responses; Billing extra |
| Stripe (gateway only, for comparison) | 3.4% + S$0.50 per domestic card | You handle tax and disputes yourself |
On a US$20 subscription, a 5% + 50¢ fee is US$1.50, or 7.5% of the price. On a US$200 annual plan it is US$10.50, about 5.3%. The fixed fee hurts most on cheap products. For Stripe's own pricing in detail, see our Stripe fees guide.
When a Singapore seller should consider an MoR
An MoR makes sense if
- You sell SaaS, apps, e-books, courses or downloads
- Most customers are overseas consumers
- You don't want to register for VAT or sales tax abroad
- You're a small team with no finance staff for disputes
A normal gateway is better if
- You sell physical goods or local services
- Most customers are in Singapore
- You sell mainly to businesses (B2B), where tax often shifts to the buyer
- Margins are thin and every percentage point matters
Eligibility matters. Stripe's Managed Payments eligibility page lists Singapore among supported business locations, but supports only digital product categories, not physical goods, and only direct integrations, not platforms. Paddle and Lemon Squeezy also review your product before approval.
If you collect money on behalf of other sellers, as a marketplace does, you have a different question: see when the Payment Services Act applies to marketplaces.
Switching to or from an MoR
Moving subscription customers between providers is the hardest part. Card details usually can't be exported by you directly; the old and new providers arrange a secure transfer, if both support it.
Before choosing an MoR
Do it yourself or get help?
Signing up for Paddle, Lemon Squeezy or Stripe Managed Payments is self-service; the work is in product set-up, pricing and connecting checkout to your website or app. For local businesses selling to Singapore customers, a standard gateway is simpler and cheaper.
Our Online Payment Setup (S$290) sets up Stripe, HitPay or an MoR checkout on your website, with payment methods, receipts and test transactions, and explains the fee and tax trade-offs for your products before you choose.
Frequently asked questions
The merchant of record is the business legally responsible for a sale. Its name appears on the customer's receipt and card statement, and it is responsible for collecting the right tax, processing refunds and handling chargebacks. With a payment gateway such as Stripe, you are the merchant of record; with services like Paddle, the provider is.
Standard Stripe is a payment processor, so you remain the merchant of record. Stripe also offers Managed Payments, a merchant of record service for digital products that handles indirect tax in more than 80 countries, fraud and disputes. As of October 2026 it adds 3.5% per successful transaction to standard Stripe fees and lists Singapore as a supported business location.
Paddle's pricing page lists 5% plus 50 US cents per transaction, with no monthly fee, as of October 2026. That includes payment processing, global sales tax handling, fraud protection, chargebacks and buyer support. Large-volume businesses can ask about custom pricing. Check the current page before signing up, as fees can change.
No, it is optional. You can sell through a normal gateway and handle overseas tax registrations yourself, or use Stripe Tax to help calculate it. An MoR is worth considering when most buyers are overseas consumers and you would rather pay a higher fee than deal with foreign tax registrations and disputes.
Mostly not. MoR services such as Paddle, Lemon Squeezy and Stripe Managed Payments are built for software, subscriptions and digital content. Stripe's eligibility page explicitly excludes physical goods. Shops selling physical products use a regular payment gateway or a marketplace, and handle tax and delivery themselves.