Choosing the right Stripe alternative

Stripe started out (and is probably best known) as a payment processing platform, but they do a lot more than that now.

These days, Stripe is considered a payment gateway - a tool that will enable internet businesses of all sizes and product types to take and manage payments online

With Stripe, you can do this without having to set up a merchant account. On top of that, it proves itself as a super powerful payment tool with additional (very useful) features, including smart retries, auto card updater, and some fraud tooling to lower the risks of churn. 

Though Stripe clearly has a lot going for it, it’s by no means a complete solution for your payments and billing infrastructure - more on that further below.

Stripe is a favorite for a lot of different types of businesses, including:

• Ecommerce
  
• Marketplaces
  
• Mobile
  
• SaaS

Why these business types in particular? 

Well, one main reason is that, with their easy-to-use APIs and wide range of integrations (like shopping carts), getting set up and started in the world of online sales is made pretty simple. 

That’s ideal for companies that want to get up and running as quickly as possible.

So, what makes Stripe a big contender as a payment gateway for SaaS businesses in particular? Let’s take a look at the pros of their capabilities: 

Stripe Billing

One big plus is how easily Stripe integrates with Stripe Billing, thanks to their shared APIs. This offers recurring subscription and invoicing solutions to businesses at an extra cost. 

Easy-to-use APIs

We’ve already mentioned that Stripe has a great set of APIs for businesses that want to move and grow fast. That’s because they’re very much developer-friendly, which lends to a simple and streamlined setting up process. You’ve got to love that.

Extensive integration catalog

By choosing Stripe as your payment gateway, you will have a wide choice of plugins (but, unfortunately, that doesn’t mean it will be easy or quick). Check out this list of revenue tools they integrate with. 

On the other hand:

All these benefits are big considerations for SaaS businesses, but there are some areas that Stripe doesn't cover or make easy when it comes to a full growth and revenue delivery strategy. 

These areas include:

• Subscriptions and recurring billing (outside of Stripe Billing)
  
• Localization (eg. covering multiple currencies, payment methods, languages)
  
• Global sales tax compliance
  
• Data, reporting, and analytics 
  
• Payment failure

That’s why Stripe is not, and does not offer a complete solution to your payment and billing process. This means that SaaS businesses that use Stripe will still need to do a lot of extra work to both integrate and correlate information across various tools and systems.

And if they don’t spend time and effort doing that extra work? Say hello to the problematic responsiveness gap.

At Paddle, we speak to 80-100 SaaS executives each month who are looking for alternatives to Stripe for various different reasons. 

We’re also in the market for payment gateways to integrate and optimize with our own revenue delivery platform. We use multiple payment gateways and acquiring banks on our backend, so we’re constantly evaluating them for top-performing platforms too. You could say we do our research. 🤓

Between our engineering team's complaints about integrating Stripe and the insights we've gleaned from sales conversations, here's the lowdown on the five main reasons SaaS companies look for alternatives to Stripe:

1) The full developer experience becomes very challenging

Despite having great APIs, this is the top cited challenge we hear from SaaS founders and executives. Why? Stripe is only one layer in your revenue delivery infrastructure, that being the payment gateway. Like we mentioned above, it’s not a complete solution. 

Because of this, you’ll need to integrate and maintain supporting tooling for subscriptions, taxes, invoicing and SaaS metrics - the full “Stripe stack”. Or build your own. 

We often come across two particular examples of where this gets annoying. The first is managing reliable SaaS metrics, which requires payments, subscriptions, and reporting all being perfectly in sync. The second is integrating sales tax tooling. This is something that needs deep integration into every transaction with country, product, and customer-level data all together. 

You can see why this can get challenging.

Stripe also prevents you from integrating common payment methods like PayPal (as they are direct competitors). To support PayPal with a Stripe stack, you’ll need to replicate all your infrastructure elsewhere. 😱 

As you can imagine, this all increases the scope of integration, implementation, and maintenance. Which translates into more engineering and finance time and resources being needed (and ultimately taken away from building and growing the product itself).

Without tight integration, we hear about second-order effects: High levels of support tickets as customers can’t change their subscriptions and  higher churn due to failing payments.

Stripe’s lack of support function doesn’t make that process any easier either - their account management is limited to much larger sellers. We hear responses from Stripe are often slow with generic answers (like links to docs or pages) - less than ideal when you are trying to resolve issues and smooth out any billing infrastructure issues as quickly as possible.

2) It’s not as simple as their “out of the box” model suggests

There are two types of Stripe users: the one that wants to get going as quickly as possible with the least effort involved, and the one who wants to drive the highest performance from their payments to maximize revenue. 

For those that want a quick and easy job, Stripe APIs make that possible. But those seeking the highest possible performance for their payments will need to do some additional work to their “out of the box” Stripe accounts. Sorry engineering teams.

For the teams managing payments at Uber, Netflix, Paddle, and others, Stripe isn’t a turnkey solution that drives the maximum revenue from day one. Instead, it’s a tool that needs careful integration, optimization, and iteration to earn those extra percentage points in performance. 

In software businesses in particular, engineering resources are already pulled pretty tight, making the second option a little more difficult to fulfil. 

This means most Stripe SaaS users are underperforming and leaving revenue on the table. We see this surface in a few areas, including international payment failure and with false fraud flagging. Not something a CEO (or anyone in the business) wants to see.

If you’re based in the US but have customers trying to pay globally, Stripe is sending your (relatively unknown) company through to your customer’s banks via intermediary banks that have little or no trading history with you. This leads to declines, particularly “do not honor” (a generic bank decline), as banks are very sensitive to losing any money to fraudulent transactions.

All this tends to lead SaaS executives to explore alternative or supplementary payment gateways. More on whether that’s a good idea later. 

3) Limits placed on executing SaaS growth strategies

With Stripe, every go-to-market project becomes an engineering project. 

SaaS growth is driven by product strategy and go-to-market strategy. Your revenue delivery infrastructure needs to adapt to new strategies like product launches, moving upmarket, growing internationally, and so on.

The fact that Stripe is not an all-in-one solution means that it can - and probably will - be limiting your growth strategy in some way. 

Having to deal with multiple integrations and work across multiple tools and platforms impacts business growth in a number of ways, including: 

• No single source of truth: By having multiple tools for revenue delivery besides Stripe, you can’t get the full picture of your revenue data and develop your growth and go-to-market strategies in the most effective way
  
• Additional burden for support teams: Your support team will have to grow to maintain your revenue delivery in the areas that Stripe doesn’t provide for, eg. managing tax exemptions, managing upgrades/downgrades/cancellations, and reconciling billing across cards and invoiced wire transfers
  
• Continuous integration and maintenance: Unfortunately, integrations aren’t a one-time project and your teams will have to continuously integrate and maintain new tools, processes, and global entities for each growth strategy
  
• Lack of PayPal integration: An undoubtedly popular payment method, particularly for those selling B2C or into European markets, this can be a huge drawback

4) You manage the overhead, plus full liability

All global tax compliance (including the heavy penalties if you get it wrong) are on you. Tax needs to be integrated on every transaction across each customer’s lifecycle, configured for each product and region. You can see how it gets tricky, right?

That’s exactly why it’s one of the most common reasons that we see SaaS businesses migrate from Stripe. Since selling software is borderless, the compliance overhead becomes overwhelming real quick.

Even with Stripe acquiring TaxJar in 2021 and making it easier to integrate sales tax calculation, sellers are still required to register, file and remit all tax. While TaxJar does have “Autofile” (a tool which files for taxes automatically on sellers’ behalf), it only works in the US currently - again, not making the lives of international software sellers very easy. 

In order to use TaxJar Autofile, Stripe sellers still need to set up and integrate a TaxJar account, so there’s no ‘native’ solution.

5) The full cost ends up much higher than the headline 2.9%

If you’re after the fully-loaded revenue stack with Stripe, you’ll be paying much more than the headline 2.9% that is originally stated.

Stripe fees are 2.9% + 30¢ for payments, then another 0.8% for Stripe Billing, with additional costs for any integrated tools or add-ons for tax, fraud, and so on. Not only that, in some countries, Stripe requires you to pay an extra 1% cross border fee if you are charging outside your ‘home’ country. 

It all adds up, especially when you consider the headcount you need to manage the integrations, the financial expertise you need to reconcile all the subscription data, taxes and reporting, and the support teams you need to pick up your customers’ orders and subscription queries.

All-in, your Stripe stack is typically the second largest infrastructure cost in software (after hosting infrastructure for your actual product’s application). This can often become a substantial amount of your revenue; sometimes adding up to hundreds of thousands, or even millions of dollars. 

SaaS founders realize overpaying here makes a fundamental impact to their bottom line financial performance.

So, now we know why SaaS businesses look around for alternatives to Stripe, how are other solutions addressing these problems, and how do you know which is right for your business? 

If you are looking for a more unified solution, a revenue delivery platform is your answer. 

A revenue delivery platform will provide you with the resources, support, and technology to improve your revenue across the entire payment process and each customer lifecycle, and ultimately optimize your business growth. 🌳

Let’s compare this model to Stripe’s model for context:

• It’s more than just a payment gateway: A revenue delivery platform is a unified solution for all things revenue delivery - from checkout and pricing to localization and subscription renewals (and more)
  
• Say goodbye to dealing with sales tax: With this model, global sales tax is handled for you within the single integration, including full liability for tax compliance too
  
• Improve your business’ performance: This infrastructure sits across the journey of your payments which will be maintained for you - not to mention the tooling and support provided to help you to easily build an experience bespoke to your business
  
• One single cost: A single cost which may be higher, but it covers the $$$ you’d be spending on extra tools, integration processes, and extra employees, and brings in the value of higher performance 

So, who does the job for you?

Paddle is a Revenue Delivery Platform that is built specifically for SaaS businesses. Managing all aspects of revenue delivery (aka, ticking all the bullet points above), Paddle covers everything from customer acquisition to renewals and expansions.

How about a short video overview?

The whole aim is to get software businesses ‘growth ready’; ready to expand upmarket, downmarket and internationally, (and ultimately optimizing their revenue intake 🤑). 

Key features:

• Optimized payments “out of the box”: Instant access to multiple acquiring banks and smart payment routing to give your payments the best chance of success wherever the buyer is based
  
• Localization: Turn on local payment methods and currencies with just one click
  
• Tax compliance: Paddle takes on the headaches of sales tax and compliance, wherever your customers are based, including all sales tax liabilities 
  
• Multiple integrations: With multiple integrations (including PayPal), your revenue delivery infrastructure is about to be far more streamlined and efficient 
  
• Dedicated support: Paddle is a partnership - not a provider - for scaling software companies, with SaaS specialist support on hand, as well as revenue delivery advisory for larger sellers

We speak to thousands of SaaS businesses about their revenue delivery infrastructure, and what solution is right for them. 

If you are considering other options to Stripe, it makes sense to look into the more direct, ‘like-for-like’ competitors: other payment gateways.

The aim for payment gateways, just like Stripe, is to let businesses be able to take payments online. Inevitably, this means businesses hit the same issues and challenges we’ve mentioned when it comes to revenue delivery. 

That said, between the payment gateway competitors, you’ll see a variety of costs, services, payment methods, integrations, third-party tools, and additional features. 

Here are some of the main alternative payment gateways to Stripe:

Braintree is a good platform to run alongside or instead of Stripe, especially if you are looking for a PayPal integration. 

Having been acquired by PayPal, it has native integration which means it’s a great fit for businesses selling B2C or lower price B2B, especially in European markets where PayPal is the preferred digital wallet.

However, similarly to Stripe, it still only covers the payments side of a complete revenue delivery strategy. You still need to set up subscription billing, analytics, and localization tools, as well as keeping on top of global sales tax compliance (which can be a job in itself).

In summary: Stripe and Braintree both offer a similar service with similar performance rates, all at a similar price point. Great for businesses looking to get up and running quickly, but the amount of manual integrations and extra tools needed may slow them down in the long run.

Undoubtedly one of the most popular and trusted payment methods or digital wallets out there, PayPal makes online payments easy (and secure). As mentioned, it’s a solid contender for businesses who sell B2C or into European markets.

As it’s only one type of payment method, PayPal is typically run alongside another payment gateway to offer more payment choices. 

In fact, due to its popularity, it’s pretty essential for the majority of businesses to have PayPal as an option, so Stripe not being able to integrate with it is a huge drawback. 

In summary: All companies selling to mid-market and enterprise businesses with a large recurring payment volume will need oh-so-popular PayPal as one of their payment methods, but if they’re already using Stripe, the lack of PayPal integration makes life a bit difficult.

Adyen is an enterprise-focused payment company with powerful payment features. Unlike Stripe, Adyen has built out its own acquiring banks in key global markets. It works particularly well for large businesses that have dedicated engineering teams to manage and maintain their revenue infrastructure. Only recently have Adyen opened up to smaller sellers migrating over.

Compared to Stripe, Adyen has fewer “turnkey” features given their enterprise focus. Many of their features are “lower level” and will take more integration effort to build on top of - particularly with subscriptions, taxes, SaaS metrics, and reconciling with invoiced wire transfers.

In terms of cost and value, their transaction fees are adjustable according to your payment volume. With Adyen, this is generally on an Interchange++ model, not a fixed % transaction fee.

In summary: Like Stripe, Adyen is a great choice for large companies wanting to optimize their revenue stack, thanks to great documentation and modern APIs. But that comes at a cost: large, dedicated engineering teams are required for this, so it’s best suited to larger enterprises.

Checkout.com is a fast-growing payment service and is mostly used by mid-market and enterprise companies.

Pousaz, their CEO had this to say on Stripe vs. Checkout.com: “We only do enterprise. We really only work with the big merchants. There are a few exceptions here and there but it’s mostly enterprise-only and it’s purely online”. 

With an extensive choice of payment methods, as well as having the appealing features of transparent pricing and payment routing, you can see why Checkout.com is a favorite among the big sellers. 

However, it still faces the challenges of being a single service provider as with other payment gateways.

 

In summary: Checkout.com sees a great range of benefits, but it doesn’t cover any other aspects of a revenue delivery strategy other than payments. That means more time and money is spent integrating and running it along with other tools.