Originally published at devtoolpicks.com
Every solo dev building a SaaS eventually hits the same decision: which payment processor do I use?
Pick wrong and you'll spend your first three months either fighting VAT registrations you didn't expect, or rebuilding your billing integration because the tool you chose doesn't handle the edge cases you care about. Neither situation is fun when you're also trying to build the actual product.
I've looked at this decision from an EU founder perspective - specifically the VAT angle that most American-written comparisons completely ignore - and from a Laravel developer perspective where Cashier compatibility matters. Here's the honest breakdown.
Quick Verdict
| Tool | Best For | Transaction Fee | MoR | Rating |
|---|---|---|---|---|
| Lemon Squeezy | Early-stage digital products, zero setup overhead | 5% + $0.50 | Yes | ⭐⭐⭐⭐ |
| Stripe | Developers who want control, US-first products | 2.9% + $0.30 | No | ⭐⭐⭐⭐½ |
| Paddle | SaaS with international customers, tax compliance priority | 5% + $0.50 | Yes | ⭐⭐⭐⭐ |
The short version: If you're pre-revenue and selling digital products, start with Lemon Squeezy. If you're a developer comfortable managing billing infrastructure and primarily sell to US customers, Stripe is the right call. If you're building a subscription SaaS with international customers and don't want to touch VAT, Paddle is worth the premium fee.
There is no universal right answer. But there is almost always a right answer for where you are right now.
The One Thing You Need to Understand First
Before fees or features matter at all, you need to understand one concept: Merchant of Record (MoR).
When you use Stripe, you are the merchant. Stripe processes the payment, but your company is the legal seller. That means you're responsible for collecting, calculating, and remitting sales tax and VAT to every jurisdiction your customers are in. Sell to someone in Germany? You owe German VAT. Sell to someone in California? Potentially US sales tax. It's your problem.
When you use Lemon Squeezy or Paddle, they are the merchant of record. They become the legal seller. Your customer's receipt says "Lemon Squeezy" or "Paddle," not your company name. And all tax obligations fall on them, not you.
This isn't a minor detail. For a solo developer selling a SaaS globally, VAT compliance alone can mean hiring an accountant, paying for TaxJar or Avalara, and registering your business in multiple jurisdictions. That's $5,000 to $20,000 per year in overhead before you've earned a single dollar. The MoR fee premium starts to look a lot more reasonable once you factor that in.
Lemon Squeezy
Fee: 5% + $0.50 per transaction (free plan). +1.5% for international cards. +0.5% for subscriptions.
Lemon Squeezy is the most solo-dev-friendly option on this list. No monthly fee, no setup complexity, no tax headaches. You create a product, share a checkout link or embed the overlay, and you're selling. That's genuinely it.
It was acquired by Stripe in 2023, which has meant better infrastructure reliability and reduced payout fees. It handles tax and VAT across 200+ countries as your MoR. And the checkout experience is clean - the kind of checkout that actually converts, not something that looks like it was built in 2012.
As a solo dev, here's what's actually good: The checkout overlay is brilliant for early-stage products. You paste a JavaScript snippet on your existing site, someone clicks a button, and a Stripe-quality checkout modal pops up. No redirect, no separate storefront to design. It also handles subscriptions, one-time payments, and software licenses in the same platform. If you're selling a WordPress plugin or a lifetime deal for your SaaS, Lemon Squeezy handles the license key generation automatically.
The EU VAT situation specifically: if you're a European founder like I am, selling digital products to EU customers means you're legally required to collect VAT. With Lemon Squeezy, that's completely handled. They register and remit on your behalf. I can't overstate how much admin time this saves when you're a solo developer with no accountant on retainer.
The real cons: The 5% + $0.50 fee adds up faster than it looks at scale. On a $29/month SaaS, you're paying $1.95 per transaction - almost 7% effective rate on a subscription. That's painful once you have 500+ paying customers. Customer receipts show "Lemon Squeezy" as the seller, which occasionally confuses customers and can lead to support requests. And support response times are 24-48 hours, which matters when there's a payment issue affecting your revenue.
Who should NOT use Lemon Squeezy: If you're beyond $5k MRR and primarily selling subscriptions, the fee math stops working in your favor. Also not the right choice if you need deep billing customization - complex usage-based pricing, per-seat billing with custom tiers, or enterprise invoice workflows will hit Lemon Squeezy's ceiling fast.
Stripe
Fee: 2.9% + $0.30 per transaction (US). +1.5% for international cards. +1% for currency conversion. No monthly fee on standard plan.
Stripe is the default choice for a reason. The API is the gold standard. The documentation is exceptional. Laravel Cashier has first-class Stripe support, which means if you're building a Laravel SaaS you have a complete, battle-tested billing abstraction ready to go. The dashboard is the cleanest in the industry. And at 2.9% + $0.30, the base fee is substantially lower than MoR alternatives.
But Stripe is not a complete solution out of the box. It's a payment processor, not a merchant of record. You handle everything else yourself.
As a solo dev, here's what's actually good: The developer experience is genuinely without peer. The webhook system is reliable. The Stripe CLI makes local testing fast. Stripe Billing handles the subscription complexity - proration, trial periods, dunning, failed payment retries - all of it. If you've used Cashier on a Laravel project, you know how much is abstracted away cleanly. For a developer comfortable with code, Stripe gives you control over every detail of how payments work in your product.
For US-focused products specifically, Stripe is hard to beat. If 80%+ of your customers are in the US, the international complexity is manageable and the fee savings versus Paddle or Lemon Squeezy are real money.
The real cons: The VAT problem is significant and widely underestimated by solo devs starting out. Stripe added Stripe Tax in recent years, which automates tax calculation and collection. But collection is not the same as filing and remittance. You still need to register in each jurisdiction, file returns, and actually pay the taxes. For a global SaaS, that means a tax compliance service or an accountant - an ongoing cost that makes Stripe's lower headline fee deceptive.
Chargebacks cost $15 each, and you're entirely responsible for managing them. Stripe doesn't fight them for you. If you're in a category with even moderate chargeback rates, this stacks up. And when things go wrong with fraud or a complex billing scenario, Stripe's support can be slow for small accounts.
Who should NOT use Stripe: If you're a solo dev without development time to build and maintain billing infrastructure, Stripe will become a second project. Also avoid it if you plan to sell globally from day one and you haven't budgeted for tax compliance tooling. The combination of Stripe + Stripe Tax + Avalara or TaxJar adds friction and cost that makes the lower transaction fee meaningless at early MRR.
Paddle
Fee: 5% + $0.50 per transaction. No monthly fee on the standard plan. Currency conversion margin applies on international payouts.
Paddle is what you reach for when international tax compliance is non-negotiable and you want to invest in a billing infrastructure that scales properly. It's a full MoR like Lemon Squeezy, but it's built for SaaS specifically rather than for digital product sellers broadly.
They acquired ProfitWell in 2023, which means subscription analytics - churn tracking, MRR dashboards, cohort analysis - are now built into the platform at no extra cost. That used to cost hundreds per month separately.
As a solo dev, here's what's actually good: The subscription management is more mature than Lemon Squeezy's. Complex pricing models - usage-based billing, per-seat pricing with tier thresholds, trial-to-paid flows - are handled properly. Dunning and failed payment recovery are included and genuinely effective. And the full compliance picture (VAT, sales tax, GST across 200+ countries) is complete and well-maintained.
For a subscription SaaS with international ambitions, Paddle also gives you Paddle.js, an embeddable checkout that's fast and mobile-optimized. Laravel Cashier also has Paddle support, so the integration path is familiar if you're already in the Cashier ecosystem.
The real cons: Paddle appears as the merchant of record on every customer receipt. So from your customer's perspective, they bought from "Paddle," not from your product. This causes genuine confusion and occasional support tickets from customers checking their bank statements. It also means your brand isn't on the most visible touchpoint of the transaction.
The currency conversion margin on international payouts - reportedly 2-3% above mid-market rates - is a real hidden cost that makes Paddle's effective fee closer to 7-8% on international sales. If you're primarily selling to US customers, this doesn't apply. But if your customer base is genuinely global, run the numbers before committing. And Paddle's flexibility for truly custom billing logic still doesn't match Stripe. If your SaaS needs something unusual in how it charges people, you may find yourself working around Paddle rather than with it.
Who should NOT use Paddle: Solo devs who are pre-product or early validation stage - the setup overhead isn't worth it yet. Also a poor fit if you have a Stripe enterprise contract with custom rates; Paddle as MoR means you can't leverage your existing Stripe pricing.
The Real Fee Math
Let's stop talking about percentages and look at actual dollars across common MRR scenarios.
Scenario: $29/month SaaS, 100 paying customers, 40% international
| Monthly Fees | Annual Fees | |
|---|---|---|
| Stripe (+ tax compliance tool at $49/mo) | ~$135 + $49 = $184 | ~$2,208 |
| Lemon Squeezy | ~$195 | ~$2,340 |
| Paddle | ~$195 | ~$2,340 |
At $2,900 MRR, the difference between them is noise. But notice that Stripe only looks cheaper if you ignore tax compliance costs. Once you add those in, all three are roughly equivalent.
Scenario: $49/month SaaS, 500 paying customers, 40% international
| Monthly Fees | Annual Fees | |
|---|---|---|
| Stripe (+ tax compliance) | ~$715 + $49 = $764 | ~$9,168 |
| Lemon Squeezy | ~$1,225 | ~$14,700 |
| Paddle | ~$1,225 + FX margin | ~$15,000+ |
At $24,500 MRR, Stripe starts to win - but only if you've already set up proper tax compliance and the overhead is genuinely running at $49/month. If it's actually costing you $200/month in accountant time, the numbers flip again.
The crossover point where Stripe's lower fee structure clearly wins is roughly $10,000-$20,000 MRR with a primarily US customer base and tax compliance infrastructure already in place.
Head-to-Head: Which Tool for Which Situation
Pre-revenue, building your first digital product: Lemon Squeezy. Zero setup, zero tax headaches, clean checkout. Start here, don't overthink it.
Laravel SaaS, US-focused customers, comfortable with code: Stripe + Cashier. You'll save on fees at scale and Laravel Cashier makes the integration clean.
Subscription SaaS, global customers, don't want to touch VAT: Paddle. The compliance coverage justifies the fee premium once you're past $1k MRR.
EU-based founder selling digital products globally: Lemon Squeezy for early stage. Paddle once you're past $5k MRR and need more subscription control.
Final Recommendation
Don't let the payment processor decision become a three-week rabbit hole. Here's the simple decision tree:
Start with Lemon Squeezy if you just want to start selling something today with zero infrastructure overhead. It's free until you make money. The fees are fair for early-stage. And the MoR protection from VAT headaches alone is worth the premium over Stripe for anyone selling globally.
Move to Stripe when you're past $10k MRR, you have a primarily US customer base or you've sorted tax compliance separately, and you want the control and lower fee structure that comes with building on the best payment API in the industry.
Use Paddle if your SaaS is subscription-first, you have a genuinely global customer base, and you want the full MoR compliance picture with better subscription tooling than Lemon Squeezy offers.
The worst outcome isn't picking the "wrong" one. It's spending weeks paralysed by the decision and not shipping. Pick based on where you are today, not where you imagine being in three years.
FAQ
Can I switch payment processors later without losing subscribers?
Yes, but it's painful. Moving subscribers from Stripe to Paddle (or vice versa) requires them to re-enter payment details, which causes churn. Lemon Squeezy to Stripe is slightly cleaner. The right move is to pick carefully once rather than migrate twice.
Is Lemon Squeezy reliable now that Stripe owns it?
Yes. The Stripe acquisition has been a net positive - better infrastructure, lower payout fees, and a more stable product roadmap. The indie developer community was initially worried about the acquisition but the platform has continued improving.
Does Laravel Cashier work with all three?
Cashier has first-class support for both Stripe and Paddle. Lemon Squeezy has a dedicated Laravel package (laravel-lemon-squeezy) that provides similar functionality, though it's less mature than Cashier.
What about Gumroad? Why isn't it in this comparison?
Gumroad (10% flat fee) is built for creators selling one-off digital products, not recurring SaaS subscriptions. It makes sense for an ebook or a template pack. For a software product with subscriptions and licenses, Lemon Squeezy is the better-positioned alternative and the fees are better at any meaningful volume.
As an EU founder, do I need to register for VAT separately even with Lemon Squeezy or Paddle?
No. That's precisely the point of the MoR model. Both Lemon Squeezy and Paddle handle VAT registration, collection, and remittance in every jurisdiction. You receive your payout minus their fee and taxes are their problem. With Stripe, VAT is still your responsibility even with Stripe Tax handling the calculation.
Conclusion
The payment processor question feels high-stakes because it involves money directly. But the honest truth is that all three options are good tools and none of them will kill your business.
Lemon Squeezy for getting started. Stripe for developers who want control. Paddle for global subscription SaaS that wants tax compliance handled completely.
Pick the one that matches where you are right now and get back to building.
Top comments (0)