Stripe or a merchant of record? Paying for payments
Why Paddle, Polar and Lemon Squeezy charge about 5% while Stripe charges less, and when the higher fee is worth it.
· 1 min read
Taking money online costs a percentage of every sale. The real decision is who is responsible for sales tax and VAT: you, or the company processing the payment.
A merchant of record sells on your behalf
Paddle, Polar and Lemon Squeezy are merchants of record. Legally, they sell your product to your customer, so they calculate, collect and file sales tax and VAT around the world, and they handle chargebacks and billing questions.
Their headline fees:
- Paddle: 5% + 50¢ per checkout transaction, all-inclusive, with no monthly fee.
- Lemon Squeezy: 5% + 50¢ per transaction, with no monthly fee.
- Polar: 5% + 50¢ on the free Starter plan for organizations created from May 27, 2026, or 3.8% + 40¢ on Pro at $20 a month. Polar says Pro pays for itself above roughly $1,379 a month in sales. Non-US cards add 1.5%.
A payment processor leaves tax to you
Stripe is a payment processor: you are the seller. Its fees are lower, but staying compliant with sales tax and VAT in every country you sell to is your job, with your own registrations and filings. Stripe Tax can calculate and collect it for an extra fee, but you still file.
A quick way to decide
- Selling worldwide, small team, no accountant: a merchant of record usually costs less than the time and risk of handling tax yourself.
- Mostly selling in your own country, or already registered for tax: a processor's lower fee can win.
- Small payments: the fixed 50¢ hurts most on cheap items. A $5 sale loses $0.75 to a 5% + 50¢ fee, which is 15%.
What the builder assumes
The stack builder estimates payment volume from your active users, the share who pay and the average payment. The defaults are 3% of users paying $10, and you can change both.