Joshua D'Costa
Growth & Marketing
Dec 11, 2024
|
5
min
According to Statista, SaaS revenue worldwide is forecasted to surpass $200 billion by 2025.
Scaling a Micro-SaaS business can be challenging. While developing an innovative SaaS product is the goal, ensuring seamless operations, especially for global customers, can be challenging. Choosing the right Merchant of Record (MoR) that can help you streamline your business operations becomes important.
A Merchant of Record doesn’t just process payments; it takes full ownership of everything tied to transactions; tax compliance, regulatory adherence, fraud protection, and even chargebacks. But not all MoRs are created equal.
Let’s break down the key features you, as a Micro-SaaS founder, should prioritize in an MoR to scale your business globally while avoiding any unnecessary hurdles.
What is a Merchant of Record (MoR)?
A Merchant of Record is an entity that manages the entire payment process on behalf of your SaaS business. Beyond processing transactions, it handles tax compliance, fraud prevention, customer billing, and legal liabilities associated with global payments.
For Micro-SaaS Founders, leveraging an MoR can save valuable time and resources, letting you focus on product innovation and growth rather than administrative complexities.
7 Key Features to Look for in a Merchant of Record Service
1. Global Tax Compliance and Invoicing
Managing taxes is one of the most difficult aspects of running a Global SaaS company. Each region has its own laws, such as GST in India and sales tax in the United States. Failure to comply might result in significant fines and penalties. An MoR automates the procedure by computing and remitting taxes on your behalf.
Look for a provider that offers transparent, tax-compliant invoicing to your global clients. Dodo Payments, for example, ensures seamless tax compliance in over 150+ countries, reducing legal concerns.
2. Payment Processing Across Borders
Cross-border transactions are complicated by factors such as currency changes, varied payment preferences, and international fraud. Your MoR should accept numerous currencies and local payment methods, like UPI in India and Apple Pay in the United States, to provide your clients with a smooth checkout experience.
3. Flexible and Scalable Subscription Management
Micro-SaaS businesses frequently function on a subscription basis. With global SaaS adoption growing at a 19.7% CAGR from 2024 to 2031 (SkyQuestt) it is important that your MoR include options for managing subscriptions efficiently, such as tiered pricing, trial periods, and automated billing updates.
Scalability is critical—your MoR must adapt to your growth and manage a growing amount of transactions smoothly..
4. Proactive Fraud and Chargeback Handling
The global digital marketplace is filled with fraudulent activity. Chargebacks can cut into your profits and harm your reputation. Global payment fraud losses may reach $206 billion by 2025. In India, with the rise in UPI transactions reaching Rs. 200 trillion, the costs of digital payment fraud have also risen to Rs. 14.57 billion, as of March 2024.
An effective MoR does more than just respond to fraud; it actively identifies and mitigates risks using advanced fraud detection techniques while addressing disputes on your behalf.
5. Seamless Integration with Existing SaaS Tools
Compatibility with technologies such as Stripe or PayPal, as well as the ability to provide additional functionality such as reporting dashboards, are essential for efficient operations
Your Merchant of Record should seamlessly integrate into your existing technology stack, which includes payment gateways, analytics tools, and CRM platforms.
6. Transparent Pricing Models
Hidden fees can disrupt your financial planning. Opt for an MoR that offers a clear, upfront pricing structure. For instance, Dodo Payments provides a flat fee model, ensuring you’re not blindsided by unexpected charges.
Hidden costs can disrupt your financial plans. Choose a Merchant of Record that has a clear, upfront pricing structure. For example, Dodo Payments offers a flat price strategy, which ensures you are not surprised by unexpected expenses.
7. Legal and Regulatory Expertise
Expanding into new markets involves managing complex rules such as the EU's GDPR and India's OIDAR. A reputable Merchant of Record should remain updated with these regulatory requirements, ensuring that your SaaS business runs successfully in international markets without any legal complications.
Conclusion
Expanding your Micro-SaaS business globally requires more than a great product. It involves managing intricate processes like tax compliance, payment processing, and customer retention. Choosing the right Merchant of Record can eliminate much of this complexity, letting you focus on growth.
Dodo Payments, as a leading Merchant of Record, offers all the key features discussed above, making it an ideal choice for solopreneurs, indie hackers, and Micro-SaaS founders.
Reach out to add us as your Merchant of Record for your business.
