FinTech
What are the main payment processing models for SaaS?
SaaS companies typically choose between a payment facilitator (PayFac) model, a merchant of record (MoR) model, or direct merchant accounts. PayFac (Stripe Connect, Adyen for Platforms) lets you onboard sub-merchants under your master account. MoR providers (Paddle, Lemon Squeezy) handle the entire payment stack including tax, compliance, and chargebacks. Direct merchant accounts offer the lowest fees but require you to handle everything yourself.
Key Considerations
- Merchant of Record is the fastest path for SaaS: they handle global tax calculation, remittance, and compliance for a 5–8% cut
- Stripe/PayFac gives you more control over the payment experience but you own tax compliance and dispute management
- For marketplace or platform models, PayFac is usually required — you need to split payments between your platform and sellers
- Chargeback liability sits with whoever is the merchant of record — this is a key factor in model selection
- Consider tax complexity: selling to EU consumers means VAT collection in 27 countries — MoR handles this automatically