SaaS payments: Stripe vs. Paddle vs. Lemon Squeezy

This is for founders and engineers picking how a software product gets paid: a new SaaS, a desktop app with licenses, or a subscription you are about to put online. The real decision is not “which checkout looks nicest.” It is whether you want to be the legal seller of every transaction, with the sales tax, VAT and chargeback work that comes with it, or whether you want a merchant of record to take that on for a bigger cut. Stripe, Paddle and Lemon Squeezy sit at different points on that line, and in 2026 the line moved: Stripe now sells its own merchant-of-record product, and Lemon Squeezy, which Stripe owns, is steering its users toward it.

The short answer

Choose Stripe (plain) if you want the lowest processing fees and full control, and you are ready to handle tax registration and filing yourself, with Stripe Tax doing the math.

Choose Stripe Managed Payments if you sell a purely digital product, you want a merchant of record, and you’re fine using Stripe Checkout or Payment Links.

Choose Paddle if you want an independent merchant of record with subscriptions, B2B invoicing and simple all-in pricing, and you can live with monthly payouts.

Choose Lemon Squeezy only if you are already on it and it works. Its own CEO says the team’s focus is on helping users move to Stripe Managed Payments.

What actually matters

First, what merchant of record means

A merchant of record (MoR) is the legal entity that sells to your customer. Paddle’s own definition is “a legal entity responsible for selling goods or services to an end customer.” In practice, the MoR buys your product from you and resells it, so three things shift onto them:

Sales tax and VAT liability. Selling software across borders means you may owe US sales tax in states where you cross thresholds, VAT in the EU and UK, and GST in places like Australia. Someone has to register, collect the right rate, file returns and pay. With an MoR, that someone is them. Without one, it’s you, even if a tool calculates the numbers.
Chargebacks. A chargeback is when a cardholder disputes a charge with their bank and the money is pulled back. The MoR’s name is on the card statement, so disputes go to them, and they fight or accept them.
Invoicing and receipts. The MoR issues the customer-facing receipts and tax invoices under its own name.

The tradeoff is cost and control. An MoR charges more per transaction, owns the checkout experience to some degree, and the customer sees their name, not just yours.

The criteria

Who carries tax liability. Calculation is the easy part. Registration, filing, remitting and audits are the work.
All-in cost on your typical transaction. Add up processing, billing, tax and international fees on a real price point, not the headline rate.
Dispute handling and fees. Who responds, what each dispute costs, and whether you get the fee back if you win.
Payout timing. Cash flow matters early. Payouts range from every couple of days to once a month.
Billing features. Subscriptions, trials, proration, usage-based pricing, dunning (automatic retries and reminders for failed payments), customer portal and B2B invoices.
Product eligibility. MoRs only take certain products. Stripe Managed Payments excludes physical goods and human services like consulting.
Migration difficulty. Whether you can move saved cards to another processor without asking every subscriber to re-enter them.

The options, side by side

All fees are US list prices as of October 2026, from each company’s pricing page. Volume discounts exist at all three.

	Stripe (you are the seller)	Stripe Managed Payments	Paddle	Lemon Squeezy
Who is merchant of record	You	Stripe (customers see “Link”)	Paddle	Lemon Squeezy
Base fee	2.9% + 30¢ per card charge	Stripe fees + 3.5%	5% + 50¢	5% + 50¢
Extra fees	+1.5% international cards, +1% currency conversion; Billing 0.7%; Tax from 0.5% per transaction where registered	Billing priced separately for subscriptions	Premium invoicing and services by quote	+1.5% international, +1.5% PayPal, +0.5% subscriptions
Tax registration and filing	You (Stripe Tax helps; filing directly or via partners)	Stripe, in 80+ countries	Paddle	Lemon Squeezy
Disputes	You respond; $15 per dispute, $15 more to counter	Stripe responds; dispute fee still charged	Paddle contests automatically; 20 USD fee, not refunded if won	Usually refunded on your behalf; $15 fee
Payouts	First payout 2 business days (US); daily, weekly or monthly after	Through your Stripe balance	Monthly, sent by the 15th; $100 minimum	1st and 15th, 13-day hold; $50 minimum
Product limits	Stripe’s general terms	Digital products only; Checkout or Payment Links only	Check Paddle’s terms	Check Lemon Squeezy’s terms
Card export on exit	To a PCI DSS Level 1 processor	Not separately documented	To a PCI-compliant vault within 2 weeks	No public outbound guide found

To see how this plays out, take a $50 monthly subscription paid with a US card:

Stripe: 2.9% + 30¢ is $1.75. Billing pay-as-you-go adds 0.7% ($0.35). Stripe Tax Basic adds 0.5% ($0.25) where you are registered. That’s about $2.35, before your accountant’s time or any filing service.
Stripe Managed Payments: $1.75 plus 3.5% ($1.75) is $3.50, plus Billing fees for the subscription.
Paddle: 5% + 50¢ is $3.00, with tax and disputes included.
Lemon Squeezy: 5% + 50¢ plus 0.5% for subscriptions is $3.25.

Plain Stripe is the cheapest per transaction by a wide margin. The question is whether that gap covers the cost of doing tax compliance yourself in every place you owe it.

Stripe on its own

Stripe gives you payments, then sells the rest in modules. Stripe Billing covers subscriptions, free and paid trials, flat, per-seat, tiered and usage-based pricing, a self-serve customer portal, Smart Retries for failed payments, prorations and invoicing. Stripe Tax calculates sales tax, VAT and GST, watches your sales against registration thresholds and can register for you. Stripe’s docs describe it as helping “manage tax calculations, registrations, and filings directly or through integrated partners.”

The key point: with plain Stripe, the merchant of record is your business. Stripe Tax is a tool. The legal obligation to register, file and pay stays with you. For a US-only B2B product that sells into a handful of states, that’s very manageable. For a consumer app selling to 40 countries, it’s real work.

Stripe Managed Payments, and what happened to Lemon Squeezy

Stripe acquired Lemon Squeezy in July 2024. In a January 28, 2026 post, Lemon Squeezy CEO JR Farr said the team had been building Stripe Managed Payments, acknowledged “slower support responses and less frequent product updates,” and wrote that “our goal is to provide Lemon Squeezy users an easy way to migrate to Stripe Managed Payments.” The post does not say Lemon Squeezy will shut down, and its pricing page is still live. But the direction is clear.

Managed Payments is Stripe acting as merchant of record. As of October 2026, Stripe’s docs say it handles sales tax, VAT and GST in more than 80 countries, plus fraud, disputes and transaction-level customer support, for 3.5% on top of standard Stripe fees. The details matter:

Digital only. Software, SaaS, games, digital media, online courses and hosting qualify. Physical goods, consulting and live coaching do not.
Limited integrations. Checkout and Payment Links only. No embedded Elements forms, no Connect platforms or marketplaces, no custom domains on checkout, and subscriptions must be created through Checkout or Payment Links.
Link is the face. Customers see Link (Stripe’s checkout network) as the merchant of record, receipts come from Link, and card statements read LINK.COM* plus your descriptor.
Stripe can refund without you. If Stripe asks for product input on a support case and you don’t answer within 48 hours, it may refund the customer.
Eligibility review. Your business must be based in one of about three dozen supported countries (US, Canada, most of Europe, Australia, Hong Kong, Japan, Singapore) and pass a review, and you must keep a low dispute rate.

Paddle

Prices in this section are as of October 2026.

Paddle is a merchant of record that isn’t owned by a payment processor. Its pricing is one line: 5% + 50¢ per checkout transaction, covering payment processing, subscription management, global tax, fraud protection, chargeback handling and buyer support. It has subscriptions, a customer portal, proration, usage-based and per-seat pricing, and dunning through a product called Retain. Some premium invoicing and advisory services are priced by sales.

The costs to know: chargebacks cost 20 USD (or GBP or EUR), and Paddle keeps that fee even when it wins. Payouts are monthly. On the 1st, your balance becomes a payout if it’s above your threshold (minimum $100), and Paddle sends it by the 15th. That’s slow if you are watching every dollar early on.

Lemon Squeezy

Prices in this section are as of October 2026.

Lemon Squeezy’s pitch was the friendliest setup for indie software sellers, and its fee page is clear: 5% + 50¢ base, plus 1.5% for international transactions, 1.5% for PayPal and 0.5% for subscription payments. It pays out twice a month after a 13-day hold, with a $50 minimum. Chargebacks are usually refunded on your behalf with a $15 fee.

It still works. But given the company’s own statement about where its effort is going, starting a new product on it in late 2026 means planning a second migration later.

Which one for you

Solo founder, digital product, global customers. You want an MoR. Compare Stripe Managed Payments and Paddle on your actual price point and countries. If you need an embedded checkout or sell anything with a human service component, Managed Payments is out and Paddle is the stronger fit.

Growing B2B SaaS, mostly US customers. Plain Stripe with Billing and Tax is usually the better deal. B2B customers often expect your company name on invoices, and US sales tax on SaaS depends on the state, so Stripe Tax’s threshold monitoring tells you when you need to register. Budget for a filing service or an accountant.

Marketplace or platform. Managed Payments doesn’t support Connect. Look at Stripe Connect with Stripe Tax, and get tax advice early.

Regulated or enterprise-heavy company. You likely want to be the seller of record for contract and procurement reasons. Plain Stripe (or another processor) plus a tax provider keeps the customer relationship and paperwork in your name.

Already on Lemon Squeezy. Don’t panic. Watch for the official migration path to Managed Payments, and confirm with support how your subscriptions and saved cards will move before you commit to a date.

Whichever you pick, write down why. A short technical decision record saves the next person from re-arguing it when fees change. And if you are tempted to build your own tax engine instead, read build vs. buy first.

Mistakes to avoid

Comparing headline rates only. 2.9% vs. 5% looks decisive until you add Billing, Tax, international cards and the cost of filing returns.
Assuming Stripe Tax makes Stripe an MoR. It doesn’t. It calculates and helps you file. The liability stays with you.
Ignoring payout timing. A monthly payout can mean waiting six weeks for a sale made on the 2nd.
Forgetting eligibility. MoRs can drop products they decide don’t qualify. Stripe says that if your product is ineligible, you become responsible for the indirect tax on it.
Building around one checkout’s quirks. Keep your own record of customers, plans and entitlements so your app doesn’t depend on one provider’s object IDs.

Migration and lock-in

The hard part of leaving a payment provider is saved cards. Card numbers are covered by PCI DSS, the card industry’s security standard, so they can only move between certified vaults, never through you.

Stripe will send an encrypted export of card details, emails and metadata to another PCI DSS Level 1 processor. It does not export subscriptions or payment history (you pull those via the API), and cards saved through Link are excluded.
Paddle says it will transfer payment method details to your new provider’s PCI-compliant vault within two weeks, after security checks. You export subscriber data from the dashboard.
Lemon Squeezy documents free migrations into it from Stripe, Paddle and Gumroad. Its docs don’t include a public guide for moving out, so ask support in writing before you depend on it.

If a provider can’t move your cards, every subscriber has to re-enter payment details, and some won’t. That churn is the real switching cost.

A quick checklist

List the countries you sell to and estimate where you’ll cross tax thresholds.
Price your most common transaction on each option, including international and subscription fees.
Confirm your product is eligible for the MoR you like.
Check whether you need an embedded checkout, marketplace payouts or custom domains.
Decide how long you can wait for payouts.
Ask, in writing, how saved cards leave the platform.
Keep customer and subscription records in your own database.
Record the decision and the numbers behind it.