If you sell through more than one provider, you've probably noticed something odd: Polar and Paddle charge noticeably more per transaction than Stripe or Shopify Payments. It's not because they're worse deals — they're solving a different problem, and understanding which category each of your providers falls into changes how you should think about their fees.

What a PSP actually does

A Payment Service Provider — Stripe, PayPal, Shopify Payments — moves money from your customer's card to your bank account. That's the whole job. Tax compliance, VAT registration, and remittance in every jurisdiction your customers are in remains entirely your responsibility. For a seller with customers concentrated in one or two countries, that's manageable. For a seller with customers in forty countries, it's a genuine compliance burden.

What a Merchant of Record actually does

Polar, Paddle, Lemon Squeezy, and (since January 2025) Gumroad are Merchants of Record. Legally, the sale is between your customer and the MoR — they become the seller of record, collect the payment, calculate and remit VAT/sales tax in every jurisdiction, and pay you the remainder. That's why their base rates run higher (typically 5%+ versus a PSP's ~2.9%): the extra percentage is buying you out of a compliance problem that would otherwise require registering for VAT in dozens of countries yourself.

The fee gap, side by side

Stripe: 2.9% + $0.30, you handle tax.
Polar (post-May 2026): 5% + $0.50 on Starter, tiered down to 3.4% + $0.30 on the Scale plan, tax handled.
Paddle: ~5% + $0.50, tax handled.
Lemon Squeezy: ~5% + $0.50 plus surcharges, tax handled.

Which one is actually cheaper?

It depends entirely on whether you'd otherwise be VAT-registered in the countries your customers live in. If your sales are mostly domestic, a PSP's lower rate plus your own straightforward tax filing is usually cheaper. If you sell digital products globally — the classic case for indie SaaS and digital creators — the MoR's higher rate is often cheaper than the accounting and compliance cost of doing it yourself.

Why this matters for your dashboard

Because these two categories calculate and report fees completely differently, comparing a Stripe transaction to a Polar transaction at face value is comparing two different things. Simeon normalizes both into the same net-revenue format so you can actually compare apples to apples across your full provider stack — see the Stripe and Polar integration pages for the exact fee breakdowns.