Merchant of Record: Keeping Global Payments Safe

In 2022, data breaches have savagely inflicted a very painful average cost of $4.35 million on businesses. What's even more alarming is that the rate and cost of data breaches have surged by a staggering 1517% over the past two decades.

As cybercriminals evolve and perfect their tactics, SaaS businesses need to urgently safeguard their online payments. However, the current global landscape presents a myriad of challenges that can be daunting to tackle independently and certainly not easily done.

This is one reason why many companies are turning towards Merchant of Record services, finding that they can handle payment processing in a secure manner.  

In this article, we will be diving into how MOR solutions tackle online fraud: 

The 4 Security Measures MORs Should Have in Place
How To Achieve Safe Payment Processing Through an MOR

What is an MOR, and why is it important? 

Before jumping down the secure payment processing hole, it’s important to quickly clarify what a Merchant of Record is and why this solution matters for Software and SaaS businesses of all sizes. 

To put it simply, the Merchant of Record is the legal entity that takes on the responsibility of selling goods and services to the end customer. 

This payment solution takes care of the entire payment process, offering a multitude of services like complete sales tax management, access to local payment methods and local business entities, compliance with local and international laws, dedicated support for resolving customer inquiries, fraud prevention, and chargeback management. 

While businesses can act as their own Merchant of Record, considering the many services this payment solution brings forth, outsourcing all of these operations to a trustworthy entity would eliminate the pressure of selling globally while allowing them to focus on perfecting their products. 

Read our complete Merchant of Record guide to find out more about what this powerful payment infrastructure can do for your business.

The 4 Security Measures MORs Should Have in Place 

Due to the disturbing data we mentioned earlier, it’s critical that online businesses prioritize robust protection against fraudulent financial transactions if they want to survive. 

When contemplating the Merchant of Record (MOR) business model, it's crucial to ensure that the payment infrastructure you're evaluating incorporates the following four essential security measures.

For an in-depth exploration of MOR compliance, check out our detailed guide, Merchant of Record: Navigating Compliance. 

1. Data Encryption

When processing transactions and beyond, to adequately protect customer data from unauthorized access, Merchants of Record need to implement robust data encryption protocols. 

TLS (Transport Layer Security) and SSL (Secure Sockets Layer) are necessary protocols employed for data encryption.

2. Fraud Detection and Prevention

Dedicated Merchants of Record will have advanced fraud detection and prevention mechanisms in place to quickly identify and block fraudulent transactions. 

It’s also important that each strategy employed be customized, taking into consideration each business’s unique model.

3. Regular Security Audits

Your MOR payments infrastructure needs to conduct frequent security assessments to monitor and quickly solve system vulnerabilities. 

Achieving PCI-DSS compliance is not only good for business, but it is also mandatory. In fact, to make sure that all security protocols are in place and executed, PCI-DSS attestation needs to be renewed every year. 

Without ensuring that all security measures are effective, sensitive cardholder information is not fully protected from other threats, such as data loss, corruption, or tampering. 

4. Incident Response Plan

Unfortunately, data breaches and cyberattacks take place. 

Should this happen, you must be certain that your Merchant of Record partner is ready to respond swiftly and effectively to reduce potential damage and downtime as much as possible. 

For this reason, having a robust incident response plan is required. 

How To Achieve Safe Payment Processing Through an MOR

Managing a proactive approach to processing payments from your international customers with an MOR involves the following measures: 

1. Using a PCI-DSS Certified Partner

The PCI Security Standards Council establishes strict security protocols for handling payment data. 

Working with certified partners means they undergo strict regular verification and audits to maintain compliance.  

For the PCI-DSS Level One Service Provider, which is the highest rated, the audit can take two to three months. 

2. Implement Tokenization 

Used to safeguard sensitive information such as anything from credit card numbers to social security numbers, tokenization is the preferred security technique used to protect everyone involved. 

The process of tokenization involves the replacement of the actual data with a randomly generated token, following the data’s structure and format. 

The use of tokenization minimizes the risk of data exposure, thus being an indispensable practice in the safekeeping of payment information. 

Additional benefits of tokenization in transaction processing are that it helps businesses achieve regulatory compliance and can be implemented without the risk of disrupting current operations. 

3. Have Access Controls In Place

To accept payments in a secure manner, considering all the possible measures to protect cardholder information, is nonnegotiable. 

Access controls play a critical role in payment processing, ensuring data security and protection against unauthorized access or breaches. This component functions on the least privilege principle, meaning granting minimum data access to systems to perform their operations. 

SaaS and software companies need to be certain that access controls, like strong authentication measures or role-based access, are part of the cybersecurity strategy Merchant of Record service providers must have in place. 

4. Secure Communication Channels

Because fraudsters are more and more creative in terms of the nature of their attacks, 
keeping all sensitive data confidential has become a necessity for any business owner. 

Secure communications are now a necessary measure for maintaining trust, adhering to different rules and regulations, and ensuring operational continuity and business profitability. 

As a result, all communication channels between you and your payment service providers need to be secure and protected. Consider implementing HTTPS for web transactions, as well as two-factor authentication, which has become the norm. 

Why is PayPro Global Different? 

As the liable party, our unique, all-in-one payment solution offers SaaS and software businesses access to an innovative infrastructure capable of boosting and safeguarding international payments. 

We’re confident we are the right partner for your business in this global growth journey. 

Not only is PayPro Global a PCI-DSS Level One certified partner, but we also comply with all existing data protection rules and tax regulations. Additionally, we employ a holistic and robust fraud detection and prevention strategy built around your business’s unique needs and growth plans. 

Through multi-level internal systems that merge advanced monitoring tools, automated alerting systems, and machine learning algorithms with regular audits and manual verifications, we can proactively detect and rapidly address any anomalies or performance barriers. 

Providing partners with dedicated customer support, handling international and local taxes complete risk management, and access to a wide range of your customers’ preferred payment methods, our Merchant of Record model will help you streamline your sales process while boosting global sales. 

Find out more about how our complete payments solution can strategically scale your business in global markets.