Paddle handles payments for software companies as their merchant of record. That means Paddle is the one legally selling to the customer, so it calculates, collects and pays the sales tax and VAT, screens transactions for fraud, fights chargebacks and handles billing questions. It covers more than 100 tax jurisdictions.
The company was incorporated in London in 2012, and more than 10,000 digital businesses use it. It’s built for software: B2B SaaS, consumer software and games, rather than physical products.
Billing and retention
Checkout comes as an overlay, embedded in a page, or as an express option, with a customer portal for managing subscriptions. Customers can pay by card, PayPal, Apple Pay, Google Pay and a long list of local methods, from iDEAL and Bancontact to Pix and UPI.
Paddle bought ProfitWell in 2022, and two tools came from it. Retain recovers failed payments and runs cancellation flows, and ProfitWell Metrics gives free subscription revenue reporting, even for businesses billing through Stripe or Chargebee.
From gross sale to monthly payout
Because Paddle is the seller, the customer’s money passes through Paddle first. Over the month, each sale lands in the seller’s Paddle balance with the tax and Paddle’s fee already taken off. Sellers are paid monthly: on the 1st, a balance above the seller’s chosen minimum converts into a payout, which Paddle sends by the 15th. A balance below the minimum rolls over to the next month.
Since October 2025, the payout reconciliation report traces each payout back to the transactions inside it, showing step by step how the gross amount came down to the net total, currency conversion included. It replaced the older balance report.
Paddle in Xero or QuickBooks
Paddle’s own guidance is to recognize revenue gross, including Paddle’s fee, so the books show the full sale with the fee as a cost, even though only the net payout reaches the bank. Each payout comes with a reverse invoice that Paddle raises on itself for the payout amount, so the seller never has to invoice Paddle.
In Xero or QuickBooks, that usually becomes one entry a month built from the payout reconciliation report, with gross sales and fees posted separately so the net figure clears against the deposit when it lands. The report can be pulled through the API each month instead of downloaded by hand.
The Paddle Billing API
Paddle Billing, the current platform, has a JSON REST API with official SDKs for Node.js, Python, Go and PHP. Its API keys carry specific permissions and an expiry date, and a separate sandbox has the same features with its own data and dashboard. Each IP address can make 240 requests a minute.
Webhooks report completed and failed transactions and every change to a subscription. They’re signed, and in live mode Paddle retries a failed delivery up to 60 times over three days.
The Reports API exports transactions, subscriptions and payout reconciliation as CSV files. Businesses still on Paddle Classic, which stopped taking new signups in 2023, can move their subscriptions across to Billing from the dashboard.
AI tools
Paddle’s changelog shows a run of AI tooling since 2025: an MCP server that lets AI assistants work with a Paddle account, a Metrics API, and OAuth apps added in June 2026.
The books after the payout
Paddle’s webhooks and Reports API leave room to connect it well beyond the dashboard. Each month’s payout reconciliation can post to Xero or QuickBooks as gross sales and fees, new and canceled subscriptions can update the CRM, and failed payments can reach the customer success team before the customer notices.
Doing month-end by hand has a price, and working it out is simple arithmetic. When Paddle’s payout and the books disagree, that’s one of the warning signs of disconnected systems, and anything connected to billing needs an owner once it’s live.