Making money is hard, and for solo founders, even taking money is hard.
Let’s look at how to best handle payments today.
We’ll talk about the impact of payment providers during your acquisition later, too.
Let’s dive into the selection of the right payment system for solopreneurs, with a focus on those who are building software products. There are lots of payment solutions for eCommerce or info products out there, but I want to zero in on SaaS payments — because that’s something I’ve recently had to make a choice about.
And because I hate artificial suspense, here’s what I chose: Paddle.com.
Now, let me explain.
Whether you’re a technically skilled founder or someone leveraging no-code tools, you’ll need to find a payment system that suits a low headcount, mostly bootstrapped business. The world of payment gateways is quite diverse, with major players like Stripe and Paddle leading the way, alongside newcomers like Lemon Squeezy and specialized platforms like Gumroad for creators. There are also enterprise solutions out there, like FastSpring, Recurly, or ChargeBee. But I have found those to be very upmarket and hesitant to embrace solo founders.
Experience this article as a podcast, or as a newsletter:
So I’ll keep my selection to Stripe, Paddle, and LemonSqueezy.
Stripe has been a cornerstone in the developer-focused payment integration space. They literally were called /dev/payments before they rebranded to Stripe. They got their developer experience locked in. Their APIs and integration capabilities are incredible, and you’ll find libraries across various programming languages and platforms. Stripe acts as a payment gateway: they handle all the sensitive information of your customers, pretty much passing the money along.
Their direct competitor, Paddle, operates differently. They’re acting as a merchant of record (MoR), which means that they actually sell your products for you. Your customers are actually their customers. Paddle is handling customer interactions and managing taxes, which significantly reduces the administrative burden on solopreneurs. They charge all the taxes required, and they report them to the proper places. Anything left over gets reverse invoiced to you.
Recently, LemonSqueezy has emerged as a fresh contender, also as a MoR. They’re catering particularly to creators selling digital products, but they have a solid subscription feature, too. Between Stripe, Paddle, LemonSqueezy, and maybe Gumroad, we solopreneurs have a pretty solid range of options to choose from, depending on our business model and the tech stack we might use.
But one thing remains. We have to juggle everything: coding, operations, reporting, marketing. So we need a payment system that doesn’t add MORE things onto our plates.
A crucial aspect for indie hackers and bootstrappers is choosing something that handles compliance issues, such as customer financial information and tax management, effectively — for us. This is where MoR platforms like Paddle and LemonSqueezy stand out. They take care of these complexities, which allows founders to focus more on their product and business growth. It costs a bit more, Paddle and LemonSqueezy stand at 5%, while Stripe sits at 2.9%. That 2.1% difference sounds like a lot, but I believe they’re definitely justified.
Consider having 100 paying customers on a subscription plan. With Stripe, that’s 1200 invoices and 1200 potential sales tax or VAT or GST or HST reporting cases. With a MoR, you issue 0 invoices. In fact, you only have 12 payouts to report. From a single vendor. Massive difference.
If you’re starting a business today, the choice between these platforms really depends on your needs. Stripe has unparalleled API documentation and integration support, which makes it ideal for those of us who prioritize technical control and compatibility. You can’t beat Stripe there. But Paddle’s all-in-one approach to handling sales, taxes, and customer interactions makes it quite the attractive option for solopreneurs who want to minimize anything outside of working on the business and the product.
And for those leaning towards a modern, creator-focused platform, LemonSqueezy is your solution, especially for selling digital products.
My personal recommendation for solopreneurs today leans towards Paddle because of its super-simple setup and account management, especially regarding tax handling.
But for those valuing integration flexibility and technical control, Stripe remains a strong contender. They are also quite the inspiration if you’re building an API. I really recommend looking into their blog posts about API design, especially the one about versioning. It’s spectacular engineering that will educate you even just by looking at the code.
Paddle has recently massively improved their developer experience, and you could argue they’re all on the same level now. You get a sandbox where you can test your integration, webhooks for events like card declines, expirations, or renewals. It’s mostly the same.
What’s not the same is how easy it’ll be to sign up. Because Paddle and LemonSqueezy are Merchants of Record, they have to be absolutely sure that what you offer is something that they can sell. For that reason, these companies have an extensive validation and verification process, which can take a while depending on what they need to know, and can occasionally lead to declined applications. It is much easier to open an account on Stripe than it is on Paddle. But once it’s open, the effort to integrate it is the same, and the ongoing effort to deal with payments is much lower on a merchant of record.
Finally, let’s talk about the impact of the payment gateway choice on a potential acquisition of your business. Stripe is particularly frustrating, as the country of origin you choose for your account cannot be changed. That makes it surprisingly complicated to transfer the account to somebody who acquires a business from a different country. That has been my experience selling a business, as migrating Stripe from one account to the other actually took some engineering and was not just a settings change.
I’m not sure how easy it is to migrate an account from inside a merchant of record, having never done it, but I believe it is much easier because the relationship between you and the merchant of records has very little to do with your location, because the MoR will sell your products either way, no matter who they sell their products for or where they’re from.
Ultimately, any platform mentioned here will work for you, and will allow you to make money. The question is how much work you want to put into integrations and managing your financials, and how easily you want to be able to hand over your payment integration when you sell your business. I recently started a new business — Podscan.fm — and I used Paddle immediately as a payment provider. I have paying customers already, and it was a breeze to set up.
I would recommend the same to you at this point in time.
