Payment Processor Fees Compared: Stripe, Polar, Lemon Squeezy, Gumroad

When you’re building a product, specifically if it’s your first time, one of the more difficult decisions you need to make is how you’re going to accept payments.

There are a lot of options out there, and it can be overwhelming to figure out which one is the best fit for you. There are a lot of factors to consider, such as the type of product you’re selling, the volume of transactions you expect, how you plan to handle your taxes, and almost always, the fees.

Each payment processor has a different fee structure, usually based on the services they offer and what kind of features they provide.

In this post, we’ll compare the fees of Stripe, Polar, Lemon Squeezy, and Gumroad. We’ll look at the fees for each platform and how they compare to each other.

Through this post, we’re going to use a $25,000 transaction amount as an example, and calculate how much you would pay each platform if for that amount of transactions.

Stripe: Transaction Fees and Payment Processing for Online Businesses

First, let’s start with Stripe. Stripe is one of the most popular payment processors out there, and for good reason. They offer a wide range of services, including payment processing, invoicing, and even accounting. Businesses that need a lot of control over their payment setup, like online stores or companies with subscription plans, often pick Stripe because it works well for them. It can handle payments from all over the world in more than 135 currencies, accept credit cards, digital wallets, and other payment types, and comes with tools for developers to build custom solutions. People who use it say it’s easy to set up for online sales and has good security to stop fraud, but some mention they’ve had trouble with their accounts being paused or closed without much explanation. Others say the customer service isn’t always helpful, and it can be tricky to use if you’re not good with tech stuff. On places like Trustpilot, Stripe gets mixed feedback—some like it, some don’t, but it still has a high rating with the Better Business Bureau.

They have a rather simple fee structure, charging 2.9% + 30¢ per transaction standard fee per transaction. This is their base standard fee, but it could get lower or higher depending on your volume of transactions and whether you’re using their other services, like invoicing or accounting.

So, let’s calculate how much you would pay Stripe for $25,000 in transactions.

25,000 * 2.9% + 30¢ = $725 + $0.30 = $725.30

So, for $25,000 in transactions, you would pay $725.30 to Stripe.

If you end up using Stripe, you can check out our other blog posts on Adding Coupon Codes to Stripe Checkout and Integrating Stripe Checkout with Remix.

Polar: A Developer-Friendly Payment Platform Focused on SaaS and Developers

Next, let’s look at Polar. Polar is another payment platform that is focused on helping developers sell SaaS and digital products. It offers tools for payments, subscriptions, and automated access, including private GitHub repo invites, Discord access, and license key generation. It also acts as the Merchant of Record, handling sales tax and VAT. Polar aims to simplify the process of selling digital products for developers. Anyone building software or digital tools who wants an easy way to manage subscriptions and give access to buyers would find Polar useful because it takes care of tax rules for them. It supports different payment methods and connects with platforms developers already use.

Before we dive into Polar, let’s first understand what a Merchant of Record is.

What is a Merchant of Record?

A Merchant of Record (MOR) is a legal entity that assumes the responsibility of collecting sales tax and VAT on behalf of the seller. This means that Polar or any other MOR will handle the sales tax and VAT for you, so you don’t have to worry about it.

Usually these services charge a higher fee than just the transaction fee like Stripe does, but it’s important to note that with the MOR service, you don’t have to worry about the sales tax and VAT.

Polar Fees

Now, let’s look at Polar’s transaction fees. Polar charges a base fee of 4% + 40¢ per transaction. Additionally, there is an international card fee of +1.5% for non-US cards and a subscription fee of +0.5% for subscription payments. Polar also reserves the right to pass on any future fees imposed by Stripe. These fees can vary based on your transaction volume and the use of additional services like invoicing or accounting.

So in summary:

• Base Fee: 4% + 40¢ per transaction.
• International Card Fee: +1.5% for non-US cards.
• Subscription Fee: +0.5% for subscription payments.
• Potential Additional Fees from Stripe.

So now, going back to our $25,000 transaction amount, let’s calculate how much you would pay Polar for $25,000 in transactions.

25,000 * 4% + 40¢ = $1000 + $0.40 = $1000.40

So for $25,000 in transactions, you would pay $1000.40 to Polar.

Lemon Squeezy: A Platform for Selling Digital Products and Subscriptions

Next up, we have Lemon Squeezy. Lemon Squeezy is another platform focused on selling digital products and subscriptions. It offers similar features to Polar, in addition to a few more such as a built-in affiliate program and a newsletter service. People selling things like e-books, courses, or software often choose it because it makes sales and subscriptions simple and handles taxes for them. Users say it’s easy to set up and like the extra tools for reaching customers, though some mention slow replies from support or delays in getting their account ready. It works with different payment methods and lets you sell to people all over the world. Lemon Squeezy charges a base fee of 5% + 50¢ per transaction.

Let’s calculate how much you would pay Lemon Squeezy for $25,000 in transactions.

25,000 * 5% + 50¢ = $1250 + $0.50 = $1250.50

So for $25,000 in transactions, you would pay $1250.50 to Lemon Squeezy.

Gumroad: A Platform for Selling Digital Products and Subscriptions

Finally, we have Gumroad. Gumroad is another payment processor, in my mind, it’s the most similar to Lemon Squeezy where they are focused on selling digital products for creators. It’s built for people like artists, writers, or musicians who want a simple way to sell their work directly to buyers. Gumroad charges a base fee of 10% + 2.9% per transaction, and there’s no monthly cost—just the fee per sale. People who use it say it’s quick to start and good for selling things like music or books, with tools to send emails to customers. But many point out the fees are high, and some have had issues with support or their accounts being stopped without much warning. On sites like Trustpilot, you’ll see mixed thoughts—some love how easy it is, others don’t like the cost or service. There’s also an option called Discover where you pay extra to get more eyes on your products, starting at 30% of the sale.

Let’s calculate how much you would pay Gumroad for $25,000 in transactions.

25,000 * 10% + 2.9% = $2500 + $725 = $3225

So for $25,000 in transactions, you would pay $3225 to Gumroad.

Comparing Stripe, Polar, Lemon Squeezy, and Gumroad transaction fees

So now that we’ve calculated the fees for each platform, let’s compare them.

Platform	Fee Structure
Stripe	2.9% + 30¢ per transaction
Polar	4% + 40¢ per transaction
Lemon Squeezy	5% + 50¢ per transaction
Gumroad	10% + 2.9% per transaction

As you can see, Stripe is the cheapest option for smaller transactions, but it doesn’t offer a lot of the features that other platforms do. For example:

• Polar offers many built-in features targeted towards developers. These include private GitHub repository invites, Discord server access, and license key generation. These features help those selling software or developer tools.

• Lemon Squeezy provides a focus on selling digital products. It includes features like a simple checkout process and a built-in affiliate system. These features make it suitable for creators selling ebooks, courses, or other digital items.

• Gumroad aims to help creators sell directly to their audience. It provides tools for selling various types of products, such as digital downloads, memberships, and physical goods. Gumroad also offers features like email marketing and customer management, all within the platform. This makes it a good option for creators who want to manage their sales and customer interactions in one place. Some might pick Gumroad over Stripe because it’s simpler and handles taxes, giving them an edge if you’re selling digital stuff and don’t want to deal with complicated setups.

When picking between Stripe and Gumroad, or any of these, think about what you’re selling. Stripe works better for physical products or bigger businesses needing custom options, while Gumroad shines for digital sales and doesn’t charge a monthly fee, just like Stripe. Both can use PayPal, but Stripe gives more developer tools, and Gumroad keeps it simple for creators. If you need something else, like better local payment options or lower fees, you might look at other choices beyond these two.

Conclusion

At the end of the day, the best platform depends on the type of your business, the products you’re selling, the volume of transactions you expect, and the features you need.

In a lot of cases, the additional features that these platforms offer can outweigh the transaction fees. For example, if you’re selling a digital product, you might want to use Lemon Squeezy because it has a built-in affiliate program and a newsletter service. Or if you’re a creator who likes things simple, Gumroad might be your pick despite the higher cost. Stripe could be the way to go if you sell physical items or need to tweak everything yourself.

So, in the end, it’s important to weigh the transaction fees against the features you need.