Taking payments for a new SaaS: Stripe vs Paddle vs Lemon Squeezy
What each costs on a $20 subscription, who handles sales tax, and which to pick when you sell to customers in many countries.
Short answer: Compare payment processing plus subscription, tax and international fees. With standard Stripe Payments, you remain responsible for your tax obligations. Paddle and Lemon Squeezy act as the merchant of record: they charge more per sale and handle tax for you. Stripe now offers the same option as Managed Payments. Compare which tax and compliance responsibilities each merchant-of-record agreement covers for your business.
What a $20 monthly subscription costs you
| Option | Fee | On a $20 sale (US card) | Who handles sales tax and VAT |
|---|---|---|---|
| Stripe Payments + Billing | 2.9% + 30¢, plus 0.7% for subscriptions | About $1.02 | You (Stripe Tax can calculate it for 0.5% per transaction) |
| Stripe Managed Payments + Billing | 3.5% plus Payments fees and 0.7% Billing | About $1.72 | Stripe, as merchant of record |
| Paddle | 5% + 50¢ | $1.50 | Paddle, as merchant of record |
| Lemon Squeezy | 5% + 50¢ base, plus applicable surcharges | $1.50 base before subscription or other surcharges | Lemon Squeezy, as merchant of record |
Pros and cons
| Pros | Cons | |
|---|---|---|
| Stripe | Flexible payment APIs and subscription options | Tax registration and filing are on you |
| A merchant of record | Tax, invoices and many payment methods handled; one payout | Higher fee per sale; less control over checkout |
Setup checklist
- Start in test mode and buy your own product with a test card before going live.
- Offer monthly and yearly; explain renewal, cancellation and refund terms clearly for both.
- Turn on the customer portal so people can update cards and cancel without emailing you.
- Send receipts from your domain, and make sure failed-payment emails reach people.
- For iPhone and Android apps, digital features bought inside the app usually go through the App Store and Google Play billing. Check their rules before you design pricing.
Questions
Do I need a company to accept payments?
Stripe and the merchants of record accept individuals in many countries, but eligibility and business obligations depend on your location and business structure. Check the rules where you live.
When should I start charging?
From the first version, even at a small price. Paying customers give you the clearest feedback on what matters.