Importance of Merchant of Record for Global eCommerce Success

By RafterOne

Software companies can easily sell to customers around the world, right? So why not market your product globally?

Anyone who does cross-border business will tell you that it is not that straightforward.

  • Do you need to translate your website?
  • Do you accept their country’s form of currency?
  • Do you understand the local privacy and tax laws?

You may find that processing payments, bills, and taxes is one of the most difficult aspects of owning a business. You may be wondering what a merchant of record is and how you may need to do business differently. Here’s a rundown of everything you’ll need to get started.

What Is a Merchant of Record?

A merchant of record (MoR) is the entity that a financial institution has authorized and obliged to execute credit and debit card transactions for customers.

The merchant of record is in charge of managing all credit card processing costs, as well as maintaining a merchant account. The MoR also maintains PCI-DSS compliance, remains up to date on any regulations applicable to the transactions and manages any chargebacks.

Alternatively, MoR service providers exist to relieve the burden of payment processing and compliance from those who would rather focus their in-house resources on more exciting aspects of building a business, like product development or client acquisition.

What’s the difference between a merchant of record and a payments solution?

Many businesses misinterpret a merchant of record and a payments solution for the same thing, but this is not the case. An MoR differs from a payments-only solution in that an MoR bears financial responsibility for its clients, whereas a payments-only solution just processes payments.

With a payments-only system, your business is liable for all financial obligations as well as any significant administrative tasks.

What difficulties does one face without a merchant of record?

If your business is going to accept financial responsibility for all payments, you must put in the time and effort to handle any payment difficulties that arise. Here are some financial responsibilities you have when you do not have a merchant of record:

  • Maintain a merchant account.
  • Negotiate fees for credit card processing.
  • Ensure that PCI-DSS standards and other payment legislation are followed.
  • Monitor tax calculation.
  • Administer refunds and chargebacks.

Also, keep in mind that the more customers you have, the more probable it is that these problems may develop. So, while a payments-only solution may appear to be less expensive on the surface, consider the resources you will require and the time you may waste dealing with any payment difficulties.

If you pick an MoR, it will be in charge of all administrative and financial activities associated with processing payments and staying compliant.

Exploring Merchant of Record Benefits

Aside from the convenience of hands-free payment processing, employing an MoR delivers a slew of other advantages.

One solution for multiple problems

Payment processing is fraught with minor complexity, such as managing several payment methods, computing the appropriate taxes, and paying multiple fees. MoRs handle these concerns so you don’t have to.

Assurance of compliance

MoRs make it a point to remain up to date on financial sector developments and to implement adjustments to compliance. Knowing that any adjustments would be handled for you may be a huge relief for busy businesses.

Easier access to global markets

With an MoR, providing global customer experiences is no longer a challenge. You don’t have to worry about currency conversion or foreign compliance in order to gain clients outside of your market, providing you with limitless opportunities to expand your business.

Merchant (of Record)
Non-Merchant Payment Facilitation
Which party is the seller?
Platform positions itself as the seller. Cardholders acknowledge that the Platform, not any other third party listed on the website, is supplying the products or services. Cardholders feel they have a relationship with Platform. The seller is not identified by the platform. Cardholders realize that they make purchases through the website, not the platform.
To which party does the cardholder owe payment?
Platform. A third party is identified on the Platform.
Which party provides the goods or services?
Platform. The Platform may (1) assume ownership of the goods at or before the sale, and/or (2) supply goods and services through agreements with third parties on the Platform. Third-party merchants on the website supply the cardholder with goods and services.
Against which party does the cardholder have recourse?
Platform. The terms and conditions of the website compel the Platform to offer the products and services and give recourse to the Cardholder. A third party who has been recognized on the website. The website’s terms and conditions state unequivocally that products and services are offered by third parties and that Cardholders have no recourse against the Platform.
Funds flow and compensation
Platform records the proceeds of the sale as revenue and has distinct contractual responsibilities to reimburse third parties before or after the sale. The platform holds funds and transfers them to third parties for a charge.

What does partnering with a merchant of record take off your plate?

Do you want to know if your business should look into acquiring an MoR? Here’s a rundown of some of the difficulties and tasks you’ll be delegating:

  • Merchant accounts: Opening numerous merchant bank accounts in countries where you have a large client base in order to accept payments in different currencies
  • Payment and data compliance: Managing payment card security (PCI-DSS) and meeting applicable data regulations in the regions you sell to or integrating extra solutions to do so
  • Currency conversion: Processing the conversion of foreign currency payments made by overseas customers
  • Payment failure rates: Integrating and maintaining numerous payment processors or payment service providers to simplify payment routing and cascading, reducing the possibility of payments being refused incorrectly as fraudulent, resulting in revenue loss
  • Fees for payment processors: All credit and debit card fees must be negotiated and managed
  • Fraud offenses: Developing the logic to highlight fraudulent orders and then manually examining those questionable orders to fine-tune your unique rules
  • Disputes and refunds: Taking care of payment reconciliation, refunds, and chargebacks
  • Sales tax: Calculating, submitting, and remitting software sales tax in the jurisdictions where your customers are located

Setting up and maintaining the infrastructure and admin needed here in-house can quickly amount to hiring several teams.


You will be able to provide superior online experiences and frictionless customer journeys to your customers by using a payment solution designed for today’s demanding consumers.