The best merchant of record
Selling anything online seems easy enough until you get hit with taxes, fraud, and global compliance. Suddenly you realize that it’s not as simple as you thought. That’s where a merchant of record,or an MoR, comes in. If you are unfamiliar with what a MoR is, this article tells you everything you need to know about implementing one into your business. You will also learn how to pick the best one and why having one matters for you and your business.
Understanding the actual functions of a merchant of record
To understand the value of a merchant of record, you must know what exactly it is and what it does. An MoR sits between you and your customer. It becomes the legal seller of your product, handling payments, VAT, sales tax, and risks so you don’t have to and can focus your energy on building. How is this helpful? Instead of you being the seller, having a MoR means they take up the following responsibilities:
Handling checkout
From credit cards to PayPal and local payment methods, they are all sorted without you having to operate them manually.
Tax and compliance
One can easily get swarmed by paperwork trying to sort through endless taxes and policies. Your MoR does this for you, handling not just US sales tax but also the EU and countless other countries.
Risk and fraud
Refunds, chargebacks, and fraud liability are handled effectively, ensuring you get the best outcome. Does this mean that your MoR now owns your business? Not at all. You still own the product and customer relationship; the MoR just handles the tough parts.
Things to look for in the best merchant of record
Not all MoRs are built the same. Here is a list of must-have features that single out the best from the rest.
Global tax automation
The best MoR can calculate and remit taxes worldwide. Manually filing for individual countries kills growth and wastes time.
Multiple payment methods
US buyers use cards, but Brazilians want Pix, and EU buyers use SEPA. A single payment gateway stunts growth. The right MoR provides a variety of local payment methods and can increase conversion by up to 10%.
Subscription management
With hundreds to thousands of free trials, upgrades, and downgrades to be sorted, an MoR needs to be equipped to handle the load. This secures your revenue and prevents losses.
Distinguishing between a merchant of record and a payment gateway
Now here’s what confuses most people. The difference between the two is simple; the payment gateway is just that, a platform for customers to make payments. You still handle everything else. But with an MoR, they become the merchant handling all your legal and financial risks.
If you’re only selling locally, a gateway may be fine, but if you’re selling globally, an MoR saves you piles of legal and financial work.With a strong MoR, you trade off a small fee per transaction for the confidence and peace of mind that your business is in good hands.