Paddle vs Polar
Both are finance tools. Here is what separates them.
What Paddle is
Paddle is a merchant of record for software and other digital products. Rather than acting as a payment gateway that sits alongside your own legal entity, it becomes the seller in the transaction, which moves responsibility for sales tax, VAT and local payment rules from the company selling the software to Paddle. The model suits businesses selling across borders, where registering for tax in each jurisdiction would otherwise be the thing that decides whether you sell there at all. In practice, the service covers payment infrastructure, subscription billing, invoicing and the tax side. Paddle handles subscription setups and global payments, issues invoices for international sales, and provides reporting for finance and management. Fraud protection is automated and chargebacks are handled as part of the service, alongside a separate risk prevention feature. Pricing is a single per-transaction rate: 5% plus 50 cents per checkout transaction, with no monthly fee, no migration fee and no separate charges layered on top. Large businesses can negotiate custom pricing. Because that rate covers tax handling and fraud cover as well as processing, it is not directly comparable with a card processor's headline percentage. Paddle works with over 10,000 digital businesses and has processed more than $6 billion in transactions. It reports an average payment acceptance rate of 94%, a 38% reduction in churn, and a 93% customer satisfaction score against 24/7 support. Those last three are the vendor's own figures and are worth reading as such. There is an API and an SDK for building the checkout into a product, and an integration with ProfitWell Metrics for subscription reporting. Setting up an account requires verification before it can go live. If you later move away, Paddle states that data can be migrated out with no retention periods or restrictions attached, which is the sort of commitment worth confirming in the contract before you depend on it, since a merchant of record arrangement puts your customer and billing relationships in someone else's name.
What Polar is
Polar is a billing and payments platform that acts as the merchant of record for the seller. Polar Software, Inc. registers as the reseller in the relevant jurisdictions, so it, not you, collects and remits VAT, GST and US sales tax. EU business-to-business sales with a valid VAT ID are handled under the reverse charge rule. You remain responsible for income tax on your own revenue in your own country. Signing up is free and needs no credit card, but account approval goes through a merchant of record and KYC review that usually takes about a week. What a sale costs is built from several parts rather than a single rate, and the headline percentage falls as the monthly fee rises. Starter has no monthly fee and charges 5 percent plus 0.50 US dollars per transaction. Pro costs 20 US dollars a month and charges 3.8 percent plus 0.40. Growth costs 100 US dollars a month for 3.6 percent plus 0.35. Scale costs 400 US dollars a month for 3.4 percent plus 0.30, and is the only tier with a shared Slack channel and prioritised support. Surcharges then stack on top: cards issued outside the United States add 1.5 percent, cross-border currency conversion costs 0.25 percent within the EU and 1 percent elsewhere, and a dispute or chargeback costs 15 US dollars whatever the outcome. Transaction fees are not returned when an order is refunded, in full or in part. Payouts run through Stripe Connect Express or a manual withdrawal, and Polar never moves the balance automatically. Stripe payouts cost 2 US dollars per month per active payout, plus 0.25 percent and 0.25 US dollars per payout, and Stripe's minimum payout amount per currency means anything below it stays on the balance until next time. More than 130 currencies are supported and checkout picks the currency from the buyer's location, with orders converted to US dollars at the time of the transaction. Unusually for this category, the Polar codebase is open source under the Apache 2.0 licence. Products can be one-time purchases or subscriptions, priced as fixed, pay what you want with an optional minimum, free, metered usage or per-seat, with intervals from daily to yearly. Two decisions are permanent: the billing interval and the pricing type are locked once a product is created, and existing subscribers stay on the price they signed up at when a price changes. Benefits automate delivery of what the customer bought: licence keys, feature flags, file downloads up to 10 GB, private GitHub repository access and Discord invites with roles. There are SDKs for JavaScript or TypeScript and for Python, plus adapters for frameworks including Next.js, Nuxt, SvelteKit, Astro and Laravel. The customer portal is hosted by Polar under your own slug and cannot be switched off, so part of the customer relationship sits on Polar's domain rather than yours.
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