How to Choose a Payment Processor for Your Startup
Navigate the decision between Stripe, Paddle, Lemon Squeezy, and other payment processors. Understand transaction fees, international support, tax compliance, and subscription billing capabilities.
Key Decision Criteria
Transaction Volume
High PriorityHigher volume often means negotiated rates. Start-ups with low volume should prioritize ease of setup over marginal fee differences.
International Needs
High PrioritySelling globally requires multi-currency support, local payment methods, and tax compliance. Some processors handle this better than others.
Subscription Support
High PrioritySaaS businesses need recurring billing, dunning management, upgrade/downgrade flows, and metered billing. One-time payments are much simpler.
Developer Resources
Medium PriorityHow much engineering time can you dedicate to payment integration? Some platforms are code-first, others offer no-code solutions.
Questions to Ask Yourself
Are you selling to consumers or businesses?
B2B often needs invoice payments, purchase orders, and ACH transfers. B2C focuses on card payments and digital wallets.
Do you need to handle sales tax automatically?
Merchants of record (Paddle, Lemon Squeezy) handle all tax collection and remittance. With Stripe, you're responsible for tax compliance or need add-ons like Stripe Tax.
How important is developer experience?
Stripe has the best developer docs and API. Paddle and Lemon Squeezy are more focused on no-code checkout pages.
What's your expected monthly revenue?
Under $10k/mo: Focus on ease of use. $10k-$100k/mo: Optimize for features you need. $100k+/mo: Negotiate custom rates.
Red Flags to Watch For
Unclear fee structure with hidden costs
Payment processing should have transparent pricing. Watch for currency conversion fees, failed payment fees, or minimum monthly charges that aren't advertised.
Poor documentation or limited API access
You'll need to integrate payments into your product. Processors with weak docs or restrictive APIs will slow down development and limit customization.
No clear plan for handling chargebacks
Chargebacks are inevitable. The processor should have clear dispute resolution processes and tools to help you fight illegitimate claims.
