Payments look simple until you have to deal with sales tax in 40 countries, failed subscription renewals, EU VAT compliance, and chargebacks from someone who forgot they signed up for your tool. The payment platform you choose determines how much of that headache you absorb vs. outsource.
Stripe gives you maximum control. Paddle and Lemon Squeezy act as your merchant of record — meaning they handle tax, compliance, and billing so you don't have to. The tradeoff is flexibility vs. simplicity, and the right choice depends entirely on your situation.
The Short Answer
Solo founder or small SaaS selling globally? Lemon Squeezy — easiest setup, handles everything. Established SaaS that needs tax compliance without rebuilding billing? Paddle. Building something complex with custom billing logic? Stripe — nothing else comes close on flexibility.
Merchant of Record: Why It Matters
This is the fundamental difference. With Stripe, you are the merchant of record. You collect payments, you're responsible for sales tax, VAT, and compliance in every jurisdiction you sell to. Stripe provides tools to help (Stripe Tax), but the liability is yours.
With Paddle and Lemon Squeezy, they are the merchant of record. They sell your software on your behalf, handle all tax collection and remittance, and pay you net of fees. You never touch tax compliance. For a solo founder selling to 50 countries, this is transformative.
Pricing Breakdown
Stripe
- 2.9% + 30¢ per transaction
- + 0.5% for Stripe Tax
- + 0.5–0.8% for Billing
- No monthly fees
- Volume discounts available
Paddle
- 5% + 50¢ per transaction
- Tax handling included
- No monthly fees
- Volume discounts at scale
- Higher fee, way less work
Lemon Squeezy
- 5% + 50¢ per transaction
- Tax handling included
- No monthly fees
- Same rate as Paddle
- Simplest onboarding of all three
True Cost Comparison
- Stripe: ~3.5-4% all-in with tax
- Paddle/LS: 5% all-in
- Delta: ~1-1.5% more for MoR
- But: no tax accountant needed
- Worth it under $1M ARR easily
Developer Experience
Stripe has the best API in SaaS. Full stop. The documentation is legendary, the SDK coverage is comprehensive, and you can build literally anything — metered billing, usage-based pricing, marketplace payouts, custom subscription logic. If you have engineers and complex requirements, Stripe is unmatched.
Paddle has modernized significantly with Paddle Billing (their new API). It's cleaner than the old Paddle Classic, with proper webhooks, a modern SDK, and decent documentation. Still not Stripe-level, but workable for most SaaS billing scenarios.
Lemon Squeezy prioritizes simplicity. The API is clean and well-documented, the checkout overlay works out of the box, and you can go from zero to accepting payments in under an hour. It's less flexible than Stripe or Paddle for complex scenarios, but for straightforward SaaS subscriptions, it's the fastest path.
Checkout Experience
Stripe Checkout is polished and converts well. You can embed it or redirect to a hosted page. Customization options are deep — you can match your brand, add fields, handle upsells.
Paddle's checkout overlay sits on top of your site, which some users find jarring. It works well for conversion but you have less control over the experience. The new checkout is better than the old one, but it's still Paddle's branded experience at the end of the day.
Lemon Squeezy's checkout is clean and modern. The overlay is tasteful, works well on mobile, and supports custom branding. For a tool that's newer to market, the checkout experience is impressively polished.
Subscription Management
Stripe Billing handles every subscription scenario imaginable — trials, metered billing, usage-based, tiered pricing, proration, dunning, pause/resume. The customer portal lets subscribers manage their own plans. It's extremely powerful but requires implementation work.
Paddle includes a customer portal, handles dunning automatically, and manages plan changes with proration. Less flexible than Stripe but covers 90% of SaaS billing needs without custom code.
Lemon Squeezy covers the basics well — subscriptions, one-time payments, license keys, customer portal. It's particularly good for digital products and SaaS tools. Where it falls short is complex enterprise billing scenarios.
Tax & Compliance
This is the killer feature for Paddle and Lemon Squeezy. As merchant of record, they handle all sales tax, VAT, and GST collection and remittance globally. You don't need to register for tax in multiple jurisdictions, file returns, or worry about compliance changes.
With Stripe, you need Stripe Tax (additional 0.5%) to calculate taxes, and you're still responsible for registration and filing in each jurisdiction. For US-only businesses this is manageable. Selling globally? It becomes a real operational burden.
Who Should Pick What
Choose Stripe if:
- You have engineers to implement and maintain billing
- You need complex billing logic (usage-based, metered, marketplace)
- You're primarily selling in one country/region
- You're at scale where the 1-1.5% fee difference matters ($1M+ ARR)
- You want maximum control over the payment experience
Choose Paddle if:
- You're a SaaS company selling globally and don't want tax headaches
- You need a proper merchant of record with an established track record
- You have moderate billing complexity
- You're between $100K and $5M ARR
Choose Lemon Squeezy if:
- You're a solo founder or small team
- You want the fastest path to accepting payments
- You sell digital products, SaaS subscriptions, or licenses
- You value simplicity over flexibility
- You're under $500K ARR and want to focus on product, not billing
Our Verdict
For most indie SaaS founders: Lemon Squeezy. The 5% fee is worth every penny when it means you never think about sales tax. Ship your product, not your billing infrastructure.
For growing SaaS ($500K+ ARR) selling globally: Paddle. More mature, more features, proven at scale.
For complex billing needs or high volume: Stripe. Nothing beats it on flexibility, and the cost savings at scale are real.