Stripe vs Paddle: Payment Processor vs Merchant of Record

Overview Comparison

Understanding the Fundamental Difference

This is not just a feature comparison. Stripe and Paddle represent different business models. With Stripe, you are the merchant. Customers buy from you. You handle taxes, compliance, and liability. Stripe processes payments on your behalf.

With Paddle, Paddle is the merchant. Technically, customers buy from Paddle, who then pays you. Paddle handles sales tax, VAT, and compliance in 200+ countries. You receive net payments after their cut.

Tax and Compliance

For many SaaS companies, tax compliance is the deciding factor. Selling software globally means dealing with VAT in Europe, GST in Australia, sales tax in US states, and more. Each jurisdiction has different rules, thresholds, and filing requirements.

Stripe offers Stripe Tax to calculate and collect taxes, but you remain responsible for filing and remittance. This works well if you have accounting resources or operate primarily in simple jurisdictions.

Paddle handles everything. They calculate taxes, collect them, file returns, and remit payments to tax authorities worldwide. You receive clean net payments with no tax paperwork. For small teams selling globally, this simplification can be worth the higher fees.

Pricing Analysis

Stripe's 2.9% + 30c is significantly cheaper than Paddle's 5% + 50c. On a $100 transaction, Stripe costs $3.20 while Paddle costs $5.50. This difference compounds at scale.

However, the comparison is not straightforward. Paddle's fee includes tax handling that you would otherwise pay accountants, tax services, or Stripe Tax to manage. For companies selling in many countries with limited finance resources, Paddle's higher rate may net out similar or even lower.

Integration and Flexibility

Stripe's API is legendary for developer experience. Documentation is excellent. SDKs cover every language. The ecosystem includes thousands of integrations, including deep connections with tools like Sequenzy for billing-triggered email automation.

Paddle's API is good but not at Stripe's level. Fewer integrations exist. Some advanced billing scenarios require workarounds. If you need complex custom billing logic, Stripe provides more flexibility.

Email Marketing Integration

Billing events are crucial triggers for email marketing. Payment successes, failures, upgrades, and cancellations should all trigger appropriate communication. Sequenzy integrates with Stripe to automate these touchpoints comprehensively.

While Sequenzy can work with Paddle through webhooks, the Stripe integration is deeper and more reliable. If sophisticated billing-triggered email automation is important, Stripe's ecosystem provides advantages.

When to Choose Stripe

Choose Stripe if you have resources to handle tax compliance or sell primarily in single jurisdictions. Stripe makes sense when lower transaction costs matter significantly to your margins. If you need maximum flexibility and the best API, Stripe delivers.

When to Choose Paddle

Choose Paddle if you are a small team selling globally without dedicated finance resources. Paddle makes sense when simplicity is worth paying for. If you want to focus entirely on product while someone else handles payments and taxes, Paddle provides that peace of mind.

Our Recommendation

For most SaaS companies, Stripe is the better choice. The cost savings are significant, the API is superior, and the ecosystem integration is unmatched. Use Stripe Tax if you need tax calculation. Only choose Paddle if the compliance simplification genuinely solves a problem you cannot otherwise address efficiently.