Choosing between Merchant of Record and PayFac payment models for new SaaS builders

Short summary

A co-founder of paas.build explains why Paddle rejects new builders and maps out the two payment models: Merchant of Record (Paddle, Lemon Squeezy) vs Payment Facilitator (paas.build). MoRs carry tax liability but gatekeep via upfront underwriting; PayFacs let you start immediately under a capped account with progressive KYB. The guide includes concrete fixes for Paddle rejections and honest tradeoffs for each path.

• •Paddle rejects new builders because as Merchant of Record it legally owns your sales and bears tax liability across 100+ jurisdictions
• •Fix Paddle rejections by completing your site, matching identities, and explaining your business plainly; or try another MoR like Lemon Squeezy
• •PayFac alternatives like paas.build offer same-day capped accounts (~£1,500) with progressive KYB, but you retain tax liability and must be UK/EU/US registered

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