Joshua D'Costa
Growth & Marketing
Apr 17, 2025
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5
min
China’s SaaS market is set to hit US$17.40 billion by 2025 and could reach nearly US$38 billion by 2029, growing at an impressive annual rate of 21.55%. Meanwhile, cloud infrastructure spending is predicted to climb by 15% in 2025, nearing US$46 billion, and advancements like DeepSeek’s R1 are sparking faster AI adoption among enterprises.
These numbers highlight a huge opportunity for Chinese SaaS companies and digital product sellers to expand globally. But with international expansion comes challenges like handling multi-currency payments, navigating different tax systems, and keeping up with varied regulatory and data security requirements, which can all slow growth and drive up costs.
That’s why a Merchant of Record (MoR) is a wise choice. It takes on the heavy lifting by simplifying global payment processing, automating tax compliance, and managing regulatory obligations. This lets companies focus on innovation and capturing new markets rather than getting bogged down in complex administrative tasks.
In this blog, we’ll dive into how partnering with a reliable MoR can simplify your international operations and set the stage for sustainable growth.
Key Challenges in Global Transactions
Complicated Payment Systems
Expanding internationally means handling multiple currencies and navigating different payment systems.
For example, processing payments from various regions involves dealing with fluctuating exchange rates, variable processing fees, and intricate local transaction protocols. This complexity can lead to delayed settlements and reduced revenue consistency.
Limited Access to International Payment Gateways
Many platforms restrict local payment methods, making it hard for businesses to build customer trust and sell internationally.
Businesses that fail to offer local payment methods may face increased cart abandonment rates and hindered global expansion. Implementing these payment options is crucial for fostering customer confidence and facilitating smoother cross-border transactions.
Tax Implications
Every country enforces its own tax structure, ranging from VAT in Europe to GST in Australia and diverse sales tax regimes in the United States.
A Chinese SaaS company entering the European market must contend with varied VAT rules across member states. Any miscalculation or non-compliance could result in fines, legal challenges, or delays in market entry, thereby affecting overall profitability.
Regulatory and Data Security Issues
Cross-border fraud rates are 3x higher than domestic transactions, which is why International transactions are subject to a myriad of regulatory requirements.
Businesses must perform identity verifications like KYC and KYB, adhere to Anti-Money Laundering (AML) standards, and comply with data protection laws.
Additionally, companies must handle import/export duties, customs tariffs, and other restrictions. Managing these regulatory demands internally can be overwhelming and distract from core business activities.
Operational Inefficiencies and Hidden Costs
Handling complex payment, tax, and compliance processes internally often results in operational inefficiencies and unforeseen expenses.
The administrative burden of managing multiple systems and ensuring up-to-date compliance with evolving regulations can lead to increased overhead costs and divert resources away from innovation and growth.
Consider a Merchant of Record
A Merchant of Record (MoR) is a solution that simplifies the process of global transactions. Essentially, it becomes a legal seller on behalf of the company, handling all aspects of payment processing, tax calculations, and regulatory compliance. By centralizing these functions, an MoR allows SaaS companies to avoid the pitfalls of managing diverse international systems on their own.
This not only reduces the risk of errors and penalties but also ensures that transactions are executed quickly and efficiently, helping businesses maintain consistent cash flow and focus on strategic expansion.
A Full-Stack MoR Solution for Chinese SaaS Companies
Dodo Payments offers a Merchant of Record solution for Chinese SaaS companies and digital product sellers. It is designed to integrate with existing systems, providing support for multiple currencies, local payment methods, and region-specific tax requirements.
Key Advantages
Accept payments from over 150 countries and multiple currencies, making global transactions smooth and reliable.
Expand internationally without the need to set up a foreign business entity, saving time and reducing overhead.
Automate tax processes by calculating, filing, and remitting taxes such as VAT and GST, cutting the risk of non-compliance.
Enforce international data protection standards and AML protocols to secure every transaction and boost trust.
Streamline operations with faster, simpler payouts and fewer blocked transactions for efficient global operations.
Outsource complex tasks like chargeback handling, fraud prevention, and dispute resolution to reduce operational burdens.
Maintain a steady cash flow and consistent revenue by effectively managing disputes and enhancing customer confidence.
Conclusion
For Chinese SaaS companies, the opportunity to expand internationally is huge, but success depends on more than just winning new customers. Your business needs reliable payment processing, strict compliance with diverse local and global regulations, and sustainable profit margins.
Essentially, you have two options:
Try to build your complex infrastructure from scratch, piecing together various systems in the hope that everything integrates seamlessly, or Partner with a trusted Merchant of Record.
By working with a reputable MoR, you offload the responsibilities of managing cross-border payments, tax compliance, fraud prevention, and regulatory challenges. Dodo Payments can help your business gain access to a comprehensive solution that simplifies global transactions and reduces operational risks.
So, transform your financial operations and help secure long-term success in the global market with us!
