Stripe vs Paddle: Two Approaches to Payment Processing
Stripe and Paddle are two of the most popular payment solutions for SaaS, but they solve fundamentally different problems. Stripe is a payment gateway and processor. Paddle is a Merchant of Record (MoR) that takes on legal responsibility for sales. Let’s break down the key differences.
Sites: stripe.com | paddle.com
Legal Model: MoR vs Payment Gateway
Stripe — Payment Gateway. Your company acts as the seller to the end customer. This means you’re responsible for:
- Taxes in every country where you have customers
- Invoicing under your own name
- Chargebacks and refunds
- Compliance with local consumer protection laws
- PCI DSS compliance
Paddle — Merchant of Record. Paddle legally becomes the seller. This means Paddle:
- Issues invoices under Paddle’s name
- Collects and remits VAT/GST/Sales Tax in every country
- Handles refunds and chargebacks
- Ensures compliance with local laws
- Takes on PCI DSS compliance
Verdict: If you don’t want to register a company in every country and deal with taxes — Paddle. If you already have accounting and legal teams — Stripe.
Fees: The Math
Stripe:
- EU: 1.5% + €0.25
- US: 2.9% + $0.30
- International cards: +1.5%
- Currency conversion: +2%
Paddle:
- Up to $50K: 5% + $0.50
- $50K–$500K: 4% + $0.50
- $500K+: custom pricing
- Taxes included (VAT/GST filing)
Example: SaaS with $10,000 MRR and customers in the EU, US, and Australia:
| Item | Stripe | Paddle |
|---|---|---|
| Payment fees | ~$290/mo | ~$500/mo |
| VAT/GST filing | ~$200/mo (outsourced) | $0 (included) |
| Accounting | ~$300/mo | ~$100/mo |
| Total | ~$790/mo | ~$600/mo |
For small SaaS, Paddle is often cheaper when you factor in tax administration costs.
API & Customization
Stripe:
- Industry-best API — libraries in 8+ languages
- Maximum checkout customization
- Stripe Elements — components for custom UI
- Webhooks for everything
- Stripe Sigma — SQL queries to transaction data
Paddle:
- API for managing subscriptions, customers, transactions
- Paddle.js — embeddable payment form
- Less flexibility in checkout customization
- Webhooks and integrations with Zapier, Slack
Verdict: For products with unique checkout flows — Stripe. For standard SaaS billing — Paddle is sufficient.
Subscriptions & Billing
Stripe Billing:
- Part of Stripe, separate fee of 0.5–0.8%
- Flexible models: usage-based, tiered, graduated
- Customer portal for subscription management
Paddle:
- Built-in billing (no additional fee)
- Trials, coupons, upsells
- Dunning management (automatic payment reminders)
When to Choose Stripe
- You have a complex, unique checkout
- You already operate in multiple countries with local entities
- You need maximum control over the payment flow
- High transaction volume (makes low fees critical)
- You need local payment methods (iDEAL, SEPA, Alipay)
When to Choose Paddle
- You’re a SaaS startup that doesn’t want to deal with taxes
- You sell globally and don’t want to register in every country
- Your product is subscriptions with trials and upsells
- You’re an indie developer or small team without a finance department
- You sell license keys
Final Verdict
For 80% of SaaS startups, Paddle is a simpler and cheaper start. For mature SaaS companies with $500K+/year revenue and a dedicated finance team, Stripe becomes more profitable thanks to lower fees and API flexibility. Many companies use both: Stripe for core payments, Paddle for specific products or regions.