6 Merchant Of Record FAQs Answered

6 Merchant Of Record FAQs Answered

SaaS and software companies, eager to expand their global reach, often grapple with the intricate web of legal obligations that come with the process of selling goods and services to international customers. 

However, rather than being daunted by these complexities, businesses should view them as opportunities. When you partner with the right partner in your global growth journey, achieving genuine success becomes not just possible but highly attainable.

Enter the Merchant of Record, an innovative business model that, when carefully selected, can yield remarkable outcomes. 

An increasing number of enterprises are discovering the transformative potential of this approach, stirring up more and more online discussions as readers seek to understand the full extent of the MoR's capabilities.

So, here are six of the most frequently asked questions answered. 

1. What is a Merchant of Record?

The Merchant of Record is a third-party legal entity that takes full responsibility for the entire transaction process between software companies selling goods and services and the end customer purchasing them. 

Handling the payment process from start to finish, the Merchant of Record presides over areas such as chargeback management, fraud prevention and detection, complete tax and compliance management, access to multiple currencies and local payment methods, and even payment-related customer support. 

You can read our Merchant of Record guide to learn more about this innovative payments infrastructure, which so many businesses are successfully and happily using.

how merchant of record works

2. How do you use the Merchant of Record for global growth?

Even though acting as your own MOR is possible, it can be extremely complicated and resource-draining, as you will need to handle the entire payment process with everything that entails. 

Gaining an increasing number of international payments depends heavily on your capacity to adhere to global tax and compliance regulations as well as establishing local business entities within the markets you target. Failing to do so will make it very difficult to achieve worldwide success. 

Instead, you can join forces with a Merchant of Record. This means your partner sells the products on your behalf and takes on the responsibility of processing payments, eliminating fraud or financial risk, and handling tax and compliance requirements, among other things. 

Using an MOR gives you access to a complete payments infrastructure that covers everything related to global and local online payments, heavily simplifies the selling process, and allows you to focus on what matters most: perfecting your products. 

3. Who should use the Merchant of Record?

In essence, all companies, regardless of size, with aspirations to grow internationally can partner with a Merchant of Record and reap the many benefits of this model. So, let’s have a closer look at the MOR’s customer profiles. 

SaaS and Software Companies 

With taxation rules and regulations on digital goods and services evolving heavily over time and the continuously growing opportunity to sell globally, software businesses find themselves in need of a payment solution that can help streamline international payments. 

Subscription Businesses 

SaaS and software companies who are processing their online transactions through the highly acclaimed subscription business model are greatly benefiting from Merchant of Record services. 

Providing its partners with comprehensive functionality for subscription and billing management, handling tax obligations, ensuring compliance in targeted markets, and improving customer satisfaction, the MOR is an active participant in any subscription business’s journey to increase its profitability. 

Large Businesses with Complex Payment Needs

Probably the best candidates for Merchant of Record partnerships are large businesses, specifically because of their complex payment needs. This is the business segment that benefits the most from everything that MORs have to offer. 

Plus, out of all financial service providers, the Merchant of Record is the one that can accommodate all payment needs due to its increased customization capabilities, further simplifying all global payment-related processes. 

Startups and Small Businesses 

There is a common misconception that small businesses have simple payment structures and a low transaction volume, making them ill-fitted for Merchants of Record. 

We strongly disagree with this view, as even selling across different US territories can raise complications. Instead of wasting their entire company budgets and frustrating their own teams on solving payment-related challenges, a partnership with a Merchant of Record simplifies the transaction process, reduces operational costs, and prepares the way for global expansion. 

International Businesses

With tax and compliance requirements changing across markets and the need to offer multiple currencies and local payment methods increasing, international businesses already selling into different markets and wishing to expand to new territories require fast and effective solutions more than ever. 

The Merchant of Record brings forward an innovative infrastructure that offers the much-needed features to solve all issues that might arise in any business’s global growth journey. 

4. Is the Merchant of Record required for international sales?

The short and straightforward answer is no. 

The Merchant of Record is not a mandatory requirement for businesses looking to expand globally. Acting as your own Merchant of Record is very much a possible solution. 

It is, however, a game-changer and a highly strategic business decision. And here is why. 

From solving extensive tax management challenges to accepting payments in multiple currencies, offering preferred payment methods, and effectively protecting customer data, the MOR takes the administrative burden that comes with global sales away from your team, allowing them to partner with some of the best experts in the industry.

Given the multitude of Merchant of Record services, you can, finally, focus on other areas connected to scaling your SaaS business internationally. 

5. What is the difference between the Merchant of Record and Seller of Record? 

Frequently misunderstood within the realm of business transactions, the Merchant of Record (MoR) and Seller of Record (SoR) represent two different distinct payment solutions. And here are the differences between them.  

Merchant of Record

  1. The MOR is the legal entity responsible for the entire payment process as well as all related obligations to the SaaS and software business’s financial transactions.

  2. The Merchant of Record handles the entire global compliance and sales tax management, ensuring that both local and international regulations are carefully met. For a comprehensive understanding of how a Merchant of Record manages compliance and adheres to legal standards, further information can be found here: Merchant of Record and Compliance.

  3. The MOR will take care of currency conversion and payment-related customer disputes, as well as offer robust fraud detection and prevention. 

  4. Through an MOR payment infrastructure, SaaS and software companies significantly simplify the transaction process while achieving both legal and financial compliance at all times.

Seller of Record 

  1. The SOR is a legal entity identified as the seller of a product or service to the end consumer, which means that on the customer’s bank statement, the SOR’s name will appear, not yours. 

  2. The SOR is also responsible for delivering the goods or services to the customer.

  3. The SOR infrastructure provides essential financial tools responsible for processing payments. 

  4. The SOR will handle all customers directly, handling customer concerns offering delivery updates and post-purchase support.

In conclusion, the Merchant of Record is focused on compliance and tax regulations. In contrast, the Seller of Record is more concerned with the product or service sold, as well as the customer’s post-purchase experience. 

In your global growth journey, as a business owner, you can act as your own MOR or SOR. However, should you decide to outsource the operational workload connected to global transactions, you need to decide which option fits your business needs and expansion goals best.

6. Are all Merchant of Record service providers the same?

No, they absolutely are not. 

And that is precisely why you need to carefully select a Merchant of Record partner that is right for your business.  

An MOR partnership only becomes lucrative when the payment infrastructure you collaborate has mission-critical system features that fast-track your global expansion. 

We are talking about dedicated customer support, the ideal mix of local payment methods and currencies, secure payment processing guaranteed through a PCI-DSS Level One certification, a fast and simple integration process, comprehensive tax management, and system flexibility. 

All of these features will positively impact business profitability and scalability. 

For a deeper insight into choosing the right Merchant of Record partner, you can read more in this detailed guide: Choosing the Right Merchant of Record Partner.

Meet PayPro Global.

The Merchant of Record that helps you grow

PayPro Global takes away the headache of selling your products worldwide. From local payment methods to simplified subscription handling and tax management, we give you the eCommerce tools you need to scale your business smoothly into the global market.


How is PayPro Global’s MOR Different? 

The last and final question: Why is PayPro Global’s Merchant of Record different from everything else out there? 

A PCI-DSS Level One Certified Partner, PayPro Global’s unique payment solution was specifically created to aid SaaS, software, video gaming, and digital goods businesses to scale worldwide. 

With over 15 years of experience in the payments industry, we bring forward innovative features and expertise that are sure to meet your business requirements. 

Providing you with localized tools to easily accept payments anywhere in the world while quickly solving any potential tax and compliance issues, we handle the entire payment process so you can focus on perfecting your products. 

Improve your customer acquisition and retention rates through complete subscription and billing management, reduce payment failure rates, optimize your revenue streams with the help of our AI-powered payment routing system, and minimize your chargeback rate thanks to our multi-language 24/7 customer support. 

Find out more about our complete payment infrastructure and how it can strategically scale your business in global markets. 


Meir Amzallag

Co-founder and CEO of PayPro Global

Ioana Grigorescu

Content Marketing Manager at PayPro Global

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