Stripe vs LemonSqueezy for SaaS: Which Payment Provider Should You Choose in 2025?

You're building a SaaS and need to accept payments. Stripe is the obvious choice—everyone uses it. But then you hear about LemonSqueezy handling taxes automatically, and suddenly you're not sure.

Here's the thing: both are excellent. But they solve different problems. Choosing wrong means either leaving money on the table or drowning in tax compliance.

This guide breaks down exactly when to use each, with real numbers and code examples.

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Quick Answer

Choose Stripe if: You want maximum control, lower fees at scale, and don't mind handling tax compliance yourself (or using Stripe Tax).

Choose LemonSqueezy if: You sell globally, hate dealing with taxes, and want someone else to handle VAT/GST compliance as your merchant of record.

Key Differences:

• Fees: Stripe 2.9% + 30¢ vs LemonSqueezy 5% + 50¢
• Tax handling: You handle it (Stripe) vs They handle it (LemonSqueezy)
• Merchant of Record: You are (Stripe) vs They are (LemonSqueezy)
• Payout: Direct to your bank vs Net 15 from LemonSqueezy

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Understanding the Core Difference: Merchant of Record

This is the most important distinction. It affects everything from taxes to refunds to legal liability.

Stripe: You Are the Merchant of Record

When you use Stripe, you are selling the product. Stripe just processes the payment.

What this means:

• Customer's credit card statement shows YOUR company name
• YOU are responsible for collecting and remitting sales tax, VAT, GST
• YOU handle refunds from your own funds
• YOU need a business entity in each tax jurisdiction (potentially)

Example: A customer in Germany buys your $99 SaaS subscription. You must:

1. Charge 19% German VAT (€18.81)
2. File VAT returns in Germany
3. Remit €18.81 to German tax authorities
4. Keep records for 7+ years

LemonSqueezy: They Are the Merchant of Record

When you use LemonSqueezy, they are selling the product. You're essentially a vendor to them.

What this means:

• Customer's statement shows "LMSQUEEZY" (not your company)
• LemonSqueezy collects and remits all taxes globally
• LemonSqueezy handles refunds from their funds first
• You need exactly ONE business entity (yours)

Example: Same German customer, same $99 subscription:

1. LemonSqueezy charges €117.81 (including VAT)
2. LemonSqueezy files German VAT returns
3. LemonSqueezy remits VAT to Germany
4. You receive $99 minus fees (~$94)

The tradeoff: Less control, higher fees, but zero tax headaches.

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Fee Comparison: The Real Numbers

Let's compare what you actually pay.

Stripe Pricing

• Standard rate: 2.9% + 30¢ per transaction
• International cards: +1.5%
• Currency conversion: +1%
• Stripe Tax: +0.5% per transaction
• Invoicing: +0.4% for paid invoices
• Chargebacks: $15 per dispute

Example on $99 subscription (US customer):

• Processing: $2.87 + $0.30 = $3.17
• You keep: $95.83

Example on $99 subscription (EU customer with Stripe Tax):

• Processing: $2.87 + $0.30 = $3.17
• International: $1.49
• Stripe Tax: $0.50
• You keep: $93.84 (before remitting VAT yourself)

LemonSqueezy Pricing

• Standard rate: 5% + 50¢ per transaction
• No extra fees for: International cards, currency conversion, tax calculation
• Chargebacks: $15 per dispute

Example on $99 subscription (any customer, anywhere):

• Processing: $4.95 + $0.50 = $5.45
• You keep: $93.55

Break-Even Analysis

At first glance, Stripe looks cheaper. But add tax compliance:

The hidden cost: If you're selling globally with Stripe, budget $200-500/month for tax software (like Avalara) plus accountant time. That's when LemonSqueezy starts looking cheaper.

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Feature Comparison

When Stripe Wins

1. Usage-based billing - Stripe's metered billing is mature and flexible
2. Complex subscription logic - Proration, trials, add-ons, quantities
3. High volume - Negotiate rates below 2.9%
4. Instant payouts - Need money fast? Stripe Instant Payouts
5. US-only business - Tax compliance is simpler

When LemonSqueezy Wins

1. Global sales tax - Zero compliance burden
2. Digital products - License keys, downloads built-in
3. Affiliate programs - Native affiliate system
4. Solo founders - No accountant needed for taxes
5. Simplicity - Less to configure and maintain

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Implementation Comparison

Both integrate with Next.js, but the setup differs.

Stripe Checkout Example

// Create checkout session
const session = await stripe.checkout.sessions.create({
  payment_method_types: ['card'],
  line_items: [{
    price: 'price_xxx', // Your Stripe price ID
    quantity: 1,
  }],
  mode: 'subscription',
  success_url: 'https://yoursite.com/success',
  cancel_url: 'https://yoursite.com/cancel',
  customer_email: user.email,
  // Tax calculation (if using Stripe Tax)
  automatic_tax: { enabled: true },
});

return { url: session.url };

Webhook events to handle:

• checkout.session.completed
• customer.subscription.updated
• customer.subscription.deleted
• invoice.payment_succeeded
• invoice.payment_failed

LemonSqueezy Checkout Example

// Create checkout
const checkout = await fetch('https://api.lemonsqueezy.com/v1/checkouts', {
  method: 'POST',
  headers: {
    'Authorization': `Bearer ${process.env.LEMONSQUEEZY_API_KEY}`,
    'Content-Type': 'application/json',
  },
  body: JSON.stringify({
    data: {
      type: 'checkouts',
      attributes: {
        checkout_data: {
          email: user.email,
          custom: {
            user_id: user.id,
          },
        },
      },
      relationships: {
        store: { data: { type: 'stores', id: storeId } },
        variant: { data: { type: 'variants', id: variantId } },
      },
    },
  }),
});

return { url: checkout.data.attributes.url };

Webhook events to handle:

• order_created
• subscription_created
• subscription_updated
• subscription_cancelled
• subscription_payment_success
• subscription_payment_failed

Integration Complexity

Stripe requires more webhook handling but gives finer control. LemonSqueezy is simpler but less flexible.

Pro tip: Use a starter kit that supports both. GetNextKit includes pre-configured integrations for Stripe AND LemonSqueezy, so you can switch providers or use both for different products.

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Common Mistakes to Avoid

1. Choosing Based on Fees Alone

LemonSqueezy's 5%+ looks expensive until you add Stripe Tax (0.5%), accountant fees ($200-500/mo), and your time tracking tax obligations. Do the full math.

2. Ignoring Payout Timing

LemonSqueezy pays Net 15 (15 days after month end). If cash flow matters, this could be 45 days after a sale. Stripe pays in 2 days. Plan accordingly.

3. Forgetting About Refunds

With Stripe, refunds come from YOUR bank account. With LemonSqueezy, they handle it (but it affects your next payout). Know how this impacts your cash flow.

4. Not Planning for Scale

Starting with LemonSqueezy is smart for simplicity. But at $50k+/month, the fee difference is $1,000+/month. Have a migration plan.

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Frequently Asked Questions

Can I use both Stripe and LemonSqueezy?

Yes. Many SaaS companies use Stripe for US customers and LemonSqueezy for international. Or Stripe for subscriptions and LemonSqueezy for one-time purchases. GetNextKit supports both out of the box.

Does LemonSqueezy work for B2B SaaS?

Yes, but customers see "LMSQUEEZY" on their statement, not your company. Some enterprise buyers prefer seeing the vendor name directly. Consider this for B2B.

How do I migrate from Stripe to LemonSqueezy (or vice versa)?

You'll need to re-create subscriptions. There's no direct migration. Notify customers, offer to honor existing rates, and provide a simple re-subscription flow.

Which has better fraud protection?

Stripe Radar is more sophisticated with ML-based fraud detection. LemonSqueezy has basic fraud protection. For high-risk industries, Stripe wins.

What about Paddle as an alternative?

Paddle is another merchant of record option, similar to LemonSqueezy but with higher fees (5%+). LemonSqueezy is generally preferred for indie SaaS due to better pricing and developer experience.

Do I need a business entity to use these?

Stripe requires a business entity (or sole proprietorship in some countries). LemonSqueezy is more flexible with individual accounts but still recommends a business entity for tax purposes.

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Conclusion

Choose Stripe if you're US-focused, want maximum control, plan to scale big (negotiate rates), or need advanced features like usage-based billing.

Choose LemonSqueezy if you sell globally, hate tax compliance, want built-in affiliates/license keys, or value simplicity over control.

Or use both. Stripe for US + enterprise. LemonSqueezy for international + digital products. That's the setup many successful SaaS founders use.

Next step: Don't spend weeks integrating payment providers. GetNextKit includes production-ready integrations for both Stripe and LemonSqueezy—switch between them with a config change.

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Related Resources

• Stripe Documentation - Official Stripe docs
• LemonSqueezy Documentation - Official LemonSqueezy docs
• GetNextKit Payments - See dual payment provider setup