Stripe is the cheapest and most flexible, but you own global sales-tax compliance. Paddle and Lemon Squeezy are merchants of record — they take the tax problem off your plate for roughly 5% + a fixed fee per sale. Rule of thumb: mostly-US customers and comfort with tax tooling → Stripe. Global customers and zero appetite for compliance → a merchant of record, with Lemon Squeezy the fastest to start and Paddle the more mature at scale.
Every solo founder hits this fork in the road, usually the week before launch. The three names that come up are Stripe, Paddle, and Lemon Squeezy — and the comparison threads are full of confident, contradictory advice. That's because they're not actually three versions of the same thing. One is a payment processor; two are merchants of record. Once you understand that split, the decision gets much easier.
The Real Difference: Processor vs Merchant of Record
With Stripe, you are the seller. Stripe moves the money, but the legal sale happens between you and your customer. That means you own the customer relationship, the pricing flexibility, and — the part everyone forgets — the tax obligations. If you cross registration thresholds in the EU, UK, Australia, or a growing list of US states, collecting and remitting sales tax/VAT is your job (Stripe Tax can calculate it for a fee, but registering and filing is still on you).
With a merchant of record (MoR) like Paddle or Lemon Squeezy, the platform legally resells your software. The customer's invoice comes from Paddle or Lemon Squeezy, not from you. They register for tax worldwide, collect the right amount at checkout, file, and remit — and pay you out the balance. You're outsourcing an entire compliance department for a bigger cut of each sale.
Digital-services VAT has no minimum threshold in many countries — technically you owe EU VAT from your first EU sale. Almost no micro-founder actually registers everywhere, but that's a risk decision you're making, not a rule that doesn't apply to you. The MoR fee is really an insurance premium against this entire category of problem.
Head-to-Head: Fees, Tax, Control
| Factor | Stripe | Paddle | Lemon Squeezy |
|---|---|---|---|
| Model | Payment processor | Merchant of record | Merchant of record |
| Typical fee | ~2.9% + 30¢* | ~5% + 50¢* | ~5% + 50¢* |
| Global sales tax / VAT | Your problem (Stripe Tax helps, for a fee) | Handled for you | Handled for you |
| Control & API depth | Deepest in the industry | Good, checkout-centric | Simplest, fewest knobs |
| Approval / onboarding | Minutes, self-serve | Manual review of your product | Fast, self-serve |
| Notable | Ecosystem standard; usage billing built in | Strong B2B invoicing; mature at scale | Acquired by Stripe in 2024; indie favorite |
*Representative standard rates for US card payments as commonly published; exact pricing varies by country, currency, and add-ons — always confirm on the vendors' pricing pages before deciding.
The fee gap looks dramatic — roughly 2 percentage points — but do the actual math. On $2,000 MRR, the MoR premium is about $40/month. Registering for VAT in even one jurisdiction, or an hour of accountant time, costs more. The MoR premium generally stays cheaper than DIY compliance until well into five-figure MRR — if your customers are genuinely global. If 90% of your revenue is US-based and under state thresholds, you're paying the premium for insurance you barely need.
Which One Should You Pick?
Pick Stripe if…
- 1.Your customers are mostly in your home country, or you're B2B where reverse-charge rules simplify VAT.
- 2.You want usage-based or hybrid pricing — Stripe's metering is far ahead (see our usage-based billing software comparison).
- 3.You want to own every detail of checkout, invoicing, and the customer record — and keep the lowest fees as you scale.
Pick Lemon Squeezy if…
- 1.You want to be selling globally today with zero tax setup — its self-serve onboarding is the fastest of the three.
- 2.Your pricing is simple — plans, one-time purchases, license keys, credit packs. It's built for exactly this.
- 3.The Stripe acquisition reassures you about longevity — it's effectively Stripe's own merchant-of-record wing for indie products now.
Pick Paddle if…
- 1.You're B2B SaaS with invoicing needs — quotes, PO numbers, wire payments — where Paddle is the most mature MoR.
- 2.You're past validation and expect meaningful revenue — Paddle's manual product review is friction at day zero, but its tooling ages better as you grow.
- 3.You want price localization and currency handling done for you across many markets.
Switching Costs: Decide Like You Might Leave
The trap in this decision isn't picking wrong — it's how expensive changing your mind is. With an MoR, the billing relationship belongs to the platform: if you later move to Stripe, subscribers generally have to re-enter payment details, and some percentage will simply not bother. That's real, permanent churn caused by a plumbing decision.
Protect yourself either way:
- 1.Keep your own customer database — emails, plans, entitlements — independent of the payment platform.
- 2.Wrap the payment integration in one thin module so a future migration touches one file, not your whole app.
- 3.Revisit the decision at ~$10K MRR — that's roughly where the MoR premium starts funding a real accountant instead.
Look at where your first 50 customers will actually come from. Mostly US → start on Stripe and revisit when international revenue grows. Genuinely global from day one → start on Lemon Squeezy (or Paddle if you're B2B), and keep your integration thin so you keep your options.
Payments is one piece of the stack — see what successful solo founders use for everything else in the indie hacker tool stack guide, and make sure the number you're charging is right in the first place with our data-backed pricing guide.