If you're an engineer building a SaaS or a developer tool, "adding payments" is rarely the hard part. The hard part is the liability that lives downstream of the payment.
Most developers underestimate the sheer volume of "glue code" and legal risk required to turn a successful transaction into a compliant business. You start by integrating an API to charge a card, a deceptively simple task with modern libraries. But almost immediately, you end up needing a tax compliance engine, a legal department, and a finance team just to sell a $10 tool globally.
Here is a technical breakdown of the specific engineering and legal headaches an MoR like Polar solves compared to a raw Stripe integration.
The "Global Tax Liability" Nightmare
The Stripe Problem: You Are the Merchant Stripe is a payment processor. It moves money from Point A to Point B. When you use it, you are the Merchant of Record. This means the legal transaction is directly between you and the buyer.
- The Reality: If you sell software to a customer in Germany, you legally owe VAT (Value Added Tax) to the German government. If you sell to a customer in Texas, you owe sales tax there. If you sell to a customer in Japan, you deal with Consumption Tax.
- The Burden: You are personally responsible for monitoring "economic nexus" thresholds in 190+ countries and 45+ US states.
- Threshold Tracking: In some regions, you only owe tax after you sell $100,000 worth of goods. In others (like the EU or UK for digital goods), the threshold is effectively $0. You owe tax from the very first dollar.
- Registration Hell: Once you cross a threshold, you must register with that specific local tax authority. This often involves filling out forms in foreign languages and navigating complex bureaucracy.
- Remittance: You must then file quarterly reports and remit the collected tax to each authority separately.
- The Risk: Ignorance is not a defense. Developers often unintentionally commit tax evasion simply by selling their SaaS globally without a compliance engine. A surprise audit or a demand letter from a foreign tax authority can destroy a small business.
The Polar Solution: Merchant of Record (MoR) Architecture Polar fundamentally changes the legal architecture of the transaction.
- Legal Proxy: Polar acts as the reseller. Legally, the transaction flows: You -> Polar -> Customer.
- Liability Shield: Because Polar is the entity on the receipt, Polar is the merchant. They are the ones responsible for calculating the correct tax rate, collecting it at checkout, and remitting it to the appropriate government bodies globally.
- Zero Code (related to MoR): You don't need to integrate third-party tax tools. You don't need to write logic to check "is this customer in the EU?" or "did I cross the threshold in Kansas?" The API handles the entire tax layer upstream of your application.
- The Result: You get one clean payout. Polar handles the world's tax bureaus.
Solving the "Undifferentiated Heavy Lifting"
The core problem Polar solves is focus.
With Stripe, you are effectively building a billing product alongside your actual product. You are dedicating engineering hours to:
- maintaining tax logic and threshold monitors.
- handling legal compliance for digital goods.
This is "undifferentiated heavy lifting"—work that is difficult, high-risk, and absolutely essential, yet provides zero unique value to your specific customers. Your users don't care how good your tax remittance code is; they just want your tool to work.
With an MoR like Polar, you are outsourcing that entire domain. You solve the tax problem by not being the merchant. You solve the schema complexity by using their simplified data model. You move "billing" from the column of things you have to build and maintain to the column of services you simply consume. This frees you to focus entirely on the code that actually makes your product unique.
Battle of the MoRs: Polar vs. The World
While all Merchant of Record platforms solve the "liability" problem, they differ wildly in fees, features, and target audience. Here is how Polar stacks up against the other major players in 2026.
| Feature | Polar.sh | Lemon Squeezy | Paddle | Gumroad |
|---|---|---|---|---|
| Best For | Developers & SaaS | Creators & No-Code | Enterprise B2B | Digital Artists |
| Transaction Fee | 4% + 40¢ | 5% + 50¢ | 5% + 50¢ | 10% (flat)* |
| Developer Exp. | Excellent (Modern SDKs) | Good | Complex / Dated | Minimal / None |
| Open Source | Yes (Apache 2.0) | No | No | No |
*Note: Gumroad's 10% fee is for the platform only; payment processing fees (approx. 2.9% + 30¢) are often added on top, making the effective rate closer to 13%.
Key Takeaways:
vs. Lemon Squeezy: Polar is roughly 20% cheaper on fees and offers significantly better tooling for developers (SDKs, webhooks, GitHub integration). Lemon Squeezy is better if you need a no-code "storefront" builder.
vs. Paddle: Paddle is the enterprise giant. It handles complex B2B sales (purchase orders, invoicing teams) better but has a much heavier integration lift and higher fees.
vs. Gumroad: Gumroad is a marketplace, not infrastructure. It charges a massive 10% fee but brings you traffic. Polar charges 4% but expects you to bring your own customers.
Thank you for reading :)
About Reach Design
We don't just write code; we engineer outcomes. At Reach Design, we specialize in building high-performance SaaS products and digital experiences that users can't put down. From complex billing architectures to seamless frontend interactions, we handle the heavy lifting so you can focus on scale.
Got a project in mind? Let’s build something remarkable. Contact us: [email protected] Web: reachdesign.co