In a world with dozens of recurring billing and payment solutions, choosing the best option for your Software-as-a-Service (SaaS) business can be intimidating. But when you know what features matter most to your business, it’s easier to find the right tool.
Stripe and Paddle are two popular options, but they provide very different services. What’s more, neither tool is primarily a subscription billing and management solution, which is a key technology for SaaS businesses. Stripe users can add Stripe Billing for managing subscriptions, and Paddle bills itself as an all-in-one platform with some subscription management capabilities. Subscription-based companies need specific capabilities, including recurring billing, subscription management, and dunning and recovery.
In this article, we’ll cover the main features of Stripe and Paddle, as well as their pros and cons.
Table of Contents
- Stripe Overview
- Paddle Overview
- Stripe vs Paddle: Pricing Comparison
- Stripe vs Paddle: Deep Dive Comparison
- What Do Customers Have to Say About Stripe and Paddle?
- How to Choose a Subscription Billing and Management Tool
Stripe is a popular payment gateway used by businesses to accept and process payments. To manage subscriptions and recurring billing and payments, users can add Stripe Billing to their account (for an additional charge).
- Accepts 135+ currencies and serves merchants in 34 countries
- Offers both a payment gateway and a payment processor
- Extensive technical documentation and flexible API make it a developer’s favorite
- Registration is fast and easy
- To manage subscription billing and payment, you need to add (and pay for) Stripe Billing
- For business owners or those without a technical background, it can be difficult to set up and use
- Doesn’t handle tax issues well — tax solutions can be done through third parties at a monthly price (huge fines can be imposed if the tax setup isn’t correct)
Paddle presents itself as an all-in-one revenue platform for accepting payments and handling taxes and invoicing. Perhaps its biggest differentiator from Stripe is that it is a merchant of record. This means that it is essentially the middleman between you and your customers.
The customer actually transacts with Paddle, and Paddle is the name that will show up on their credit card statement. Also, Paddle owns all the data related to these transactions, and refunds are at their discretion.
- Covers all aspects of payment infrastructure, including tax compliance
- Provides managed support
- Frees up developers with an all-in-one solution to help you scale quicker
- Handles VAT, which is big if you’re a small business operating in the EU
- As a reseller, it represents your brand and can therefore run into problems with support standards
- High pricing (7%)
- Charges 5 to 8% more on foreign currencies
- Can’t connect with CRM, help desks, or accounting tools
Stripe vs Paddle: Pricing Comparison
Stripe, like most payment processing tools, bills by transaction, but the exact fees depend on the type of transaction. For example, for a credit card purchase, it takes 2.9% in addition to a flat fee of $0.30.
ACH (or debit) payments, on the other hand, are charged 0.8% with a maximum fee of $5.00. Stripe has pricing structures for a variety of payment types, including Bancontact, iDEAL, and EPS.
Brands can also contact Stripe to work out a customized fee agreement that might take into account volume or multi-product discounts. For businesses with a subscription model, you will need at least one additional product: Stripe Billing.
You can choose between the Stripe Billing Starter plan, which charges an additional 0.5% on recurring payments, or you can choose the Scale plan, which charges an additional 0.8% on both recurring payments and one-time invoice payments. Handling your recurring billing and payments through Stripe and Stripe Billing will cost, at minimum, 3.4% + $0.30 for each transaction.
Paddle also bills by the transaction, but their fees are significantly higher. Their pay-as-you-go model charges 5% of each transaction plus an additional $0.50. They also offer custom pricing, but you’ll need to speak with their sales team to learn more.
Paddle justifies its higher fees by arguing that it provides a complete payment solution, saving you money on other services. However, it’s worth asking which (if any) of those services you will need. Their 5% + $0.50 fee isn’t hard to beat if you combine just a few quality solutions.
Stripe vs Paddle: Deep Dive Comparison
Let’s look at how Stripe and Paddle stack up across some crucial capabilities for subscription billing and management platforms.
Recurring billing is essential for a subscription-based business. Stripe users can tap into Stripe Billing to create and send recurring invoices. If you have a team of developers, Stripe’s API allows you to build custom billing logic.
While Paddle can handle prorations and allows you to manage subscriptions within their platform, they are only now introducing invoicing functionality, which is not included in their Starter plan.
SaaS and other subscription-based businesses also need to manage each account’s subscription. Stripe Billing supports coupons, free trials, and add-ons. In the fight against churn, Paddle allows you to pause subscriptions until the customer is ready to reactivate.
Subscription Analytics and Accounting
Stripe Billing’s dashboard shows reporting and analytics around MRR, churn, lifetime value, and other common metrics. For in-depth analytics, however, Stripe users have to export their data to another tool.
As your merchant of record, Paddle serves as the single data source for all your revenue operations. This saves you the trouble of tracking down and merging data from different sources. Paddle also offers pre-built reports — but for detailed analysis, they direct users to purchase their premium advisory services.
Dunning and Recovery
You can configure Stripe Billing to retry a transaction or send follow-up emails or retries if a payment fails, but the process is a technical one that involves coding.
Paddle offers what they call end-to-end dunning, allowing you to send subscription renewal and credit card update emails to your customers, as well as automatically retry failed payments.
One of its helpful features is that you can decouple payment retries from customer emails, thus strategically retrying payments without inundating the customer with notifications.
Stripe allows businesses to set tax rates and apply them to invoices and online payments. For automated tax calculation, however, customers need the add-on product Stripe Tax.
One of Paddle’s selling points is that they apply tax rates, and collect and remit them for you. As your merchant of record, they also take responsibility for tax liability. This is especially helpful for very small companies who operate that do business in Europe and have to contend with Value-Added Tax (VAT).
Multi-Currency and Global Service
Stripe supports 135+ currencies and allows you to display prices in a customer’s native currency.
Paddle supports 26 different currencies and allows you to accept multiple currency types.
Stripe’s APIs allow it to integrate with just about any tool, assuming you have the development resources to do so.
Paddle also boasts a set of APIs and webhooks for developers to work with. Unfortunately, many small teams don’t have the development resources to build robust integrations.
Companies using Stripe can either send customers to a Stripe-hosted payment page or embed the checkout form through their APIs. Additionally, Stripe Billing offers a customer portal through which your customers can update their subscriptions or change their contact information.
Paddle aims to give your customers a native payment experience by adding their checkout to your website through either a pop-up or in-line form.
What Do Customers Have to Say About Stripe and Paddle?
When shopping for the right payment technologies and tools, user reviews from G2 can give you important insights and feedback on what it’s like to work with these platforms. In overall ratings, both platforms score well.
Beyond high-level ratings, however, customers also rate individual features, so you should also consider which functions are most important to your business. Stripe edges out the competition on ease of use, and but Paddle rates higher on ease of admin.
How to Choose a Subscription Billing and Management Tool
The right subscription billing and management tool can make running and growing your business easier. Each solution, however, offers a different mix of features and functions. When making your choice, you should consider not only key features like recurring billing, revenue forecasting, and multi-currency capabilities but also factors like pricing and customer support.
Finding the right solution is all about balancing your current needs, your plans for the future, and your budget.