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How Paddle does the heavy lifting for CFOs and Finance teams

Explore how Paddle absorbs the operational burden of how you get paid, the liability of the sales tax, and the complexities of global compliance from day one. You can focus on the business of running a finance team, rather than on the mechanics of how you get paid.

Paddle is a merchant of record (MoR) which offers businesses an alternative to building your own payments stack. An MoR is a term used to describe the legal entity selling goods or services to an end customer. A SaaS business can be its own merchant of record but you can outsource this work to companies like Paddle who are built to do this for their customers.

Like a middleman, we take on the burden of payment processing and compliance, and when each transaction is complete, it's Paddle's name that appears on your customers’ credit card statements.  As such, we handle the complexities behind taking that payment and the liability of processing the sales tax for that customer. We remove unnecessary subscription and software management, fixes, and integrations from their workload.

Using an MoR removes complexity and risk from your payments infrastructure, increases financial efficiency and transparency, and allows for greater focus on your areas of greatest leverage.

Stephen Chandler, Managing Partner of Notion Capital.

As the only MoR built specifically for SaaS businesses, we have over ten years of experience partnering with SaaS businesses, supporting their ambitious growth goals. 

The result? You can focus on the business of a finance team, rather than on the mechanics of how you get paid. Paddle can do that back-office admin for you. This includes collecting sales tax, ensuring payment card industry (PCI) compliance, and honoring refunds and chargebacks.

What’s more, it puts you back in the driver's seat when it comes to controlling the traditional finance role of managing how you get paid. It puts you back in control of your payments stack, compliance, and reporting without the manual workarounds, liability, and inefficiencies that come with your current setup.

The tax and compliance burden 

Paddle solves one of the more complex problems, which is sales tax compliance and the liability of said tax compliance. We take it completely off your hands as CFO. In 2021, Paddle took the burden of almost $46 million in sales tax from our sellers. That's around 233,000 tax filings that our customers didn't have to take on in-house. 


  • Paddle takes on the sales tax liability for all products that are sold through our solution.
  • Our systems are in line with emerging law changes. 
  • We register jurisdictions worldwide, charge the correct sales tax on every transaction, file and remit taxes.
  • Sales tax is applied automatically to every payment through Paddle, so you know you’re protected.
  • Paddle and its payment partners are compliant with legal, regional, and payment-related regulations.

With Paddle, you're globally tax compliant from day one, without the burden of actually having to calculate, remit, and manage the tax in every territory that you operate in. 

Guaranteed compliance is also integral to due diligence reports for fundraising and valuation. Imagine the impact this could have on your next round. 

Pay a single all-inclusive price

As for the cost, your payments, billing, tax compliance, and more at an all-inclusive price. No added costs, no hidden fees. Here's how that breaks down.

Paddle payments infrastructure
  • Payment processing & routing
  • Subscription billing & management
  • Invoicing & checkout
  • Global tax & compliance
  • Fraud protection & chargebacks
  • Reporting & insights
  • Customer billing support 

Total cost: 5% + 50¢

Status quo payments stack

Processor + payment gateways + others: + 2.5-3% +30¢

Subscription Management: + 0.5-1%

Anti-fraud product: + 0.5%

Routing tooling: + 20¢

Refund & chargeback fees: + 0.1%

Tax calculation product: + 0.5%

Tax filing products per market: $200 - $5000/month

Customer billing support: ~$60,000 per person per year

Administrative and operational headcount (Finance, Engineering): + $1000s / month

Advisory services: + up to $100,000 / year

Total: ~8%

The value of a single source of truth for your revenue data

Whether you're reporting to your board investors or completing the due diligence for fundraising rounds, real-time visibility on your revenue data and performance metrics is crucial. 

Paddle gives you instant access to a ready-built, all-in-one payments infrastructure. As all checkout, invoicing, and subscriptions are handled by Paddle, you can use reliable real-time data to report on your performance. All in one place. You can pull all the historical and real-time data from our secure webhooks, and APIs, or through the ProfitWell Metrics integration if you signed up. 

This is particularly useful if you have self-service and sales-assisted sales motions, as Paddle brings all that revenue data together in one place. This clean, accurate data can then be easily fed into your accounting systems, enterprise resource planning (ERP), and customer relationship management (CRM) software. 

So when your next board meeting appears on the calendar, it’s not days of “all-hands-on-deck” work for your teams to pull data from each platform and verify it against the overall revenue number. It’s a simple matter of accessing it through one source. 

We have seen customers migrate their subscription billing to Paddle not only save money on software, but to gain better visibility over their data, making reporting easier in these circumstances. Iconosquare successfully migrated over 13,000 live customer subscriptions to Paddle.

The move to Paddle means that Iconosquare can manage the entire subscription process from one platform. This has streamlined reporting, given better visibility over accounting data, and delivered significant cost savings on billing and payment processes.

More levers – not just to run, but grow 

What’s more, if you are a subscription business you can sign up for ProfitWell Metrics (even if you choose not to partner with Paddle). Earlier in 2022, we acquired ProfitWell and have since introduced ProfitWell Metrics into the Paddle dashboard. Gaining real-time visibility of your subscription data should not be hours of relentless data transfers and manipulation across multiple payments and billing platforms.

ProfitWell Metrics makes it easy to see how your business is doing at a glance, and brings you core insights into growth strategies you need to prioritize most. You get access to automatically generated, out-of-the-box dashboards and reports on:

  • Revenue growth
  • Retention
  • Cash flow
  • Unit economics
  • And more 

What does this mean for you? This tool makes analytics easy again, whether you’re doing day-to-day reporting, or putting together monthly results for your team and investors.  

When you see the value of maintaining a single source of revenue truth with little human intervention and all your payment mechanics in one place, have you really done your due diligence if you haven't considered the all-in-one model?

Take the headache out of growing your software business

We handle your payments, tax, subscription management and more, so you can focus on growing your software and subscription business.

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The important questions answered 

What control does Paddle give me?

With Paddle, you remain in control of how you present your product and relationships with your customers. You also still manage how you present your billing and checkout information to your customers. 

Paddle (like other MoRs) handles all the financial elements of each transaction. That means they will have certain obligations towards the end buyer, like the responsibility for calculation and remittance of sales tax. But it ends there. 

Do I still need to register for sales tax? 

The short answer is no. If an MoR, like Paddle, is responsible for the transaction then it holds complete responsibility for any sales tax liability. Your business is entirely isolated from this obligation and there would be no cause to register to do the sales tax. 

What's the difference between Paddle and a payment service provider (like Stripe or Chargebee)? 

A payment service provider (PSP) only handles one part of the transaction process: the part where money’s taken from your customer’s bank account and put into yours. You still need to manage the financial, legal, and taxation responsibilities.

Paddle handles your entire order process and appears on the customer’s credit card statement, which means taking on the related liabilities.

How does this work in terms of revenue recognition? 

With Paddle, your payments and subscriptions all live in one place so you have a single, reliable source of revenue data for all of your customers. (More on this later). 

Paddle ensures all your billing and payments are compliant and sales data is easy to access. The payout you receive from Paddle is not subject to sales tax as this is borne by the transaction with the end customers (which Paddle is liable for). 

What is the difference between Paddle and other MoRs? 

Businesses have been using a merchant of record to sell online for decades. But most options on the market were created in the pre-SaaS world. Dealing with them nowadays means many versioning issues and hacks with poor support. 

Paddle is the only MoR built specifically for the software industry. You'll spend less time maintaining a legacy system, and more time growing with a reliable, modern merchant of record

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