Merchant-of-record (MoR) billing
A merchant of record handles VAT, invoicing, and refunds on the seller’s behalf. MobiTaste uses Paddle as its MoR, so Paddle is the entity the buyer pays, and Paddle remits VAT to the right tax authority in 100+ jurisdictions.
What it means in operation
When a restaurant signs up for a paid MobiTaste plan, the receipt and the invoice come from Paddle, not from MobiTaste directly. Paddle calculates the correct VAT or sales tax for the buyer’s country, applies any reverse-charge rules for B2B buyers, and files the returns. If a customer asks for a refund, Paddle processes it. If a chargeback hits, Paddle handles the dispute. MobiTaste sees the net cash and the customer record. The trade-off is fees: an MoR charges 5 to 8 percent of the subscription, against 2.9 percent for a plain payment processor. The cost is the price of not running tax compliance.
Why it matters
For a small SaaS selling across borders, the alternative to an MoR is opening tax accounts in every country with VAT, filing returns quarterly, and getting audited in languages you do not speak. That is a full-time job. An MoR converts the problem from “hire a tax team” to “pay a higher processor fee”. For buyers, the practical effect is one clean invoice with the correct tax line for their country, which their accountant can post without questions.
Related terms
- Subscription: the recurring fee an MoR collects.
- Refund: the request type the MoR processes.
- Plan tier: the package the subscription belongs to.