Stripe vs Paddle vs Lemon Squeezy (Merchant of Record Explained)

When you're ready to charge for your app, three names come up: Stripe, Paddle and Lemon Squeezy. They can look interchangeable — all take card payments and handle subscriptions. The difference that actually matters is who is legally selling to your customer, and therefore who deals with sales tax and VAT around the world.

Fees and product status below are as published in October 2026; payments products change often, so check each provider's pricing page.

The key concept: merchant of record

The merchant of record (MoR) is the business legally responsible for a sale. They appear on the customer's card statement, issue the invoice, handle refunds and chargebacks — and collect and pay the sales tax or VAT.

Why that matters: selling digital products internationally means tax obligations in many places. The EU, UK, Australia, many US states and others require sellers of digital goods to charge local tax and file returns, sometimes from the first sale. Doing that yourself is real ongoing work.

With Stripe (standard), you are the merchant of record. Stripe processes the payment; tax compliance is your responsibility. Stripe offers tools (Stripe Tax) to calculate and collect tax, but you still register and file.
With Paddle and Lemon Squeezy, they are the merchant of record. They technically resell your product to the customer, handle global tax, and pay you out. You don't register for VAT in 30 countries.

Stripe

The most popular payment platform for developers, known for excellent APIs and documentation.

Pricing: a per-transaction card fee (in the US, standard online card pricing is 2.9% + 30¢), with extra fees for international cards, currency conversion, and add-ons like Billing (subscriptions) and Tax.
Strengths: flexible, every payment method, superb docs, huge ecosystem, works for physical goods and marketplaces as well as software. AI tools write Stripe integrations fluently. (How to add Stripe payments to an AI-built app.)
Weakness for small sellers: you handle tax compliance. For a US business selling only in the US, that may be manageable; selling digital products worldwide, it adds up.

Stripe Managed Payments is Stripe's own merchant-of-record offering, built by the team behind Lemon Squeezy after Stripe acquired it in 2024. It's in public preview, available in a limited set of countries, and costs more than standard Stripe. Worth watching if you want Stripe's tools with MoR handling.

Paddle

A merchant of record focused on software and SaaS.

Pricing: 5% + 50¢ per transaction, covering payment processing, tax handling and more.
Strengths: global tax compliance done for you, subscription billing, invoicing, localised pricing, handles chargebacks and fraud.
Weaknesses: higher percentage than raw processing, an approval process for your business, less flexibility than Stripe, and restrictions on what you can sell (software and digital products, not physical goods).

Lemon Squeezy

A merchant of record popular with indie developers for its simple setup and storefronts.

Pricing: 5% + 50¢ per transaction, with extra fees for some situations.
Status: acquired by Stripe in 2024. Signups remain open, but the company has said product updates are slower and that it intends to offer an easy migration path to Stripe Managed Payments. If you're choosing today, factor that in.

Side by side

	Stripe	Paddle	Lemon Squeezy
Merchant of record	You (or Managed Payments, in preview)	Paddle	Lemon Squeezy
Global sales tax / VAT	Your responsibility (tools available)	Handled	Handled
Typical fee	Lower % + add-ons	5% + 50¢	5% + 50¢
Physical goods	Yes	No	No
Flexibility / API depth	Highest	Good	Good
Customer sees on statement	Your business	Paddle	Lemon Squeezy

How to choose

Selling software or digital products internationally, small team, want tax handled: a merchant of record — Paddle is the established choice.
Selling physical goods, services, or running a marketplace: Stripe.
Mostly domestic sales, or you already have an accountant handling tax: Stripe is usually cheaper.
Need maximum flexibility or unusual billing: Stripe.
Want Stripe with MoR: keep an eye on Stripe Managed Payments as it matures.

For what it's worth, EasySpawn bills through Paddle for exactly the reason above: selling worldwide from day one without registering for tax everywhere.

This isn't tax or legal advice — tax rules depend on where you and your customers are. A short conversation with an accountant before launch is money well spent.

Things to get right whichever you pick

Verify webhooks — they're how you know a payment succeeded. (Handling webhooks reliably.)
Never trust prices or plan names sent from the browser. Look them up on the server.
Test mode first. All three have sandbox environments with test cards.
Keep the secret key on the server. (What is an API key?)
Selling inside a mobile app? App-store rules may apply. (Turn your web app into a mobile app.)

The summary

The real difference is the merchant of record: with Stripe it's you; with Paddle and Lemon Squeezy it's them.
MoRs handle global sales tax for a higher fee (5% + 50¢).
Stripe is cheaper and more flexible, but tax compliance is yours.
Lemon Squeezy's future is tied to Stripe Managed Payments.

EasySpawn runs your app's backend with server-side secrets and a database for orders and subscriptions, so Claude Code can build and test your payment webhooks against the provider's test mode. See how it works or join the waitlist.

Stripe vs Paddle vs Lemon Squeezy: Which Should You Use to Get Paid?