Paddle vs Stripe: Which Payment Platform is Right for Your Business?

If you're considering Paddle vs Stripe for your payment processing, we're covered everything you need to know in this comprehensive guide.

Joanna TaylorJoanna Taylor

By Joanna Taylor  •  Updated 7 October 2024

Paddle vs StripePaddle vs Stripe

If you run an online business, you need a way to accept payments. This usually means you need a payment gateway.

Two popular options are Paddle and Stripe.

These platforms are payment processors that can help your businesses process payments but have different features.

In this article, we'll take a detailed look at Paddle vs Stripe, along with their individual advantages and disadvantages to help you pick the best one for your business.

We will also break down each platform in detail, compare their pricing, and give you all the information you need to make an informed decision.

Paddle vs Stripe: Comparison Overview

FeaturePaddleStripe
Payment MethodsMultiple currencies, Cards, PayPal, Apple Pay, Google PayMultiple currencies, Cards, Bank Transfers, Apple Pay, Google Pay, SEPA Direct Debit
Subscription BillingYesYes
Built-in Tax HandlingYesLimited
Developer FriendlyLimitedYes, highly customizable
Compliance HandlingYes, automaticNo
Pricing ModelPer transaction percentagePer transaction percentage
Fraud ProtectionExtensive fraud protectionYes

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Paddle vs Stripe Compared

Paddle 

Paddle vs Stripe - Homepage

Paddle Main Features Overview

Paddle is an all-in-one payment platform, with a focus on providing Merchant of record (MoR) services. Their audience is primarily SaaS companies, but they also provide services to sellers of digital products such as templates, resources and graphics.

Paddle handles subscriptions, invoices, recurring payments and even helps you collect sales tax.

Paddle is a simple solution for businesses that need international payments and want to skip the trouble of managing taxes and compliance.

It is built to help online businesses grow without worrying about complex payment systems.

With Paddle, you can focus more on your products and less on payment headaches. Paddle is also designed for those who want to quickly start accepting payments without spending hours in technical setup.

Paddle vs Stripe - Checkout Tailwind UI

An example of a Paddle checkout from TailwindUI

Paddle Pros

Tax Handling: Paddle automatically takes care of VAT and other tax rules, including automated VAT collection. You don’t have to worry about keeping up with different tax rates in different countries because Paddle manages sales tax and global tax for you.
Simple Pricing: Charges a percentage + flat fee per transaction, so it's easy to know the costs. You always know how much you will be paying, which makes it easier to plan your budget and avoid surprises.
Ease of Use: Made for businesses that want simple integration without needing coding skills. This makes Paddle a great choice for small business owners who don’t have tech experience but want to accept payments.
International Payment Handling: Paddle lets you accept payments from many different countries and supports multiple currencies. This means you can easily expand your customer base around the world without having to worry about setting up complex international payment systems.
Sales Tax Solution: Paddle provides a sales tax solution that handles tax calculation, filing and verification capabilities, and sales tax compliance automatically.

Paddle Cons

Customization Limits: Not good if you need a lot of custom code or special payment setups. Paddle is built to be simple, which means it doesn’t give you the same customization options as some other platforms.
Fewer Payment Methods: Compared to Stripe, Paddle offers fewer payment method integration options. If your customers prefer using certain local payment methods, Paddle may not always support them.
Limited Developer Tools: Not the best choice for businesses with their own developers who want to customize the system. Paddle doesn’t offer as many developer features, which can be a problem if you want to create a unique payment experience for your users.
No Custom Pricing: Paddle users have to rely on the platform's set pricing model, which means there is no custom pricing available for larger or more established businesses.

Stripe

Stripe vs Paddle

Stripe Main Features Overview

Stripe is a flexible and developer-friendly payment platform. It supports many payment methods and is popular with startups and bigger businesses.

Stripe offers high customization and has lots of APIs for developers. This means you can use Stripe to create custom payment solutions that match your business needs exactly.

Stripe is designed for businesses that want full control and are ready to invest time into setting things up.

Stripe Pros

Highly Customizable: Stripe gives you a lot of control through its APIs. Great for tech-savvy businesses or businesses that have developers. You can create unique payment flows that make it easier for customers to pay you.
Multiple Payment Options: Supports cards, bank transfers, direct debit, SEPA Direct Debit, Apple Pay, Google Pay, and other payment methods. This means that your customers can pay however they want, which can increase your sales and customer satisfaction.
Third-Party Integrations: Works well with many business tools like accounting software, shopping carts, and other platforms. This helps you manage your business operations smoothly without needing to switch between different systems.
Scalable Solution: Stripe is great if your business is growing and you need a payment system that can grow with you. As your needs change, Stripe can offer more features and options to help you handle more transactions.
Subscription Management Tools: Stripe offers advanced subscription management tools, including prorated billing, usage-based billing, and trial periods. This makes it easier to manage subscriptions and cater to different customer needs.
Extensive Fraud Protection: Stripe provides extensive fraud protection and chargeback protection to help businesses manage security and prevent unauthorized transactions.

Stripe Cons

No Built-in Tax Compliance: Although Stripe does now include tax collection features (for a small additional fee) they do not manage your overall compliance and remitting taxes for you - this is something you'd need a merchant of record solution like Paddle for.
Potentially Higher Costs: Although Stripe's initial processing fees are lower than Paddle's, they do charge for additional services such as subscriptions and tax collection, so these fees can add up.

Paddle vs Stripe Pricing Comparison

Let's take a look at how Paddle vs Stripe compare when it comes to the critical issue of pricing.

Paddle Pricing models

Paddle Pricing

Paddle: Charges a flat fee + percentage per transaction.

Paddle's flat fee means you don’t need to worry about costs changing with each sale. If your business has steady or predictable sales, this makes planning easy and ensures no surprises. With Paddle, the pricing is clear and straightforward, making it less stressful to manage payments.

Paddle charges a flat fee of around 5% + $0.50 per transaction . This fee includes the cost of payment processing, taxes, and compliance. This is a good option if you don’t want any surprise fees or extra charges.

Since Paddle also handles all of your tax and compliance, including automated tax calculation and sales tax compliance, you are getting more value with the flat fee. There are no added costs for different types of payments or handling taxes, which makes it easy to plan your finances.

Stripe Pricing models

Stripe Charges a variable percentage per transaction. 

If you're a US based seller, this is usually around 2.9% + 30 cents. These are fees for processing payments from most popular credit cards.

Stripe charges additional fees for their subscription management services, with fees starting from 0.7% of subscription billed volume.  

Stripe also offers tax calculation features which start from 0.5% per calculation.

If you're utilizing all of these services, the effective rate is around 4.1% + $0.30 per transaction. Bear in mind though, some transactions will not incur all fees. Also if you process payments through Direct debit, these operate at a lower rate.

Paddle v Stripe Pricing

Stripe also offers volume discounts if you have a lot of transactions each month, but you need to meet certain requirements. It’s important to calculate your expected sales and see which pricing model works best for you.

Additionally, Stripe has extra fees for things like international transactions, currency conversion, and wire transfers. 

If you plan to sell in multiple countries, these extra costs should be considered. Overall, Stripe’s pricing can be less predictable, and it’s best to keep track of all potential fees when planning your budget.

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Paddle vs Stripe Detailed Comparison

Now, you may be wondering, why choose Skool instead of other platforms? Let’s look at some key reasons:

Ease of Use

Paddle: Easier to set up, especially if you don’t have technical skills. It manages compliance, sales tax, and payments processing, making it a great option for businesses that don’t want to deal with complex setups. Paddle’s goal is to make payment processing simple and efficient so that business owners can focus on other parts of their business. The simple interface and minimal setup process make it easy for anyone to start using Paddle.

Stripe: Made for developers. If you have a tech team, Stripe gives you a lot of flexibility. You can design custom payment flows that fit your needs. However, if you don’t have someone with technical knowledge, Stripe can be overwhelming. The platform is powerful but requires a lot of work to make it run smoothly. Stripe is better for companies that are ready to spend time on development and customization.

Winner: Draw - both platforms are easy to use

Tax and Compliance

Paddle: Handles sales tax and compliance automatically, saving you time and effort. 

You don’t have to worry about keeping up with changing tax laws or filling out tax forms because Paddle does it for you. 

This makes it a very attractive choice for international businesses that don’t want to handle the tax complexities of global tax rules.

Stripe: Doesn’t handle taxes directly, so you need to do it yourself or use third-party tools. 

Stripe does now include an option to handle tax collection (conveniently called Stripe tax), although you will need to handle remittance of tax to the various countries where you collect it.

Winner: Paddle

Customization

Paddle: Limited customization options. Good if you want a simple, ready-to-use solution. 

Paddle is designed for business owners who want an easy setup with basic payment features. 

You won’t be able to make a lot of changes to how the payment process looks or works, but it’s a good option if you’re looking for simplicity.

Stripe: Highly customizable, which lets you create unique payment experiences. 

Ideal for businesses with specific needs and developer support. If you want to create a payment process that fits your brand perfectly, Stripe is the right choice. 

You can add different payment methods, create custom checkout pages, and use advanced tools to offer a seamless experience to your customers. 

Stripe also allows for custom pricing and other customization options that can adapt to the needs of high volume businesses.

Winner: Stripe

Payment Methods

Paddle: Supports cards, PayPal, and Apple Pay. It’s good but doesn’t cover as much as Stripe. Paddle offers fewer payment methods, but it does include popular options that most customers will use.

Stripe: Offers many options, like bank transfers, direct debit, SEPA Direct Debit, Google Pay, and other payment methods. Better if you need to support many different payment types. Stripe supports almost all payment methods, including local payment options that some customers prefer. This means that you can reach more customers in more countries, making it easier to grow your business worldwide.

Winner: Stripe

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Paddle vs Stripe: Which is Better?

Overall, the key benefit of Paddle vs Stripe is the handling of tax collection and remittance. If you want a hands off system that handles collection and submission of all tax related matters, Paddle is for you.

If you want more flexibility and control over your payments infrastructure, Stripe is certainly a better option.

It's also worth mentioning the potential drawback of using a Merchant of Record service like Paddle - this means that all your sales to any juristiction are automatically going to be at the threshold for tax (meaning your customers will likely be charged tax in most countries around the world).

This happens because Paddle is essentially operating as one company through which all sales go - and therefore they are likely to already be hitting the thresholds for tax charging in most worldwide juristrictions (states and countries).

Whilst this may not be a significant issue, it can affect sales volumes for some markets.

If you're using Stripe vs Paddle, you're unlikely to hit many of the juristictional limits for some time (if at all) and therefore you won't be charging tax to a lot of your customers.

Another consideration is that Paddle is focused around SaaS companies and related software businesses. If you're selling a different kind of product (e.g. a membership site, online course etc) you're less likely to be accepted into Paddle for your payment processing.

Why not Consider using Kourses with Stripe

Are you a creator looking to use Stripe as your payment processor and you want to create and sell digital products, online courses or memberships? You should consider Kourses!

Kourses is a platform designed for education businesses and entrepreneurs who need a simple, powerful solution to manage their business on top of the Stripe online payments system.

Kourses includes the following features:

  • Create beautiful membership portals
  • Create conversion optimized checkout flows and sell access directly through the various payment gateways Stripe offers.
  • Tokenized payment details make it quick and easy for your buyers to re-purchase additional products from you
  • Create online courses with built in secure video hosting
  • Grow highly engaged membership communities with discussion and gamification (coming soon)
  • Selling digital products made easy with easy content uploading and management

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