Stripe vs Paddle: Payment Processors Compared

Stripe vs Paddle: Which Should You Use?

Both process payments, but they work very differently. Understanding this is crucial.

The Fundamental Difference

Stripe: You are the merchant of record Paddle: Paddle is the merchant of record

This changes everything about taxes, liability, and operations.

What Does "Merchant of Record" Mean?

With Stripe (You're the Merchant)

• You collect payment
• You issue invoices in your name
• You handle sales tax globally
• You deal with chargebacks directly
• You handle refunds
• Lower fees, more responsibility

With Paddle (They're the Merchant)

• Paddle collects payment
• Invoices come from Paddle
• Paddle handles sales tax
• Paddle handles chargebacks
• Higher fees, less work

Feature Comparison

| Feature | Stripe | Paddle | |---------|--------|--------| | Fees | 2.9% + $0.30 | 5% + $0.50 | | Sales tax | DIY or +$0.50/txn | Included | | Merchant of record | You | Paddle | | API quality | Excellent | Good | | Customization | Maximum | Limited | | Checkout | Customizable | Paddle's checkout | | Subscriptions | ✅ | ✅ | | One-time payments | ✅ | ✅ |

The Math

Small Volume ($10K/month)

• Stripe: $290 + $300 = $590 fees
• Paddle: $500 + $500 = $1,000 fees
• Paddle costs $410 more

But Add Tax Compliance

• Sales tax software: $50-200/mo
• Accountant time: Hours
• Registration fees: Varies
• Real Stripe cost: Higher than it looks

When to Choose Stripe

• You have tax compliance handled
• You sell primarily in one country
• You want maximum customization
• You're a larger company
• You need specific Stripe features (Connect, etc.)

When to Choose Paddle

• You sell globally (many countries)
• You're a small team
• You don't want to deal with taxes
• You're okay with Paddle's checkout
• SaaS or digital products only

Alternative: LemonSqueezy

Similar to Paddle (Merchant of Record) but:

• Better for indie hackers
• Cleaner interface
• License key management
• Similar pricing to Paddle

With Spawned

Spawned integrates Stripe for payments:

• Checkout sessions
• Subscription management
• Webhooks
• Customer portal

You handle tax compliance yourself or use Stripe Tax ($0.50/transaction).

The Bottom Line

Stripe = More control, more responsibility, lower fees Paddle = Less work, global taxes handled, higher fees

For small teams selling globally: Consider Paddle For larger teams or US-focused: Stripe is usually better