Stripe vs Paddle: Choosing the Right Payment Processor

When you're building a SaaS, billing is one of the last things you want to get wrong. Two providers dominate the space: Stripe and Paddle. Both are excellent — but they solve different problems.

The key difference: merchant of record

This is the most important concept to understand.

• Stripe is a payment processor. You are the merchant of record. You are responsible for collecting and remitting VAT/GST worldwide, handling refund compliance, and issuing correct invoices.
• Paddle is a merchant of record. Paddle sells your product on your behalf, handles all tax compliance globally, and manages invoicing for you.

If you sell to European businesses (B2B with VAT), US customers across multiple states, or customers in 50+ countries, Paddle's MoR model can save you enormous compliance headaches.

Feature comparison

| Feature | Stripe | Paddle | |---------|--------|--------| | Tax collection | You handle it | Included | | EU VAT compliance | Manual or via Taxjar | Automatic | | US sales tax | Manual | Automatic | | Checkout UI | Stripe Elements / Checkout | Paddle Billing overlay | | Subscription management | Full control | Full control | | Free plan | Yes | Yes | | Processing fees | ~2.9% + $0.30 | ~5% + $0.50 | | Payout speed | 2 days | 3–5 days | | Fraud protection | Radar (ML) | Built-in |

When to choose Stripe

Stripe is the right choice if:

• You are a US-only or early-stage startup and tax compliance is not yet a concern
• You need deep control over your checkout flow (custom UI, A/B testing)
• You need usage-based billing or complex metering
• Your team has engineers comfortable owning tax logic

When to choose Paddle

Paddle is the right choice if:

• You sell globally and don't want to think about VAT/GST
• Your team is small and compliance bandwidth is tight
• You want Paddle to handle chargebacks and refund compliance
• You primarily sell subscriptions (not one-time purchases)

How SaaS Starter handles both

SaaS Starter uses a factory pattern — you configure which provider to use via a single env var:

PAYMENT_PROVIDER=stripe   # or paddle

Behind the scenes, getPaymentProvider() returns a unified interface:

interface PaymentProvider {
    createCheckoutSession(params: CheckoutParams): Promise<CheckoutResult>
    createPortalSession(customerId: string, orgId: string): Promise<PortalResult>
    handleWebhook(req: Request): Promise<WebhookResult>
    cancelSubscription(subscriptionId: string): Promise<void>
    getSubscription(subscriptionId: string): Promise<Subscription>
}

Switching providers is a one-line config change. No code changes required.

Pricing impact example

For a $49/month SaaS with 100 customers:

| | Stripe | Paddle | |--|--------|--------| | Monthly revenue | $4,900 | $4,900 | | Processing fees | ~$165 | ~$245 | | Tax compliance tool | ~$50/mo | $0 | | Net after fees | ~$4,685 | ~$4,655 |

At scale, Stripe becomes more economical — but Paddle's compliance value increases as you add international customers.

Our recommendation

Start with Stripe if you're US-focused and want maximum control. Switch to Paddle when you hit international expansion or when VAT compliance becomes a real burden. With SaaS Starter, you can make that switch in minutes.