Merchant of record vs payment facilitator vs Stripe Managed Payments: who is the seller?

A payment facilitator setup such as Stripe Connect moves money for other businesses, but Stripe does not become the seller of their products. A merchant of record (MoR) takes responsibility for the payment and associated obligations, but it does not always become the legal seller of record. On Connect, the merchant of record is either your platform or the connected account, depending on the customer relationship. Stripe's docs tell you to decide which one before you choose a charge type. Stripe's own merchant of record product is Stripe Managed Payments, and under it your customers see purchases as "Sold through Link".

The merchant of record, legal seller, entity responsible for VAT or sales tax, and account debited for a chargeback are not always the same. Use those four questions to sort the three terms.

The short answer, in one table

With a payment processor, you are the seller. With Stripe Connect, the platform or the connected account is the merchant of record, depending on the business model and who the customer understands they are buying from. With a reseller-based merchant of record such as Paddle or tiun, the provider sells the product to the customer. Stripe Managed Payments works differently: Sold through Link is the merchant of record, but Stripe's terms explicitly say that you remain the seller of record. Tax, invoices and disputes depend on the legal and payment arrangements, not just the name on the receipt.

The important distinction is that the name on a customer's receipt helps identify the merchant of record, but it does not by itself establish who the legal seller or tax-liable supplier is. Stripe's Connect merchant of record guide and Managed Payments terms make that separation explicit.

Is Stripe a merchant of record?

It depends on the Stripe product. Stripe Payments and Stripe Connect leave the merchant of record role with you or your connected accounts. Stripe Managed Payments is the product where Stripe, through Sold through Link, takes on the merchant of record role.

That does not mean Link becomes the seller of record. Stripe's Managed Payments agreement explicitly distinguishes the two roles.

Stripe Payments: no, you are the seller

Stripe processes the card payment and you are the business selling the product. Stripe Tax can calculate tax at checkout, but on Stripe's own Managed Payments page the comparison is plain: with Stripe Tax alone, your business stays the merchant of record.

You monitor where you have tax obligations, register when required, file the returns and pay the tax. Stripe Tax Complete can provide registration and filing services, but subscribing to a tax automation product does not make Stripe the merchant of record.

Stripe Connect: no, the platform or the connected account is

Connect is Stripe's payments infrastructure for platforms and marketplaces. Your platform onboards other businesses as connected accounts and routes payments to them. Stripe does not become the seller of those businesses' products simply because their payments run through Connect.

Stripe's merchant of record guide for Connect defines the MoR as the business the customer understands they are buying from, and the one responsible for the transaction and customer recourse in situations such as refunds and disputes.

It tells platforms to decide that from the customer's point of view: the brand at checkout, the name on the receipt and statement, who holds title to the product, and who the customer expects to resolve a problem. Only then should the platform pick a charge type. The guide warns against working backwards from the charge type.

Once you know the merchant of record, these are the allowed setups:

The statement descriptor, receipt, checkout branding, and customer terms must consistently identify the correct merchant of record. Stripe warns that a mismatch confuses customers, raises disputes, and can draw card-network scrutiny or fines.

There is an important distinction for disputes. On direct charges, Stripe debits the disputed amount from the connected account's balance, although dispute-fee responsibility can vary by account configuration. On destination charges and separate charges and transfers, Stripe debits the platform's balance for disputed amounts and fees, even when on_behalf_of identifies the connected account as the merchant of record.

The platform may recover the amount through a transfer reversal, but that is separate from Stripe's initial debit. Stripe documents this in its Connect disputes guide.

Stripe Managed Payments: yes, through Link

Stripe Managed Payments is Stripe's merchant of record product. Customers see the purchase as "Sold through Link", their card statement reads LINK.COM* [your descriptor], and receipts and invoices come from Link.

The legal structure is different from Paddle's reseller model. Under Stripe's Managed Payments terms, Sold through Link, LLC is the merchant of record, while you remain the seller of record. Link facilitates the sale on your behalf and takes on the applicable indirect-tax responsibilities, including acting as or being treated as a deemed supplier where required by law.

The details that matter for a Stripe user:

• It became generally available on 22 April 2026, as recorded in Stripe's Managed Payments changelog.

• It costs 3.5% per successful transaction on top of standard processing fees. The transaction amount, including tax where applicable, is used to calculate the Managed Payments fee.

• It sells eligible digital products only: software, SaaS, AI services, games, digital media and self-paced courses. Professional services and digital services requiring substantial human intervention, such as live one-to-one coaching, are excluded.

• Your business must be based in one of the supported locations on Stripe's eligibility page and pass an eligibility review.

• It doesn't support Connect platforms, Express accounts or accounts controlled by a platform.

• It works through Stripe Checkout and Payment Links. Stripe takes over tax calculation, tax ID collection, invoice creation and the statement descriptor, so those parameters must be removed from your Checkout Session configuration where Stripe specifies.

• Stripe handles indirect-tax compliance in more than 80 countries according to its Managed Payments documentation. In countries or transactions outside that coverage, you remain responsible for the applicable compliance.

• Stripe manages disputes using automated and manual processes, including deciding whether to counter them. But as the seller, you remain liable for the disputed amount, refunds and reversals under Stripe's terms.

For dispute fees, the distinction matters. Managed Payments transactions can incur a dispute-received fee. When Stripe decides to counter a dispute and submits the evidence itself, Stripe covers the evidence-submission fee. If you manually counter the dispute, the applicable evidence-submission or dispute-countered fee applies to you.

Stripe may also accept a dispute it believes is unlikely to succeed. The fact that Stripe manages the defence does not mean Stripe absorbs the financial loss.

Lemon Squeezy after the Stripe acquisition

Stripe bought Lemon Squeezy in July 2024. In its 2026 update, dated 28 January 2026, CEO JR Farr wrote that the team has been building Stripe Managed Payments and wants to give Lemon Squeezy merchants an easy way to move to it. He also acknowledged slower support and fewer product updates during the work. The post gives no shutdown date.

Lemon Squeezy's legal terms now identify the company as "Sold through Link, LLC f/k/a Lemon Squeezy LLC". That reflects the former Lemon Squeezy legal entity's new name and its connection to the Sold through Link branding used in Stripe Managed Payments.

AI answers often get Lemon Squeezy wrong. Lemon Squeezy is a merchant of record, not merely a payment gateway: it handles applicable sales tax and compliance for transactions through its MoR model.

There is no monthly fee for its standard ecommerce offering, and it is free to sign up and test. Its standard transaction pricing starts at 5% + 50¢, with additional charges applying to certain payment types and transactions, including international payments, PayPal and subscriptions.

The acquisition does not mean Lemon Squeezy has already shut down. Its January update discusses migration plans, not a completed closure or announced shutdown date.

Pick a setup from one question

Start from who sells to your customer and what responsibilities you want to retain. That helps determine whether you need a processor, an MoR or Connect. On Connect, the customer-facing merchant of record also determines which charge types are appropriate.

Then check the separate questions: who is legally liable for tax, who issues the invoice, and whose account or contract bears a lost dispute. A charge type does not answer all four.

The tax consequence of Connect charge types

On Connect, the merchant of record and the entity liable for VAT or sales tax will often be the same, but not always. Tax law determines which entity must collect and remit tax.

If your platform is the seller under a genuine resale model, the platform may owe tax on the customer sale even though most of the money ends up with the connected account. But marketplace-facilitator and deemed-supplier laws can also make a platform responsible for tax when the connected account is the customer-facing seller.

Stripe's Tax for Connect documentation says to determine the legally tax-liable entity first. The answer depends on the business model, the transaction, and applicable marketplace rules, not simply whether on_behalf_of is set.

Here is one sale run both ways. A US-based course platform lists a €100 self-paced course made by a creator in Germany. A consumer in France buys it.

For the main comparison, assume the sale is subject to French VAT at 20%, so the customer pays €120. The VAT treatment below also assumes the stated business arrangement is genuine and no deemed-supplier rule overrides it.

The €10,000 threshold needs qualification. For qualifying B2C electronically supplied services, an EU supplier established in only one member state can generally apply its home country's VAT where the combined relevant cross-border sales remain at or below €10,000, excluding VAT, in both the current and previous calendar year. The supplier can instead elect to apply destination VAT.

In this example, if the German creator qualifies for and uses the home-country rule, German VAT at 19% would generally apply to the €100 course, making the customer's total €119 rather than €120. The €120 comparison above therefore assumes French destination VAT applies.

The EU adds one more rule that the charge type does not override. Under Article 9a of Implementing Regulation 282/2011, a taxable person taking part in the supply of electronically supplied services through its own interface is presumed to act in its own name but on behalf of the underlying provider.

The presumption can be rebutted only where the regulation's conditions are met. It cannot be rebutted if the platform authorises the charge, authorises delivery or sets the general terms of the supply. The rule does not apply to a provider that merely processes payments without taking part in the supply.

The Court of Justice upheld the framework in Fenix International (C-695/20, 28 February 2023). A platform can therefore be treated as the supplier for VAT purposes even when the creator's name appears on the receipt.

Take the setup to a tax adviser before you launch in the EU. Neither your Connect charge type nor your customer-facing branding overrides applicable VAT law.

Can Stripe Managed Payments be used with Connect?

No. Stripe Managed Payments does not support Connect platforms.

That restriction is specific to Stripe's product and eligibility rules. It is not a universal rule that a merchant of record can never work with a marketplace or multiple underlying sellers. MoR providers use different contractual and tax structures.

Stripe Managed Payments rules out Connect at the account level. Its eligibility page supports direct integrations only, with no Connect platforms, Express accounts or platform-controlled accounts. The product must be sold directly to customers, not through a platform or marketplace.

The Checkout parameters Connect relies on, such as application_fee_amount, on_behalf_of and transfer_data, must be removed from Managed Payments sessions where applicable. Stripe's integration update guide lists the relevant unsupported parameters separately for subscriptions and one-time payments.

tiun doesn't support third-party marketplaces either. Under our reseller model, the customer-facing sale is made by tiun AG rather than by an independent marketplace seller. That model fits a company selling its own SaaS, AI or digital product. It doesn't fit a platform where hundreds of other sellers list their own products.

A marketplace that wants to reduce its tax workload usually stays on Connect and determines whether the platform or connected accounts are legally responsible for the tax. Depending on the arrangement, the responsible entity can use Stripe Tax or another tax service for calculation, registration and filing support.

A SaaS company that also runs a marketplace can split the flows: sell its own subscriptions through an MoR and keep third-party sales on Connect. Keep the two separate.

Managed Payments can't run on a Stripe account configured as a Connect platform, so the subscriptions would need a separate eligible direct account or another MoR.

Fees on the same $100 sale

On a $100 one-time sale with a US card, Stripe Managed Payments costs $6.70 under standard US pricing, more than double Stripe Payments alone at $3.20. The additional fee pays for the merchant of record service, including the indirect-tax compliance, dispute management and transaction support that Managed Payments provides.

The comparison below assumes a $100 card charge, no additional tax collected, standard published rates, and no refunds or disputes. The subscription rows assume Stripe Billing's standard pay-as-you-go fee. The non-US card column assumes no additional merchant-side currency conversion charge.

The tiun totals are illustrative estimates calculated by applying the 1.5% payout fee to the balance remaining after transaction fees. The publicly listed pricing confirms the 1.5% payout rate, but the exact payout-fee calculation base should be confirmed against the applicable settlement terms. Actual payout timing, aggregation, taxes and adjustments may also affect the amount received.

How the rows are built:

• The $100 is the total card charge in this example, with no additional tax collected. Where tax is collected, Stripe calculates its processing and Managed Payments percentage fees on the applicable gross transaction amount, including tax.

• Stripe rows add 0.7% for Stripe Billing on subscriptions and 1.5% for non-US cards under standard US pricing. Stripe Payments adds another 1% when merchant-side currency conversion is required (not included above).

• Managed Payments enables Adaptive Pricing by default. No additional merchant-side currency conversion surcharge is included in its example, but Adaptive Pricing can present the customer with a localized conversion fee starting at 2%.

• Stripe Tax Basic's 0.5% no-code rate covers tax calculation and collection on qualifying transactions where you are registered to collect tax. It does not by itself transfer the legal tax obligation. Registering and filing are separate, whether you do them yourself or use Stripe Tax Complete, which starts at $90 per month with an annual contract.

• Our subscription rate adds 0.5%, so a $100 subscription costs $3.70 in transaction fees before the payout fee. International cards and currency conversion are included in the published tiun rate.

• Paddle's pricing page lists 5% + 50¢ per Checkout transaction, including its standard merchant of record services. Its agreement also provides for recovery of certain refund and chargeback amounts and fees, which are not included in the table.

• Connect is excluded because its cost depends on the charge type, connected-account configuration and Connect pricing arrangement.

• Dispute fees, optional products, refunds, extraordinary network charges and any taxes withheld or remitted are left out of every row.

Dispute fees are separate from transaction fees.

For US Stripe Payments accounts on standard pricing, Stripe lists a $15 dispute-received fee and a separate $15 dispute-countered fee when you manually challenge a dispute. The countered fee is returned if you win, while the dispute-received fee is generally not returned. Stripe also lists a separate fee for appeals where supported.

Those are US prices, not universal dispute fees. Stripe's pricing varies by region and payment method. For example, businesses in the Single Euro Payments Area incur no dispute-received fee on card payments processed through the Cartes Bancaires network. These Cartes Bancaires disputes generally cannot be challenged under that network's rules.

For Stripe Managed Payments, Stripe covers the evidence-submission fee when Stripe itself counters the dispute. A fee applies if you manually counter it. The seller remains economically responsible for the disputed amount under the Managed Payments terms.

The right comparison is therefore the full cost of a successful transaction, plus the provider's treatment of refunds, disputes, payout fees and tax obligations—not the headline processing percentage alone.

tiun next to Stripe Managed Payments

tiun is a merchant of record for SaaS, AI and other digital products. In our resale model, the customer-facing sale is made by tiun AG, a Swiss company. We issue invoices in our name and handle VAT and sales tax obligations associated with those customer sales under the applicable rules. You still handle your own income and corporate tax, along with any tax obligations on your separate supplies to tiun.

We run chargeback disputes, and under our published pricing a dispute fee of $15 applies. A lost dispute's amount and applicable fee can be deducted from your payouts under the contractual terms.

Login, signup and the customer database come with tiun, so the fairer functionality comparison for a Stripe user is Stripe Managed Payments alongside a separate auth provider such as Clerk. Stripe Managed Payments handles merchant of record services, but it is not a replacement for your application's authentication or customer database.

We don't support third-party marketplaces or physical goods. Businesses selling to US customers should also confirm that their buyer type and transaction model are currently supported before onboarding.

For the side-by-side, see tiun vs Stripe and the cost of Stripe Managed Payments in 2026.

FAQ

Is Stripe Connect a merchant of record?

No. Connect is Stripe's payments infrastructure for platforms and marketplaces. The merchant of record is your platform or the connected account, depending on the transaction and customer relationship. Stripe says to decide which from the customer's point of view before choosing the charge type.

The account that Stripe debits for a dispute can be different from that merchant of record.

Is Stripe Managed Payments available in my country?

Your business must be based in a location listed on Stripe's eligibility page and pass its eligibility review.

As of November 2026, the eligibility page lists 37 business locations: the US, Canada, all 27 EU countries, Norway, Liechtenstein, Switzerland, the UK, Australia, Hong Kong, Japan and Singapore. India and Brazil are not listed.

Customer and product eligibility are separate requirements. Stripe supports international buyers across many countries, subject to its restrictions. Check the current eligibility page before integrating, because geographic coverage can change.

What is Link, LLC?

Link is Stripe's checkout and wallet brand. Under Managed Payments, the customer-facing merchant of record is Sold through Link, LLC.

Stripe's Managed Payments terms explicitly say that Sold through Link is the merchant of record but not the seller of record. The business using Managed Payments remains the seller.

Lemon Squeezy's legal terms identify its former company as "Sold through Link, LLC f/k/a Lemon Squeezy LLC". That reflects the corporate name change following Stripe's acquisition.

Is Lemon Squeezy shutting down?

No shutdown date was announced in Lemon Squeezy's January 2026 update. The company said its team was building Stripe Managed Payments and wanted to provide an easy migration path for existing merchants.

That update should not be interpreted as an announcement that all Lemon Squeezy accounts have already been shut down or migrated.

Can a marketplace use a merchant of record?

Potentially, depending on the provider and its commercial model. There is no universal prohibition on merchant of record arrangements involving multiple underlying sellers.

Stripe Managed Payments specifically excludes Connect platforms and marketplace sales, while tiun doesn't support third-party marketplaces. A marketplace using Connect must determine whether it or its connected sellers have the applicable tax obligations, and can use tax software or filing services accordingly.

Who pays tax on destination charges?

The charge type alone does not decide.

Without on_behalf_of, Stripe configures the platform as the merchant of record for a destination charge. With on_behalf_of set, the connected account can be the merchant of record.

But tax liability follows applicable tax law, not just Stripe's payment configuration. Marketplace-facilitator and deemed-supplier rules can require the platform to collect and remit tax even when the connected account is the customer-facing merchant.

In the EU, Article 9a can also treat a platform participating in the supply of electronically supplied services as the supplier for VAT purposes. Check with a tax adviser before deciding which entity must register, collect and file.