Merchant of record (MoR) software is a comprehensive platform that handles the complex financial aspects of online transactions on behalf of businesses. It is sold by entities that are legally authorized and responsible for processing payments, handling currency conversions, mitigating chargebacks and fraud, managing taxes, and compliance with regulations in a secure transaction environment.
Merchant of record (MoR) solutions are commonly used by businesses across various industries that engage in cross-border sales such as software as a service (SaaS), retail and e-commerce, streaming services, gaming and entertainment, travel and hospitality, etc.
MoR providers act as an intermediary between businesses and end customers, thus enabling businesses to sell products or services online globally without being responsible for legal and fiscal obligations. A business implementing an MoR solution doesn’t require any other payment or tax compliance solution, as MoR automates the entire operation transaction processing workflow.
MoR solutions are different from payment processing software or payment services providers (PSPs). While they all deal with financial transactions, they differ by the level of responsibility they handle.
Payment processing software helps businesses transfer funds from one business account to another, leaving businesses to handle the other financial and legal aspects of the workflow.
However, the MoR provider takes full responsibility for the processes involved, including transaction processing, currency conversion, tax management, VAT, customs, fraud prevention, and compliance across different jurisdictions.
MoR software also varies from merchant of record (MoR) services as the latter doesn’t offer the above features as a part of the platform but rather provides it through integration with other payment tools or software.
To qualify for inclusion in the merchant of record (MoR) category, a product must:
Support diverse payment methods, such as credit and debit cards, digital wallets, and bank transfers, as well as multiple currencies
Automate calculation, collection, and remittance of taxes across various jurisdictions
Identify frauds and incorrect or unauthorized transactions, and also minimize chargebacks
Ensure compliance with payment card industry data security standard (PCI DSS), know your customer (KYC) or anti-money laundering (AML), and other region-specific regulations
Offer reporting and analytics features to monitor transactions, revenue, taxes, and other key metrics
Integrate with e-commerce platforms, marketplaces, and other retailer’s websites
