Paddle acts as your merchant of record, handling all tax compliance, payment processing, and regulatory requirements globally. This makes it ideal for SaaS businesses that want to sell worldwide without tax complexity.

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Features

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Merchant of Record Benefits

  • Global tax compliance - VAT, GST, sales tax handled automatically
  • Payment processing - Cards and PayPal in 200+ countries
  • Compliance - PCI, GDPR, and local regulations
  • Customer support - Paddle handles payment disputes
  • Invoicing - Automatic invoice generation

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Payment Methods

  • Credit/debit cards (all major)
  • PayPal
  • Wire transfers (for large transactions)
  • Local payment methods (region-specific)

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Subscription Features

  • Recurring billing
  • Free trials
  • Subscription pausing and resuming
  • Plan changes with proration
  • One-time charges on subscriptions

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Configuration

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Prerequisites

  • Paddle account (approved)
  • Live or sandbox credentials
  • Products created in Paddle
  • Webhook configuration access

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Setup Steps

1

Get Your Credentials

  1. Log into Paddle Dashboard
  2. Navigate to Developer Tools → Authentication
  3. Copy your Vendor ID
  4. Generate and copy API Auth Token
  5. Note your Public Key
For sandbox:
  1. Use Paddle Sandbox
  2. Get separate sandbox credentials
2

Configure in FunnelFox

  1. Go to Project Settings → Payment Providers
  2. Select Paddle
  3. Enter your Vendor ID
  4. Enter your API Auth Token
  5. Enter your Public Key
  6. Choose environment (Sandbox/Live)
  7. Click Save
3

Webhook Configuration

FunnelFox automatically configures webhooks for:
  • Subscription created
  • Subscription updated
  • Subscription cancelled
  • Payment succeeded
  • Payment failed
Webhook URL:
https://api.funnelfox.com/webhooks/paddle/[project-id]
4

Product Setup

Products sync automatically from Paddle:
  1. Create products in Paddle Dashboard
  2. Set up subscription plans
  3. Configure pricing and trials
  4. Products appear in FunnelFox

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Checkout Modes

Paddle offers two checkout experiences:

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One-Page Checkout

Everything on a single screen:
  • Email and payment in one step
  • Faster completion
  • Higher conversion for simple products
  • Best for: Single products, impulse buys

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Multi-Page Checkout

Step-by-step process:
  • Separate email and payment steps
  • Better for complex purchases
  • Allows email capture before payment
  • Best for: High-ticket items, B2B
Configure in checkout element: 
Checkout Mode: One-page or Multi-page
FunnelFox automatically pre-fills customer data including email and location (via GeoIP) to reduce friction.

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Subscription Management

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Creating Subscriptions

Paddle handles:
  • Recurring billing cycles
  • Automatic renewals
  • Payment retries
  • Dunning emails

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Trials

Configure in Paddle product: 
Trial Period: 14 days
Trial Type: Free
Auto-convert: Yes

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Pausing Subscriptions

When paused:
  • Billing stops immediately
  • Access continues until period end
  • Can set automatic resume date
  • Paddle handles proration

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Plan Changes

Paddle automatically handles:
  • Immediate upgrades with proration
  • Downgrades at period end
  • Credit for unused time
  • Invoice adjustments

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One-Time Charges

Add charges to existing subscriptions: 
// Via Purchase action after initial subscription
One-time charge for add-ons
Upsells and cross-sells
Same payment method used
One-time charges are perfect for onboarding fees, setup costs, or additional services on top of subscriptions.

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Pricing and Currencies

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Multi-Currency Support

Paddle automatically:
  • Detects customer location
  • Shows local currency
  • Handles conversion
  • Includes local taxes

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Dynamic Pricing

Set prices per country:
  • Purchasing power parity
  • Local market rates
  • Regional promotions
Configure in Paddle Dashboard under Pricing.

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Tax Handling

Paddle manages all tax complexity:

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Automatic Calculation

  • VAT in EU (per country)
  • GST in Australia/NZ
  • Sales tax in US (per state)
  • Local taxes globally

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Compliance

  • Tax registration
  • Filing and remittance
  • Invoice generation
  • Reverse charge (B2B EU)
As merchant of record, Paddle is the seller. They handle all tax obligations, you just receive payouts.

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Testing

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Sandbox Environment

Use Paddle Sandbox for testing:
  1. Create sandbox account
  2. Use sandbox credentials
  3. Test cards process immediately
  4. No real charges

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Test Cards

Card NumberResult
4242 4242 4242 4242Success
4000 0000 0000 0002Declined
4000 0000 0000 9995Insufficient funds
Use any future expiry and any CVV.

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Preview Mode

Funnels in preview:
  • Automatically use sandbox
  • Full checkout flow
  • Webhook processing
  • Test subscriptions created

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Customization

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Checkout Appearance

Limited customization available:
  • Logo upload
  • Brand colors
  • Custom CSS (basic)
Configure in Paddle Dashboard under Checkout Settings.

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Email Communications

Paddle sends:
  • Receipt emails
  • Subscription notifications
  • Payment failure notices
  • Renewal reminders
Customize templates in Paddle Dashboard.

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Limitations

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Compared to Direct PSPs

Less Control
  • Paddle owns customer relationship
  • Limited checkout customization
  • Paddle branding present
  • Fixed email templates
Fewer Features
  • No custom discount codes
  • Limited payment methods
  • No customer portal API
  • Basic analytics only
Higher Fees
  • 5% + $0.50 per transaction
  • Includes tax handling
  • No monthly fees
  • Payout fees may apply

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Webhooks and Events

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Key Events

Monitor these webhook events:
EventWhen TriggeredAction
subscription_createdNew subscription startsProvision access
subscription_updatedPlan change or renewalUpdate access
subscription_cancelledCancellation requestedSchedule removal
subscription_payment_succeededPayment processedExtend access
subscription_payment_failedPayment failedGrace period

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Event Data

Paddle sends comprehensive data: 
{
  "subscription_id": "12345",
  "status": "active",
  "next_bill_date": "2024-02-01",
  "update_url": "https://...",
  "cancel_url": "https://..."
}

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Troubleshooting

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Best Practices

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Optimize Conversions

  • Use one-page checkout for simple products
  • Pre-fill customer data when possible
  • Show local currency and tax-inclusive pricing
  • Minimize required fields

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Subscription Management

  • Offer pause instead of cancel
  • Use win-back campaigns
  • Monitor failed payments
  • Implement upgrade prompts

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Compliance

  • Let Paddle handle all tax matters
  • Don’t override tax calculations
  • Keep customer data in sync
  • Monitor regulatory changes

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Migration from Other PSPs

Moving to Paddle:
1

Export customer data

Get customer list from current PSP
2

Import to Paddle

Use Paddle’s import tools
3

Update payment methods

Customers update cards on next charge
4

Parallel run

Keep old PSP active during transition
Paddle becomes the merchant of record. This changes your business relationship with customers. Consult legal/tax advisors before switching.

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Next Steps