If you're considering Paddle vs Stripe for your payment processing, we're covered everything you need to know in this comprehensive guide.
By Joanna Taylor • Updated 7 October 2024
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.
Feature | Paddle | Stripe |
---|---|---|
Payment Methods | Multiple currencies, Cards, PayPal, Apple Pay, Google Pay | Multiple currencies, Cards, Bank Transfers, Apple Pay, Google Pay, SEPA Direct Debit |
Subscription Billing | Yes | Yes |
Built-in Tax Handling | Yes | Limited |
Developer Friendly | Limited | Yes, highly customizable |
Compliance Handling | Yes, automatic | No |
Pricing Model | Per transaction percentage | Per transaction percentage |
Fraud Protection | Extensive fraud protection | Yes |
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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.
An example of a Paddle checkout from TailwindUI
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.
Let's take a look at how Paddle vs Stripe compare when it comes to the critical issue of 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 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.
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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Now, you may be wondering, why choose Skool instead of other platforms? Let’s look at some key reasons:
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
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
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
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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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.
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:
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