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Merchant of Record: What Every Business Owner Needs to Know

Your company has decided to use a payment card. You might have realized that managing your payment system and taxation can be the most complex part of your operations. Some of you may wonder who are the merchants of records and whether you need different services. Let me explain the basics.

How does a merchant of records work?

In this sense, merchants of records function as intermediary resellers; they cover their customer's payment, give the products to the customer then ship them on to their customers in return. It all takes a few seconds.

When you ask for payment information when a customer e-mailed you at checkout, your payments are processed by your MoR. Your consumer's credit cards can also carry a 'MOR name'. MoR also carries out the legal requirements of the territory. And typically you offer the product or service to the MoR, then sell it to the customer.

VAT and Sales Tax Are Usually Based on the Buyer's Location for Digital Goods

In the sale or purchase of computer software, VAT and Sales Tax are usually calculated according to the location of the customer and not based upon the location of business activity. These are different services that are often taxed depending on where the job is performed instead. Also, there is a difference between selling Software (or Digital) products and choosing a simple credit card processing service like or Paypal. In such circumstances, you must track, file, or submit taxes to Canada without any restrictions regardless of the location or the headquarters of the entity.


How does a merchant of records differ from a payment service provider?

Payment service providers or payment services like Paypal or eDeal are software applications that offer alternative payment methods from debit or bank cards. You probably already have a few PSPs in your country or your clients. PSPs are responsible for payment processing and no other part of an order processing including sales tax or payment disputes. A record trader handles this himself. Some PSPs such as Stripe, accept multiple currencies — making it easy to provide services to clients from several countries. But PSP has been widely utilized at various times.

Merchant of Record vs. Payment service provider

The major difference between payment services providers and merchants of records is the fact that PPPs are purely payment-based solutions. Merchants of record also have the responsibility to ensure that all transactions are performed, payments are received and financial risks are taken care of. The advantages of using MoR models over PSP are the ability to do local processes (MoR works with local acquirers – as opposed to the PSP model – which works with acquirers within the merchant country).

A Merchant of Record simplifies your financial operations

You never started your own software business to learn the complex tax laws around the globe. You started this project with the goal of building something that you liked. Merchants can help you focus more on achieving your objectives: developing products that are valuable.


The merchant of record purchases the software and then sells it to your customer. You do not communicate with the customers directly or through financial institutions. Your customers will visit your website and buy the software.

What is a seller of records?

A Seller of Records is an entity or legal entity which is described as the seller of products for consumers. They are also responsible for accounting transaction taxes if not otherwise specified.

How does a seller of records work?

Seller of Records aims to reduce sales taxes and maintain trade policies for internet sales. You can outsource sales to a Record sales representative who is dedicated to producing and marketing. The SoR provides essential economic elements such as payment systems, channels, processors, and settlements for the processing of payments.


Every transaction recorded on Payment Systems points to a Seller in record who identified as the originator when the transaction took place.

What difficulties will I face without a merchant of record?

When the company assumes financial liability for payments you have to take steps to resolve any problems arising from payment. Although payment solutions appear cheaper on paper, it should be noted how much time you will be spending dealing with payment problems. Those who choose MoR will have to deal with administrative and financial issues associated with processing payments and ensuring compliance.


Payment is a necessity. But the means through which you collect payments is of your choice. Yes, you can go for something cheaper and simpler, in theory. Learning about merchants of record seems like a very complex task. So, yes, simple can easily appear better. Only it’s not. There are layers after layers after layers when it comes to payment. And these layers may prevent your business from thriving. An MoR won’t. It will, actually, boost your revenue and help you focus on what you know best, your product.

Syandita Malakar
Syandita Malakar
Hi guys this is Syandita. I started Business Module Hub to help you all to post updated articles on technologies, gadgets. Although I love to write about travel, food, fashion and so on. I quite love reading the articles of Business Module Hub it always update me about the new technologies and the inventions. Hope you will find Business Module Hub interesting in various way and help you accordingly. Keep blogging and stay connected....!
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