Stripe vs Lemon Squeezy vs Paddle: Payments for Your First SaaS
Short answer: Stripe Payments with Stripe Billing is a payment processor. Its headline fees are the lowest of the three, but you are the seller, so sales tax and VAT are yours to sort out. Paddle, Lemon Squeezy and Polar are merchants of record (MoR). They resell your software, collect and remit the tax, and charge more for it: each lists 5% + 50¢. Stripe now sells its own merchant-of-record option, Managed Payments, at 3.5% on top of its normal fees. Lemon Squeezy, which Stripe bought in 2024, is steering its sellers toward it.
If you sell to consumers in many countries and don't want to register for tax yourself, start with a merchant of record. If most of your customers are businesses in your own country, or you need custom payment flows, start with Stripe.
Fees and product details were read from each provider's own pages on 17 October 2026. Prices change and differ by country, so check the linked pages before you decide. None of this is tax advice.
The real decision: who is the seller of record?
Payment processor
Stripe Payments + Billing
Customer
pays with a card
You
are the seller on the receipt
Stripe
moves the money, keeps its fee
- Register for, collect and remit sales tax / VAT where you owe it (Stripe Tax can do the work, for a fee)
- Answer disputes and billing questions
Merchant of record
Paddle · Lemon Squeezy · Polar · Stripe Managed Payments
Customer
pays the merchant of record
The MoR
is the seller on the receipt
You
get a payout minus its fee
- The MoR handles indirect tax, fraud screening and disputes for those sales
- You still own refunds policy, product support and your price
With a payment processor, your business sells the subscription and Stripe moves the money. Working out where you owe sales tax or VAT, registering, collecting and filing is your job. Stripe Tax can calculate it, and its Tax Complete plan adds registrations and filings, starting at $90 a month on a one-year contract (Stripe pricing).
With a merchant of record, the customer buys from the MoR, which then pays you. Paddle sells "as your Merchant of Record" (Paddle pricing). With Stripe Managed Payments the customer sees Link, which is part of Stripe, as the merchant of record, the purchase reads "Sold through Link", and the card statement shows LINK.COM* plus your descriptor (Stripe: how Managed Payments works). In exchange the MoR handles indirect tax, fraud screening and disputes on those sales.
Side by side
| Provider | Model | List fee (US) | Who handles sales tax / VAT | Watch out for |
|---|---|---|---|---|
| Stripe Payments + Billing | Processor | 2.9% + 30¢ per domestic card, plus 0.7% for Billing | You (Stripe Tax can do the work, for a fee) | +1.5% for international cards, +1% if currency conversion is needed |
| Stripe Managed Payments | Merchant of record | Stripe's fees above, plus 3.5% | Stripe, in more than 80 countries | Checkout and Payment Links only, an eligibility review, no Connect |
| Paddle | Merchant of record | 5% + 50¢ | Paddle | Under $10: custom pricing on request |
| Lemon Squeezy | Merchant of record | 5% + 50¢ | Lemon Squeezy | +1.5% international, +1.5% PayPal, +0.5% on subscription payments |
| Polar | Merchant of record | 5% + 50¢ on the free Starter plan | Polar | +1.5% for international cards; lower rates on paid plans from $20 a month |
Sources: Stripe pricing, Managed Payments pricing, Managed Payments docs, Paddle pricing, Lemon Squeezy fees, Polar pricing.
Two details change the math. Stripe charges the 3.5% Managed Payments fee "on the full transaction amount, including any indirect taxes" (Stripe), and Lemon Squeezy calculates its fee on the total order value (Lemon Squeezy). Where VAT applies, a merchant of record takes its percentage from the tax as well as from your price.
What changed: Lemon Squeezy and Stripe Managed Payments
- July 2024. Stripe acquired Lemon Squeezy (Lemon Squeezy).
- September 2025. Stripe had published pricing for Managed Payments, its own merchant-of-record product, by then: 3.5% per successful transaction on top of payment fees (Stripe).
- January 2026. Lemon Squeezy's "2026 Update" said the team was building Stripe's merchant-of-record product and that the goal is to give Lemon Squeezy users an easy way to migrate to Managed Payments (Lemon Squeezy). Its site footer now reads "Sold through Link, LLC f/k/a Lemon Squeezy LLC".
- October 2026. Stripe documents Managed Payments for Checkout and Payment Links, with an eligibility review and a list of supported business countries that includes the US, Canada and much of Europe (Stripe: eligibility).
What it means for you: if you're starting today and liked Lemon Squeezy for its simplicity, evaluate Managed Payments next to it. If you already sell on Lemon Squeezy, the update gives no shutdown date, so follow Lemon Squeezy's own announcements before you plan a migration.
Worked example: one $20 monthly payment
Stripe Payments + Billing
2.9% + 30¢, Billing 0.7%
$1.02 · 5.1%
Paddle
5% + 50¢
$1.50 · 7.5%
Polar (Starter)
5% + 50¢
$1.50 · 7.5%
Lemon Squeezy
5% + 50¢, subscription +0.5%
$1.60 · 8.0%
Stripe Managed Payments
2.9% + 30¢, Billing 0.7%, MoR 3.5%
$1.72 · 8.6%
You are the seller
Merchant of record
On paper the processor wins by 48 to 70 cents per payment. That bar leaves out what tax compliance costs you: Stripe Tax Basic adds 0.5% per transaction where you're registered (no-code integrations; $0.50 per transaction through the API), Tax Complete starts at $90 a month, and an accountant is extra. The merchant-of-record bars already include it. Whether the difference is worth it depends on how many tax registrations you would otherwise need, which is a question for an accountant, not a fee table.
Fixed fees hurt cheap products most. On a $5 sale, 5% + 50¢ is 75¢, or 15%. Paddle and Lemon Squeezy both offer custom pricing on request for products under $10.
Which one should you pick?
- 1
Do you want another company to carry the sales tax and VAT obligation on your sales?
Yes → 2
No → A
- 2
Do you need something Managed Payments leaves out: Stripe Connect, a checkout embedded with Elements, or one-off invoices?
Yes → C
No → 3
- 3
Is your business in a country Stripe Managed Payments supports, and does Stripe approve the account?
Yes → B
No → C
- AStripe Payments + Billing
- Lowest headline fees. You register and file tax where you owe it; add Stripe Tax when that day comes.
- BStripe Managed Payments
- Merchant of record on Stripe Checkout or Payment Links. 3.5% on top of Stripe's payment and Billing fees.
- CPaddle or Polar
- Standalone merchants of record with their own checkout and billing. Compare their checkout options against what you need.
- You sell to businesses in your own country, or you need Stripe Connect, embedded checkout or invoices: Stripe Payments with Billing. Add Stripe Tax when you cross a tax threshold.
- You sell to consumers worldwide and don't want tax registrations: a merchant of record.
- You want a merchant of record but already know Stripe's API: Managed Payments, if your business country is supported and Stripe approves the account.
- You need a merchant of record and Managed Payments doesn't fit: Paddle or Polar. Compare their checkout options against your product.
Wiring it up with an AI coding agent
Payments code is where a confident agent does the most damage, so give it a narrow lane.
- Test keys only. The agent works in test mode or a sandbox. Live keys never enter the chat, the repository or the agent's environment.
- Hosted checkout. Use the provider's checkout page, not a card form your agent builds. Managed Payments requires Checkout or Payment Links anyway.
- Access comes from webhooks. Verify the signature against the raw request body, return a
2xxquickly, then do the work. Store the IDs of events you've processed, because Stripe says the same event can arrive more than once (Stripe: webhooks). Test locally withstripe listen --forward-to localhost:4242/webhook. - The success page is a thank-you page. It isn't proof of payment. A customer can reach it without paying, and a paid customer can close the tab before it loads.
- Tag every checkout. If one Stripe account serves several products, put your app's name in the session metadata and ignore webhooks that aren't yours.
- Test the money paths. Paid → access granted. Refunded or cancelled → access removed. The same webhook delivered twice → access granted once.
These checks belong in the security pass before you take money, next to authorization and rate limits.
The step-by-step build loop for this, with plan mode and verification gates, is in How to build a SaaS with Claude Code.
What ConfettiSaaS uses
Our own Fast Track and sponsorship checkouts are Stripe Checkout sessions with Managed Payments switched on. Each session carries an app tag in its metadata, because our Stripe account is shared with other products and our webhook drops events that belong to them. That's a description of our setup, not proof that it's right for yours.
Sources
All retrieved 17 October 2026.
- Stripe, Pricing (United States)
- Stripe, Managed Payments pricing
- Stripe, Managed Payments, How Managed Payments works, Managed Payments eligibility
- Stripe, Receive Stripe events in your webhook endpoint
- Paddle, Pricing
- Lemon Squeezy, Fees, Stripe acquires Lemon Squeezy (26 July 2024), 2026 Update: Lemon Squeezy + Stripe Managed Payments (28 January 2026)
- Polar, Pricing
