What Is a Merchant of Record?

If your eCommerce business is expanding, especially across regions or product lines, you’ve probably come across the term Merchant of Record (MoR). It’s a concept that sits at the intersection of payments, compliance, and liability, and understanding how it works is crucial if you want to scale without taking on unnecessary risk.

In this article, we’ll break down exactly what a Merchant of Record is, what responsibilities it holds, and whether using an MoR is the right fit for your business model.

The Definition: What Is a Merchant of Record?

A Merchant of Record (MoR) is the legal entity responsible for processing payments, collecting sales tax or VAT, handling refunds and chargebacks, and maintaining compliance with financial regulations. When a customer completes a transaction, the MoR’s name, not necessarily your brand’s, appears on their bank or credit card statement.

In other words, the MoR acts as the official seller of the product or service, even if you’re the one providing the goods.

What Does a Merchant of Record Actually Do?

The Merchant of Record assumes a wide range of responsibilities, including:

• Payment Processing – Collects payments from customers and routes funds to your business (less any fees).
  
  
  

• Tax Compliance – Calculates, collects, and remits applicable sales tax, VAT, or GST based on the buyer’s location.
  
  
  

• Regulatory Compliance – Ensures adherence to local laws and global regulations like PSD2, PCI DSS, and more.
  
  
  

• Chargebacks and Disputes – Handles customer disputes, chargebacks, and associated liabilities.
  
  
  

• Invoicing and Receipts – Issues receipts and manages transaction records under its name.
  
  
  

Essentially, the MoR serves as the financial and legal intermediary between the buyer and the actual product provider (you). You focus on your product or service, while the MoR handles the operational burden of selling and collecting payments.

Why Would a Business Use a Merchant of Record?

There are several scenarios where outsourcing MoR responsibilities makes strategic sense:

1. Selling Globally Without Local Entities

International expansion involves complex tax laws, foreign transaction compliance, and local banking requirements. An MoR can handle all of this for you, without needing to incorporate in every region.

2. Reducing Regulatory Risk

Payment processing is highly regulated. From PCI compliance to evolving privacy and tax laws, an MoR shields your business by assuming legal responsibility for these areas.

3. Simplifying Operations

Instead of managing multiple PSPs, tax systems, and risk protocols, working with an MoR provides a single point of integration. It simplifies your stack and frees up resources to focus on growth.

4. Avoiding Liability

In the event of a chargeback, fraud claim, or legal dispute, the MoR, not you, is typically responsible. That level of protection can be a significant advantage for growing brands.

Merchant of Record vs. Payment Processor vs. Payment Gateway

It’s easy to confuse the Merchant of Record with other components of the payments ecosystem. Here’s how they differ:

• Payment Processor – A technology platform (like Stripe or Adyen) that facilitates the movement of funds between customer and merchant.
  
  
  

• Payment Gateway – The digital front-end that securely collects and transmits payment details to the processor.
  
  
  

• Merchant of Record – The entity legally responsible for the transaction, tax handling, and customer relationship for the sale.
  
  
  

In many cases, eCommerce brands using Stripe or PayPal are the Merchant of Record themselves, which means they also bear all the associated compliance and risk.

Pros and Cons of Using a Merchant of Record

✅ Pros

• Offloads tax, compliance, and liability headaches
  
  
  

• Enables faster international expansion
  
  
  

• Streamlines backend operations
  
  
  

• Shields your brand from disputes and legal exposure
  
  
  

• Reduces internal resource needs for payment management
  
  
  

⚠️ Cons

• Less control over the full payment experience
  
  
  

• Your brand may not appear on the customer’s bank statement
  
  
  

• MoR providers take a larger cut of revenue to cover their responsibilities
  
  
  

• Not ideal for businesses that want direct PSP relationships and control over fees
  
  
  

Should Your Business Use a Merchant of Record?

Using a MoR is ideal for certain business types, including:

• Digital goods or SaaS companies selling globally
  
  
  

• Startups that want to enter new markets without setting up local infrastructure
  
  
  

• Subscription-based models needing compliance help
  
  
  

• Marketplaces or platforms handling seller payouts and tax obligations
  
  
  

However, if you’re an established eCommerce brand with the ability to manage tax, compliance, and multiple PSPs, or if you want full control over checkout experience and margins, it may make more sense to remain your own Merchant of Record.

This is especially true when using modern tools like Lasso, which give you full first-party control over checkout, payments, and data without requiring an MoR intermediary.

How Lasso Helps You Stay In Control, Without Becoming an MoR

At Lasso, we empower merchants to take control of their payments infrastructure without the downsides of outsourcing MoR responsibilities. With Lasso, you can:

• Integrate directly with your preferred PSPs
  
  
  

• Capture and manage first-party payment data compliantly
  
  
  

• Automate tax calculation and reporting
  
  
  

• Protect against chargebacks and fraud with built-in risk tools
  
  
  

• Maintain a seamless branded checkout experience
  
  
  

This gives you the best of both worlds: flexibility and ownership, plus operational efficiency and scalability.

Final Thoughts

A Merchant of Record plays a critical role in modern eCommerce, especially for businesses operating across borders, dealing with digital goods, or needing to offload compliance risk. While it’s not necessary for every brand, it can be a powerful lever for fast-scaling companies looking to simplify operations and stay compliant.

That said, MoR isn’t the only way to grow globally. With the right tools, like Lasso, you can retain full control over your customer experience, reduce reliance on intermediaries, and still manage risk, compliance, and complexity at scale.

Before choosing an MoR solution, evaluate how much control, margin, and visibility you’re willing to trade for operational simplicity. And remember: your payment infrastructure should be a growth engine, not a black box.