Global Growth: Understanding Merchant of Record for E-commerce

Merchant of Record eCommerce: Do You Need One?

A merchant of record ecommerce (MoR) refers to the legal entity that handles all the payments on behalf of an ecommerce business. It takes on the liability related to every transaction, arranges tax payments, ensures PCI compliance and takes care of any refunds and chargebacks.

It is essentially a third-party that a business entrusts with processing transactions on its behalf in exchange of a small fee. In this way a merchant of record ecommerce deals with all legal, taxation & compliance complexities so your team does not have to expend valuable resources on the same.

But does your business need a merchant of record for ecommerce? In this blog, while comparing ecommerce merchant of record with direct selling, we will look at factors that will help you decide if you should opt for a merchant of record ecommerce solution. We also dive into some merchant of record options so you can find the right MoR that suits your business needs.

Read more: Optimizing Cross-border Trade: Merchant of Record for SaaS Companies

What is Direct Selling?

Any business that does not rely on an external MoR service is engaged in direct selling.

Many businesses operate as their own Merchant of Record. This means they have internal teams to organise the payment infrastructure and undertake all the processes involved in collecting & managing payments.

Third-party Merchant of Record services act as an intermediary between a business and its customers, taking responsibility for all of the payment processes and liabilities on behalf of the business. Ultimately they act as a reseller of the goods or services, with the customer paying the MoR during their purchase, and the merchant then paying the business.

Simplifying Operations with Merchant of Record ecommerce

The Benefits of Using a Merchant of Record

There can be many reasons why a business wants to out-source their payment processing. This becomes most relevant for businesses that need to collect cross-border payments where the legal constraints, compliance needs and taxes vary. Keeping tabs on all this on your own would be much more expensive than outsourcing to merchant of record eCommerce solution.

An ecommerce merchant of record too does the following for you in lieu of a small fee:

1. Clears Payments

Your consumer will buy the product, their payment will go to the MoR’s account (and that will be shown on the invoice that the MoR generates and bills to your consumer), from where, after adhering to all laws and tax compliances, the MoR will transfer the money to your/the merchant’s account.

2. Adheres to Regional Laws

No one can do everything, least of all do legal stuff. This is why ecommerce merchant of record will keep abreast of all local as well as international laws (and the potential irregularities between them) so that you do not have to worry about any of it.

3. Takes up Liability for Transactions

This is important. When processing payments internationally, where you have to comply to multiple countries’ laws, there is ample room for you to make errors and be strongly penalized for it. The ideal merchant of record ecommerce solution will not only not make such mistakes, but in case they do, they will also take full responsibility for it to ensure that your business does not suffer.

4. Can Juggle Multiple Currencies

Managing transactions internationally can be a quagmire for those not well-versed in currency conversion. An MoR takes off that pressure from your plate and can charge customers in the currency of their choice while securing you the best exchange rate.

SubscriptionFlow as a Merchant of Record ecommerce solution

What Industries Benefit from Using an MoR?

Virtually every industry can benefit from using a MoR, but if your business falls under the following three categories, it may serve you best.

  1. SaaS
  2. Digital
  3. eCommerce

What is the Difference Between Merchant of record vs. Seller of Record vs. Payment Service Provider

A seller of record is basically a different merchant from whom a consumer is buying your product. It is entirely up to the seller how they wish to process the payments for all transactions made on their outlet, but the reason why they do this is because do not wish to create products of their own and so generate profits by selling your products at a higher price and keeping the difference for themselves. (Kind of like Walmart.)

A payment service provider, on the other hand, is simply a processor of payments that does everything that a merchant of record does but without the added hassle of taking up any responsibility to collect taxes or comply to any country’s legal regulations. For local businesses that do not operate in more than one country, it may even be prudent for them to take up the services of a payment service provider since they pretty much only need to figure out the tax compliances once and they will be set for a long time.

A Complete Merchant of Record for Ecommerce

However, if your business caters to clients globally or wishes to reach that level, going for a merchant of record ecommerce might be the best fit. And luckily for you, SubscriptionFlow has launched its merchant of record services that offer the following key features:

  1. Prevention from fraud
  2. Easy exchange of currency
  3. Embracing all financial liabilities
  4. Invoicing your consumers and managing to collect all payments from them
  5. Collection of taxes strictly based on the location from which the customer is being billed (i.e. their billing address)

Read more: What Is Merchant of Record (MoR)? How It Can Become the Backbone of Your Online Transactions

Why is SubscriptionFlow such a robust MoR?


In this blog we covered some of the ways you can see for yourself if you are in need of a merchant of record or not. To cater to those who may not need one, we have also shown alternatives that you may be on the lookout for like direct selling or having a seller of record.

Then we discussed the merchant of record services launched by SubscriptionFlow to help out those who may be on the lookout for a solid merchant of record for their business. SubscriptionFlow is a great fit for anyone looking to expand into new markets as for a very reasonable rate, it offers fantastic services that are hard to find elsewhere.

Book a demo with SubscriptionFlow now and begin your merchant of record journey now!