SaaS Payment Providers 2025: Stripe vs Lemon Squeezy vs Polar - Complete Guide
Compare Stripe, Lemon Squeezy, and Polar payment providers for SaaS businesses. Detailed analysis of fees, tax compliance, developer experience, and which platform is best for your startup in 2025.
Selecting the right payment provider is one of the most critical decisions you'll make as a SaaS founder. Your choice impacts everything from your revenue and global reach to your development overhead and legal compliance burden. Whether you're building with Next.js boilerplates, React templates, or any other framework, your payment integration will be a core component of your SaaS success.
In this guide, we'll break down three of the most popular choices for SaaS businesses in 2025: the industry giant Stripe, the indie-favorite Lemon Squeezy, and the developer-centric newcomer, Polar.
TL;DR: At a Glance
| Provider | Fees | Merchant of Record? | Developer Experience | Best For |
|---|---|---|---|---|
| Stripe | 2.9% + 30¢ (+ add-ons) | No | Powerful, but complex | Scaled businesses with custom needs & dev resources. |
| Lemon Squeezy | 5% + 50¢ | Yes | Simple & intuitive | Solo founders & indie hackers prioritizing speed. |
| Polar | 4% + 40¢ | Yes | Developer-first & open-source | Technical founders who value a great DX & simplicity. |
Stripe Payment Gateway: The Powerful Industry Standard for SaaS
Overview
Stripe is a widely used and feature-rich online payments platform. It's an incredibly powerful and flexible platform with a comprehensive suite of tools that can handle nearly any payment scenario you can imagine.
Fees
Stripe's standard pricing is a pay-as-you-go model of 2.9% + 30¢ per successful card transaction. However, this is just the starting point. If you need recurring subscriptions, you'll use Stripe Billing, which adds an additional 0.5% on top of the transaction fee. Other services like international payments (an extra 1.5%) and automated tax calculation (Stripe Tax) also come with their own costs.
Tax Handling: You're in Charge
This is the most crucial distinction: Stripe is not a Merchant of Record (MoR). This means that while they process the payment, you are the one legally selling the product. Consequently, you are responsible for calculating, collecting, and remitting sales tax and VAT in every single jurisdiction where you have customers. This can create a significant administrative and legal burden, especially for businesses selling globally.
Developer Experience
Stripe's developer experience is second to none in terms of power. It offers robust, well-documented APIs and SDKs for virtually every programming language. However, this power comes with complexity. A full Stripe integration for a SaaS application, including subscription logic, webhooks, and a customer portal, can be a significant development project.
| Pros | Cons |
|---|---|
| • Unmatched flexibility and customization | • Not a Merchant of Record (major tax compliance burden) |
| • Extensive global payment method support | • Can be complex and time-consuming to implement |
| • Enterprise-grade reliability and security | • Costs can add up with necessary add-ons |
| • Scales to any size business | • Can be overkill for simple SaaS projects |
Lemon Squeezy Payment Platform: The All-in-One Solution for Indie SaaS Makers
Overview
Lemon Squeezy has won the hearts of many indie hackers and solo founders by focusing on simplicity and solving the biggest pain point: taxes. It's designed from the ground up for selling digital products and SaaS, bundling everything you need into one simple package.
Fees
Lemon Squeezy offers a straightforward, all-inclusive pricing model: 5% + 50¢ per transaction. There are no monthly fees or hidden costs for features like dunning (failed payment recovery) or tax handling - it's all included.
Tax Handling: They've Got Your Back
Lemon Squeezy acts as a Merchant of Record (MoR). This is their killer feature. As an MoR, Lemon Squeezy legally sells your product for you. They take on the full responsibility for global sales tax and VAT compliance. They handle the calculation, collection, and remittance, so you can focus on your product instead of navigating complex international tax laws.
Developer Experience
The developer experience is designed to be "easy peasy." The API is simple and focused, and you can get a checkout flow running with minimal code. They also offer pre-built checkout overlays and a customer portal that can be integrated with just a link, saving significant development time.
| Pros | Cons |
|---|---|
| • Merchant of Record status completely handles tax liability | • Higher per-transaction fee than Stripe's base rate |
| • Incredibly simple and fast to set up | • Less customization and flexibility |
| • All-in-one platform (includes email marketing, affiliates) | • Fewer supported payment methods than Stripe |
| • Built specifically for digital products and SaaS | • May not be suitable for highly complex billing models |
Polar Payment Provider: The Developer-First, Open-Source SaaS Payment Solution
Overview
Polar is a newer player that has quickly gained traction, especially among technical founders. It combines the tax-handling benefits of a Merchant of Record with a developer-first, open-source philosophy. It aims to provide a powerful, yet streamlined, experience for modern SaaS businesses.
Fees
Polar's pricing is a flat 4% + 40¢ per transaction. Like Lemon Squeezy, this is an all-inclusive fee that covers payment processing, tax compliance, and all platform features.
Tax Handling: Compliance Included
Like Lemon Squeezy, Polar is a Merchant of Record (MoR). They handle the complexities of global sales tax and VAT, which is a massive advantage for small teams and solo developers who want to sell internationally without the headache.
Developer Experience
This is where Polar truly shines. It's built by developers, for developers. The platform is open-source, and the integration is designed to be incredibly fast - it can take just a few lines of code to get started. They offer framework-specific adapters (like for Next.js) and a clean, modern API that developers love. They also have built-in "benefits" like automatically generating license keys or granting access to a Discord server upon purchase.
| Pros | Cons |
|---|---|
| • Merchant of Record status handles tax compliance | • Higher fee than Stripe's base rate |
| • Exceptional, developer-centric experience | • A newer platform with less of a track record |
| • Open-source, offering transparency and community input | • More limited feature set compared to the vastness of Stripe |
| • Built-in entitlements (license keys, Discord/GitHub access) | • Fewer third-party integrations than Stripe |
How to Choose the Best SaaS Payment Provider?
Your decision should be based on your team's size, resources, and priorities.
Choose Stripe if:
- You are a larger, established business with dedicated development and finance teams.
- You require highly complex, custom billing logic (e.g., intricate usage-based billing).
- You have the resources to manage global tax compliance internally.
- You need the absolute lowest transaction fee at a very high volume.
Choose Lemon Squeezy if:
- You are a solo founder, indie hacker, or small team.
- Your top priority is launching as quickly as possible with minimal development overhead.
- You want to completely offload the burden and risk of sales tax compliance.
- You value an all-in-one, simple solution over granular control.
Choose Polar if:
- You are a technical founder or a developer-led team.
- You prioritize an excellent, modern developer experience and fast integration.
- You want the peace of mind of a Merchant of Record but also the transparency of an open-source platform.
- You are selling software that could benefit from built-in entitlements like license keys.
Frequently Asked Questions About SaaS Payment Providers
What is a Merchant of Record for SaaS businesses?
A Merchant of Record (MoR) is a legal entity that takes responsibility for processing payments and handling tax compliance on behalf of the actual seller. For SaaS businesses, using a MoR like Lemon Squeezy or Polar means they handle all sales tax, VAT, and GST calculations, collection, and remittance across global jurisdictions.
Which payment provider has the lowest fees for SaaS startups?
Stripe has the lowest base transaction fee at 2.9% + 30¢, but when you add subscription billing (0.5%) and other necessary features, the total cost often approaches Polar's 4% + 40¢ all-inclusive fee. For startups prioritizing simplicity over cost, Polar and Lemon Squeezy offer better value despite higher rates.
Can I switch from Stripe to Lemon Squeezy or Polar later?
Yes, but switching payment providers requires significant development work to migrate subscription data, update billing logic, and potentially rebuild customer portals. It's better to choose the right provider from the start based on your long-term needs.
Do I need a developer to integrate these payment providers?
- Stripe: Yes, requires significant development work for full SaaS integration
- Lemon Squeezy: Minimal coding required, can use no-code checkout overlays
- Polar: Developer-friendly but still requires some technical implementation
Which payment provider is best for international SaaS sales?
Both Lemon Squeezy and Polar excel at international sales due to their Merchant of Record status, automatically handling tax compliance in 100+ countries. Stripe supports more payment methods globally but requires you to manage tax compliance yourself.
How important is tax compliance for SaaS businesses?
Tax compliance is critical for SaaS businesses selling internationally. Non-compliance can result in significant penalties and legal issues. Using a Merchant of Record (Lemon Squeezy or Polar) eliminates this risk entirely, while Stripe requires you to handle compliance yourself.
This comparison is based on current features and pricing as of August 2025. Always verify the latest information from official sources before making decisions.