Do I need a merchant of record?
The problem“Everyone says use a merchant of record. Is it worth the extra fee for a small product like mine?”
You need a merchant of record if Stripe does not work where you live, or if you sell digital products to consumers abroad and do not want to register for VAT and sales tax yourself. If you sell only at home or only to businesses with VAT numbers, a processor such as Stripe is cheaper. On ten €30 sales a month the difference is about €10.
When do you need one?
| If | Need one? | Why |
|---|---|---|
| Stripe does not work in your country | Yes | A merchant of record is the seller, so you do not need your own Stripe account. |
| You sell digital products to consumers in the EU or UK from outside | Yes, or register for VAT yourself | EU and UK VAT on digital sales to consumers applies from the first sale for sellers based outside. |
| You sell to US consumers in many states | Helpful | US states tax digital goods differently; registration is usually needed once you pass a state’s sales threshold, often $100,000 a year. |
| You have no company yet | Often | Some merchants of record pay individuals; check the provider’s country and business rules. |
| You sell only to businesses with VAT numbers | Usually not | The buyer accounts for VAT under the reverse charge. |
| You sell only in your own country | Usually not | You handle one tax system, which your accountant already does. |
What does it cost extra?
| Per month | Stripe + Stripe Tax | Merchant of record | Difference |
|---|---|---|---|
| 10 sales of €30 | €8.50 | €18.50 | €10.00 |
| 100 sales of €30 | €85.00 | €185.00 | €100.00 |
| 1,000 sales of €30 | €850.00 | €1,850.00 | €1,000.00 |
Stripe: 1.5% + €0.25 per European card payment, plus Stripe Tax Basic at 0.5% per sale (Stripe fees). Merchant of record: AgentaOS at 4.5% + €0.50 (pricing); others range from 3.9% + 40¢ (Creem) to 5% + 50¢ (Paddle, Lemon Squeezy, Polar Starter), see Stripe alternatives. The Stripe column leaves out what you pay to register and file VAT and sales tax, which the merchant of record does for you.
Honestly: at 1,000 sales a month the gap is about €1,000, enough to pay an accountant to file for you. Many sellers start with a merchant of record and move to a processor once they reach that point.
Related questions
Do I need a merchant of record?
You need one if Stripe or a similar processor does not work in your country, or if you sell digital products to consumers in other countries and do not want to register for and file VAT and sales tax there yourself. You may not need one if you sell only in your own country, or only to businesses that account for VAT themselves.
Is a merchant of record worth the extra fee at small volume?
Usually yes when you sell to consumers abroad. On ten €30 sales a month, a merchant of record at 4.5% + €0.50 costs about €10 more than Stripe with Stripe Tax. That €10 replaces EU VAT registration and quarterly filings, which apply from the first sale for sellers outside the EU.
When do I not need a merchant of record?
When you have a company in a country Stripe supports, sell mostly to businesses with VAT numbers, or sell only domestically. Then a processor plus your accountant is cheaper per sale.
What does a merchant of record do that Stripe does not?
It is the legal seller of each sale. It collects and pays VAT and sales tax, issues invoices in its own name, and handles refunds and chargebacks. With Stripe you stay the seller, and Stripe Tax only calculates the tax; registering and filing is still yours.
Can I start with a merchant of record and switch later?
Yes. Many sellers start with one to avoid tax registrations, then move to a processor once volume makes the per-sale saving worth an accountant. Customer subscriptions may need to be moved, so check how your provider exports them.
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