Payment processing fees for software makers: Stripe vs. Lemon Squeezy vs. Freemius

Payment processing fees are the cost of accepting a customer’s payment and moving the money to your business. They affect every software sale, but the rate shown on a provider’s pricing page rarely tells you the full cost.

That advertised rate usually combines three charges: the interchange fee paid to the customer’s bank, the assessment fee paid to the card network, and the payment processor’s markup. Other costs may apply for international cards, currency conversion, subscriptions, disputes, and tax handling.

These costs are also packaged differently depending on whether you use a payment processor or a merchant of record. That makes it difficult to compare platforms based on their advertised rates alone.

In this article, we explain how payment processing fees work and compare the effective costs of Stripe, Lemon Squeezy, and Freemius. You’ll see what each platform includes, what costs extra, and how much of every sale you actually keep.

TL;DR: Payment processing costs for software sellers

• Basic card processing usually costs 1.5%–3.5% per transaction before subscriptions, international payments, tax tools, and disputes are added.
• Stripe: Starts at 2.9% + $0.30 for US cards. A complete global billing and compliance stack can cost 7.2%–11.7%, depending on your transaction mix.
• Lemon Squeezy: Starts at 5% + $0.50. International subscriptions add 1.5% for the international payment and 0.5% for subscription billing, with other fees possible.
• Freemius: Starts at a 4.7% progressive revenue share for SaaS and apps, or 7% for WordPress products, plus gateway fees. Freemius does not add its own surcharges for international payments, subscriptions, or PayPal.
• Compare the effective rate, not only the number shown on the pricing page.

What are payment processing fees

Payment processing fees, aka credit card processing fees, are the costs you pay each time a customer pays by card. Most processors charge a percentage of the transaction plus a flat fee. For example, a rate may be 2.9% + $.030 per transaction.

That rate usually includes three main costs:

1. Interchange fee: Paid to the bank that issued the customer’s card.
2. Assessment fee: Paid to credit card networks such as Visa and Mastercard.
3. Processor markup: Kept by the payment processor that handles the transaction.

When a processor quotes one rate, these costs are already combined. Interchange and assessment fees are set by the card networks. Only the processor’s markup can be negotiated. Higher transaction volume can give you more bargaining power to negotiate that markup down.

Interchange fees are usually the largest cost. It often represents 70%-90% of the total processing fees and typically ranges from 1% to 3% per transaction. The exact rate depends on the card and the level of risk. For example, debit card transactions usually incur lower interchange fees, and standard consumer debit cards typically cost less to process than corporate or rewards cards.

Assessment fees are much smaller and more predictable. They are usually around 0.13%-0.15% per transaction. Visa charges around 0.14% of the transaction value, while Mastercard charges about 0.1375% on transactions below $1,000.

Once interchange, assessment, and processor markup are combined, most businesses pay between 1.5% and 3.5% per card transaction. Software businesses may also pay extra fees for subscriptions, international cards, currency conversion, and disputes.

The same three fees apply to both credit card and debit card payments. However, payment processors combine and present them in different ways.

The three common ways processing fees are priced

Payment processors usually present their fees in one of three ways: flat-rate, tiered, or interchange-plus pricing. Understanding these models makes it easier to compare the rates you see.

Flat-rate pricing model

Flat-rate pricing charges the same rate for every transaction, regardless of the card type or level of risk. Interchange, assessment, and processor markup are combined into one advertised rate per transaction, usually as a percentage of the transaction amount plus a fixed per transaction fee.

This is the easiest model to understand and predict. This pricing model is common among payment processors and makes their fees easier to estimate. It does not always mean lower fees, though.

Tiered pricing model

Tiered pricing groups transactions into categories, usually called qualified, mid-qualified, and non-qualified. Each category has a different rate. Different types of credit card and risk levels can push transactions into more expensive tiers with higher interchange fees.

The lowest advertised rate may only apply to qualified transactions. Rewards cards, online payments, and other transactions considered higher risk may fall into more expensive categories.

Some providers also charge a monthly fee. This model is uncommon for software sellers, but it is important to recognize because the advertised rate may be lower than what you actually pay. That gap can make the true credit card processing costs harder to predict or compare across pricing models.

Interchange-plus pricing model

Interchange-plus pricing passes the real interchange fees and assessment fees on to you, then adds a separate processor markup. This makes each cost easier to identify, and as volume grows it can also make it easier to negotiate processing fees and compare payment processor charges. But your total rate can change from one transaction to another. You may need to review your statement to understand your actual payment processing fees.

The pricing models are only one part of the comparison. You also need to know who acts as the legal seller, either you or the platform acting as the merchant of record (MoR).

That distinction affects your total costs and responsibilities much more than the way the fees are presented.

Payment gateway vs. merchant of record: Who’s actually charging you

With standard Stripe payments, you are the legal seller. With Freemius and Lemon Squeezy, the platform is the legal seller. The difference determines what their fees cover.

Stripe processes the payment and sends the money to you. Its processing fee combines interchange, assessment, and Stripe’s markup. However, you remain responsible for sales tax and VAT in every country where you sell. This can include registering for tax, calculating the correct amount, filing returns, and sending the collected tax to the relevant authorities.

Lemon Squeezy and Freemius operate as merchants of record. They legally sell the product to the customer on your behalf. Beyond payment processing, their fees also cover responsibilities such as registering, calculating, collecting, filing, and remitting tax, as well as managing fraud and handling disputes.

Software payments are also usually card-not-present transactions because the customer pays online. Because the payment provider cannot physically verify the card, these transactions normally cost more than in-person transactions. If you see a lower rate for card-present transactions, it will not apply to most online software sales.

Stripe’s processing fees for software businesses

Stripe charges 2.9% + $.30 for each US card transaction. However, the total cost of running a complete billing and compliance system can reach 7.2%-11.7%.

This doesn’t mean Stripe has hidden fees. The advertised rate only covers payment processing. It doesn’t cover every service a software business may need to sell globally.

As already mentioned, with standard Stripe payments, you remain responsible for registering for sales tax and VAT, filing returns, and paying the correct tax authorities. Stripe also charges $15 when a customer files a chargeback and another $15 if you challenge it, whether you win or lose. Payments made with cards issued outside your home country may cost more as well.

See also: How to deal with the new Stripe chargeback fee

Stripe also offers its merchant-of-record service, Managed Payments. It changes who is responsible for sales tax and VAT, but it has some important limits. It only works with Stripe Checkout and Payment Links, doesn’t support Connect or marketplace businesses, and is available only to sellers in certain countries.

For current eligibility requirements and an explanation of what the service covers, read our Stripe Managed Payments deep dive.

Lemon Squeezy’s fees for software businesses

Lemon Squeezy’s base rate is 5% + $0.50 per transaction, with no monthly fee. However, additional fees apply to subscriptions, international payments, PayPal transactions, and some marketing features.

Because Lemon Squeezy is a merchant of record, its platform fee already includes payment processing. In this setup, Lemon Squeezy is also the payment service provider. Merchants accepting credit card payments don’t pay separate payment processor fees on top of the platform fee. Lemon Squeezy also handles sales tax and VAT as the legal seller.

For a one-time $99 card payment from a US customer the fee is:

• 5% of $99: $4.95
• Fixed fee: $0.50
• Total fee: $5.45
• Effective rate: 5.5%

For a $99 subscription from a US customer, Lemon Squeezy adds a 0.5% subscription fee. The total becomes $5.95, or about 6% of the payment.

For the same $99 subscription purchased by a UK customer, Lemon Squeezy adds the UK’s standard 20$ VAT. This increases the amount charged to the customer to $118.80.

The 5% base rate, 1.5% international fee, and 0.5% subscription fee creates a total rate of 7%. Lemon Squeezy applies that percentage to the full transaction amount, including VAT, which raises the fee.

The calculation looks like this:

• Product price: $99
• UK VAT at 20%: $19.80
• Total charged to the customer: $118.80
• 7% of $118.80: $8.32
• Fixed fee: $0.50
• Total Lemon Squeezy fee: $8.82
• Payout after VAT and fees: $90.18

The $8.82 equals about 8.9% of the original $99 product price. It is also about 48% higher than the $5.95 fee for the same subscription purchased with a US card.

Additional payment processing costs may also apply:

• PayPal payments: +1.5%
• Sales recovered through abandoned-cart emails: +5%
• Affiliate-referred sales: +3%

These fees will not apply to every transaction. Still, an international subscription business may pay several of them during a normal month.

Freemius’ fees for software businesses

Freemius charges a progressive revenue share starting at 4.7% for SaaS and desktop apps, plus payment gateway fees. It does not add separate platform surcharges for subscriptions, international customers, PayPal payments, or tax.

Freemius calculates its revenue share from the product price, excluding the tax component. For a $99 subscription, the Freemius fee is therefore $4.65 whether the customer is in the US or the UK.

Payment gateway fees are charged separately and vary by payment method and transaction type. For example, accepting credit or debit cards can cost different amounts, and debit card transactions may be priced lower than some credit card transactions.

For a $99 US subscription, the estimated cost is:

• Freemius revenue share: $4.65
• Estimated gateway fee: $3.47
• Estimated total fee: $8.12

For a UK customer, 20% VAT increases the total transaction value to $118.80. Freemius still calculates its 4.7% revenue share from the original $99 product price, but the gateway fees apply to the full transaction amount, including VAT:

• Product price: $99
• UK VAT: $19.80
• Total charged to the customer: $118.80
• Freemius revenue share: $4.65
• Estimated gateway fee: $4.16
• Estimated total fee: $8.81

The gateway fee may vary depending on whether the customer pays by card or PayPal, but Freemius doesn’t add its own international or subscription surcharge.

The revenue share also covers more than access to checkout. Freemius acts as a merchant of record and calculates, files, and remits tax. Freemius also protects against fraud and processes PCI-compliant payments. It also manages disputes and recovers failed payments and abandoned carts, all without an additional percentage fee. If you lose a dispute, however, the payment processor may deduct a $15–$20 dispute fee.

Freemius also becomes less expensive as revenue grows. Its progressive revenue share starts at 4.7% on the first $50,000 in monthly revenue and decreases across several brackets. Revenue above $100,000 per month is charged at 0.5%. There are no setup or monthly platform fees. You only pay when you make a sale.

Stripe vs. Lemon Squeezy vs. Freemius fee comparison

These three platforms charge for different services, so their base rates are not directly comparable.

Stripe’s standard rate mainly covers payment processing. You remain the legal seller and keep responsibility for tax and compliance.

Lemon Squeezy includes processing in its merchant-of-record fee. Freemius also acts as the merchant of record, but charges its revenue share and payment gateway fees separately.

*Stripe refunds the fee for challenging a dispute if you win, but not the original dispute-received fee.

Stripe has the lowest starting rate because it mainly processes the payment. Lemon Squeezy and Freemius charge more because they act as the legal seller and handle tax compliance for you.

The most useful comparison is how much you pay in total and which responsibilities you still need to manage yourself, not simply which platform has the lowest base rate.

Choose the fee that covers the business you are actually running

• Choose Freemius if you sell globally and want a predictable platform fee without extra surcharges for international payments, subscriptions, or PayPal. Gateway fees are separate, but Freemius handles global tax compliance as your merchant of record.
• Choose Lemon Squeezy if most transactions are one-time card payments from US customers. In that case, the final fee stays close to the advertised 5% + $0.50. International, subscription, and PayPal fees increase the cost of other transactions.
• Choose Stripe if you want the lowest direct processing rate and prefer to build your own payment and compliance stack. Remember to include the cost of Stripe Billing, tax tools, disputes, and your team’s time. Stripe Managed Payments can cover more of this work for eligible sellers. Businesses with enough transaction volume may also be able to negotiate processing fees or seek lower processor rates, though those add-ons still matter.

Find out what every sale is costing you

A low advertised rate means little if every international payment, subscription, dispute, and tax tool adds another charge. Your effective rate is the only number that shows what you actually keep.

Stripe starts at 2.9% + $0.30, but that rate only covers processing credit card transactions, not all the business functions around selling globally.

Lemon Squeezy includes merchant-of-record services, but adds fees for international payments, subscriptions, and PayPal.

Freemius combines payments, global tax compliance, and software licensing without adding its own international, subscription, or PayPal surcharges. Gateway fees remain separate.

If you sell software globally, compare the platforms using your real transaction mix and payment methods, not the best-case rate on a pricing page.

To calculate your current effective rate and see exactly how Freemius compares, talk to Freemius CEO Vova Feldman.

Frequently asked questions about payment processing fees

How much does Stripe really cost for a software business?

Stripe can cost a global subscription business 7.2%–11.7% of revenue once the full billing and compliance stack is included. Its standard US rate starts at 2.9% + $0.30, but these payment processor fees can rise once you add international cards, currency conversion, Stripe Billing, Stripe Tax, invoicing, and disputes.

The exact cost depends on your transaction mix. A business selling one-time products mainly to US customers will pay closer to the base rate. Businesses with high transaction volume may have some bargaining power to negotiate lower fees, even though many other Stripe costs remain.

What additional fees does Lemon Squeezy charge beyond 5%?

Lemon Squeezy charges 5% + $0.50 as its base rate, and its fee structure includes additional fees for certain transactions and features:

• 1.5% for transactions outside the US
• 1.5% for PayPal payments
• 0.5% for subscription payments
• 5% on payments recovered through abandoned-cart emails
• 3% on affiliate-referred sales

These added percentages increase total credit card fees and payment processing costs on the affected transactions.

Payout fees may also apply depending on your country and payout method. Lemon Squeezy calculates its platform fee from the total order value, including sales tax or VAT.

Is Stripe Managed Payments a full merchant of record?

Yes, Stripe Managed Payments acts as the merchant of record, but only for eligible transactions. It handles indirect tax compliance in more than 80 countries, along with fraud prevention, disputes, and transaction support.

However, it only supports eligible digital products, business locations, and direct Stripe integrations. It doesn’t support Connect or marketplace businesses. You remain responsible for tax in countries that fall outside its coverage.

What’s included in Freemius’s fee that Stripe and Lemon Squeezy charge separately for?

Freemius includes global tax compliance, subscription billing, software licensing, fraud management, customer disputes, failed-payment recovery, cart recovery, a customer portal, and an affiliate platform in its revenue share.

Stripe charges separately for products such as Billing and Tax or leaves the work to you. Lemon Squeezy includes merchant-of-record services but adds extra percentages for subscriptions, international payments, PayPal, affiliate sales, and recovered carts. Freemius still pays the underlying banks and credit card companies through its gateway partners, but does not add the same extra platform surcharges for those items.

What is a typical payment processing fee?

A typical credit card processing fee is between 1.5% and 3.5% of the transaction value. Most providers charge a percentage plus a flat fee, or fixed fee per transaction. Online, international, and subscription payments can cost more. Your final rate depends on the card, customer location, payment method, pricing structure, and additional services you use. Debit card transactions often have lower interchange fees than credit card transactions, and online transactions can cost more than in-person payments.

Do merchant of record platforms charge payment processing fees?

Yes. Merchant-of-record platforms still pay the banks, card networks, and payment gateways that process each transaction behind the scenes. Some include these costs in one platform fee, while others show payment gateway fees separately. The fee also covers services that a standard processor doesn’t provide, such as collecting and remitting tax, managing fraud, and handling disputes while processing payments. That is why a merchant-of-record rate is usually higher than a basic processing rate: the platform also assumes legal-seller and compliance responsibilities.