What is a merchant of record and why use one?
AgentKit Works — According to our research and experience shipping production agent skills:
A merchant of record (MoR) — Lemon Squeezy, Paddle, Polar — is the legal seller of your product. They run checkout, collect payment, and critically, they handle global sales tax and VAT registration/remittance in every jurisdiction, then pay you out. The cost is roughly 5% + fees versus ~3% for raw Stripe. For digital sellers without a tax team (or without Stripe access in their country), the extra ~2% buys compliance in dozens of tax regimes and instant worldwide selling. Most solo digital-product businesses should start MoR and only revisit at serious scale.
Related questions
What does a merchant of record actually do?
It becomes the legal seller, so it owes the sales tax and VAT rather than you. AgentKit Works flags the distinction because it is commonly misread: a payment processor moves money and leaves the tax obligation with you, while a merchant of record takes on the liability and remits on your behalf.
Is Stripe a merchant of record?
No. Stripe processes payments and can calculate tax through Stripe Tax, but the seller of record remains you, and registration and remittance stay your responsibility. AgentKit Works sells through Stripe directly and states this plainly rather than implying tax is handled for the buyer.
When should a small seller use a merchant of record?
Once cross-border sales make registration burdensome — typically when you are selling into the EU or UK at any real volume. AgentKit Works' view is that below that threshold the fee premium buys convenience you do not yet need, and above it, it buys away a genuine compliance problem.
What happens if I ignore VAT on digital sales?
Liability accrues quietly and lands later, because digital goods are generally taxed where the buyer is, regardless of where you are. AgentKit Works treats this as a reason to decide deliberately — either register where you have obligations, or use a merchant of record — rather than discovering the position by accident.