Payments
Stripe vs Lemon Squeezy vs Paddle
Three ways to take money on the internet, sitting at three very different points on the effort-versus-control curve. Stripe is a payments toolkit you assemble; Lemon Squeezy and Paddle are Merchant of Record (MoR) services that swallow your sales-tax and VAT problem in exchange for a fatter cut and less control.
Stripe if you want control and don't mind owning tax compliance; a Merchant of Record (Lemon Squeezy for scrappy digital/SaaS, Paddle for scaling B2B SaaS) if you want to never think about global tax again.
Best for Anyone who wants full control over checkout, data, and pricing logic — and who is either US-only, small enough not to worry about global tax yet, or big enough to run tax compliance properly (with Stripe Tax + an accountant).
Strengths
- The best developer experience in the category by a wide margin. Clean SDKs, excellent docs, huge ecosystem, and every AI coding tool knows Stripe cold — you'll get working code on the first try more often than with anyone else.
- You are the merchant of record, so you own the customer relationship, the data, the pricing, and the checkout UX end to end. Subscriptions, usage-based billing, metered pricing, invoicing, Connect for marketplaces — it does everything.
- Lowest headline fees: ~2.9% + $0.30 in the US. No MoR premium baked in.
- Stripe Tax and the Stripe Billing stack (customer portal, dunning, revenue recognition) exist as first-party add-ons if you want to stay in one ecosystem.
Watch out
- You are the merchant of record, so YOU are liable for collecting and remitting sales tax, VAT, and GST worldwide. Stripe Tax calculates it, but registering in each jurisdiction and filing returns is on you. If you sell digital goods internationally this is real work and real risk — it's the whole ballgame.
- Stripe Tax is metered and adds ~0.5% per transaction on top of processing fees, so the 'cheapest' option narrows once you turn on compliance tooling.
- Account freezes and reserve holds happen, and support for smaller accounts can be slow when they do.
Best for Indie hackers, solo founders, and small teams selling digital products, one-off downloads, licenses, or small SaaS who want zero tax headaches and are fine with a hosted checkout.
Strengths
- Merchant of Record: they handle ALL global sales tax, VAT, and GST — calculation, collection, remittance, and filing. You genuinely never touch it. For a solo dev selling to 40 countries this is the single biggest reason to pick an MoR.
- Fastest setup in the group. You can be selling — with checkout, license keys, digital delivery, and a customer portal — in an afternoon. Built for digital products specifically.
- Now owned by Stripe (acquired 2024), so it runs on Stripe rails underneath with a lighter, product-focused layer on top. Stability and payment-method breadth improved as a result.
- Nice built-ins for the indie use case: software license key generation, affiliate/partner program, and simple flows that don't require you to think like a payments engineer.
Watch out
- Higher fees: roughly 5% + $0.50 per transaction. That MoR premium is the price of not doing tax — real money at scale.
- Less flexible than Stripe. Complex or unusual billing models, deep checkout customization, and marketplace/split-payment scenarios are limited or absent — you live inside their product's opinions.
- Post-Stripe-acquisition direction is a strategic question mark; roadmap and investment now sit at Stripe's discretion. Fine today, worth watching if you're betting a business on it long-term.
Best for B2B and prosumer SaaS companies that have outgrown 'indie' and want a Merchant of Record that handles tax AND the messy parts of subscription revenue — dunning, invoicing, compliance — at scale.
Strengths
- Merchant of Record like Lemon Squeezy — full global tax/VAT/GST handled — but built for SaaS billing depth rather than one-off digital sales. Strong subscription management, proration, and plan changes.
- Mature compliance and fraud operation aimed at software businesses; handles B2B invoicing, reverse-charge VAT, and enterprise-flavored buyer requirements better than the lighter tools.
- ProfitWell (metrics/retention) and Paddle Retain (dunning/churn recovery) are part of the family, so you get real revenue-ops instrumentation, not just a checkout.
- Consolidates payments, tax, subscriptions, and reporting under one MoR relationship, reducing the number of vendors a growing SaaS has to manage.
Watch out
- Fees are in the ~5% + $0.50 range (varies by deal/volume) — same MoR premium as Lemon Squeezy, meaningfully more expensive than raw Stripe.
- Developer experience and docs are a step behind Stripe, and AI coding tools know it less well — expect more manual reading and more friction wiring it up. It's also overkill if you just sell a $19 download.
- Approval and onboarding can be stricter and slower than self-serve tools; they vet the businesses they take on as MoR.
The verdict
Pick Stripe if you want maximum control and the best developer experience, you're US-focused or comfortable owning global tax compliance (with Stripe Tax plus an accountant), or you have unusual billing/marketplace needs. It's the default for a reason — just go in clear-eyed that you are the merchant of record and tax is your problem. Pick Lemon Squeezy if you're a solo dev or small team selling digital products or small SaaS and you want to never think about VAT again — pay the ~5% and buy your time back. Pick Paddle if you're a growing B2B/subscription SaaS that wants the same MoR tax relief but with grown-up billing, dunning, and revenue tooling built in. The honest heuristic: if paying ~2% extra to make international tax completely disappear sounds like a good trade, go MoR (Lemon Squeezy small, Paddle scaling). If you'd rather keep the 2% and the control and handle compliance yourself, use Stripe.