Merchant of Record (MoR)
A merchant of record is the entity that is legally authorized to process a consumer's payment — taking on liability for chargebacks, refunds, tax compliance, and regulatory obligations associated with the transaction.
In any payment transaction, the merchant of record is the business name that appears on the customer's credit card statement and bears ultimate responsibility for the sale. This distinction matters enormously for platforms and marketplaces because it determines who owns the customer relationship, who handles disputes, and who manages sales tax and VAT compliance.
There are three common models: the platform as MoR (maximum control, maximum liability), a third-party MoR service (like Paddle, FastSpring, or Merchant of Record providers for SaaS), or the sub-merchant as MoR (the platform facilitates but each seller is the MoR).
Choosing the right MoR model affects everything from pricing flexibility and global expansion to regulatory exposure and operational complexity. Companies selling digital products internationally often benefit from a third-party MoR to handle multi-currency, VAT/GST collection, and local payment methods without building that infrastructure in-house.
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