Why Payment Selection Is Strategic
The payment system isn’t just infrastructure for accepting money. It’s the point where your product’s conversion either happens or doesn’t. Baymard Institute research shows 17% of users abandon carts due to unavailable payment methods. In international markets, this rises to 25% when local preferences aren’t accounted for.
Methodology: 7 Selection Criteria
Criterion 1: Payment Geography
Question: Where are your payers located, and what currencies do they want to use?
This is the first and most important filter. A provider might work perfectly in the US but not support SEPA Direct Debit for Europe or Alipay for China.
Criterion 2: Integration Model
| Model | Examples | Pros | Cons |
|---|---|---|---|
| Payment Gateway | Stripe, Braintree | Full checkout control | Complex integration, PCI on you |
| Merchant of Record | Paddle, LemonSqueezy | Taxes, compliance on provider | Higher fees |
| Hybrid | Adyen | Many methods, managed risk | Expensive for small biz |
For SaaS and digital goods, MoR often wins: the fee difference (Paddle 5% vs Stripe 2.9%) is offset by zero tax compliance costs and chargeback handling.
Criterion 3: Total Fees
Example for $100K/month SaaS:
- Stripe: ~$3,200/month + FX + cross-border
- Paddle: $5,000/month (all-in: taxes, chargebacks, compliance)
- Real difference depends on international transaction share
Criterion 4: Taxes and Compliance
Via Payment Gateway: you’re the merchant of record. Track tax thresholds per country. EU VAT: OSS/IOSS registration required. US Sales Tax: Economic Nexus per state.
Via MoR: provider is the legal seller. Collects and remits taxes. You receive net payout. Saves $500-2,000/month on accounting.
Criterion 5: Subscriptions and Recurring Billing
| Feature | Stripe | Paddle | LemonSqueezy |
|---|---|---|---|
| Subscriptions | ✅ Billing | ✅ | ✅ |
| Dunning | ✅ | ✅ | ❌ Basic |
| Customer Portal | ✅ | ✅ | ❌ |
| Usage-based | ✅ | ✅ | ❌ |
Stripe Billing is the most powerful for subscription businesses.
Criterion 6: Checkout and Conversion
Every second of checkout loading time reduces conversion by 2-4%. Consider: hosted vs embedded, customization, localization, mobile optimization (60%+ of payments).
Criterion 7: Payouts
| Provider | Settlement | Min Payout |
|---|---|---|
| Stripe | T+2 US, T+7 EU | $1 |
| Paddle | T+1 | $100 |
| LemonSqueezy | Weekly | $50 |
| Adyen | T+3 | $500 |
Regional Specifics
- US/Canada: Cards + Apple Pay/Google Pay. Stripe is standard.
- Europe: Cards + SEPA Direct Debit + local methods. MoR simplifies VAT.
- Asia: Alipay/WeChat Pay in China, GrabPay/GCash in SEA. Alipay+ unifies multiple methods.
- Latin America: High cash/local method share. Mercado Pago dominates.
Common Mistakes
- Focusing only on fees — saving 1% on fees can cost 5% in conversion
- Ignoring tax obligations — gateway without MoR = VAT responsibility in 27 EU countries
- Underestimating integration time — complex API can take 2-3 weeks
- Not checking payout options — ensure provider pays out to your country/currency
- Single-provider dependency — diversification reduces account freeze risk
Selection Checklist
- Define payer geography — 80% of decision depends on this
- Choose model: MoR for digital goods/SaaS, gateway for flexibility
- List required payment methods for your market
- Calculate total cost (including FX, chargebacks, taxes)
- Verify compatibility with your stack
- Assess migration difficulty
- Test checkout with real users from target countries
- Connect a secondary provider as backup
Quick Recommendations
- Indie dev, digital product, global: Paddle or LemonSqueezy
- SaaS subscriptions, US/EU focus: Stripe
- Enterprise, many payment methods: Adyen
- Selling to China: Alipay + WeChat Pay (both mandatory)
- Latin America: Mercado Pago or dLocal
- Maximum savings: start with MoR, switch to gateway at $50K+/month
Payment infrastructure is your foundation. Spend time choosing now to avoid weeks of migration later.
Stripe | Paddle | LemonSqueezy | Adyen