# Merchant of Record in EdTech > Learn why EdTech companies use a Merchant of Record to simplify global payments, automate tax compliance, and scale faster across regions. - **Author**: Joshua D'Costa - **Published**: 2025-02-24 - **Category**: Merchant of Record, Tax & Compliance - **URL**: https://dodopayments.com/blogs/merchant-of-record-edtech --- EdTech companies use a Merchant of Record because a course or subscription sold to a learner abroad triggers VAT, GST or US sales tax in the buyer's country, and an MoR becomes the legal seller so those obligations transfer rather than accumulating across dozens of jurisdictions. The global education market has been projected to reach $10 trillion by 2030, with dramatic increases in both K-12 and post-secondary graduates. [Asia](https://dodopayments.com/blogs/merchant-of-record-china) and Africa are leading this growth, and the world will need to add 1.5 million teachers per year to keep up with demand. Early childhood education growing at a 4.4% CAGR and K-12 at 3.5%, driven by increased participation in emerging economies and digital infrastructure investments. Post-secondary education and workforce training are also on the rise thanks to more widespread online learning and supportive government policies. The global EdTech market has been forecast to add roughly $170.8 billion at a 15.9% CAGR through 2029, with AI-powered platforms paving the way for personalized learning. This shift is creating new opportunities for students, educators, and institutions worldwide. Edtech businesses often operate across multiple countries, each with its own tax laws, payment regulations and compliance requirements. For example, each of the 27 EU member states sets its own standard VAT rate alongside reduced rates, while payment flows must follow local rules such as PSD2 strong customer authentication in Europe and PCI DSS globally. Dodo Payments is PCI DSS Level 1 certified, which removes that part of the scope from your own stack. Currency conversions and cross-border transaction fees add yet another layer of complexity. A Merchant of Record will allow EdTech companies to focus on delivering quality education without getting bogged down by administrative hassles as it will handle all the challenges by processing payments, managing taxes, and ensuring compliance. ## Why EdTech Needs a Merchant of Record **Tax Complexity** > Subscription billing is only 30% of the problem. The other 70% is tax compliance, failed payment recovery, and cross-border friction that most founders do not see until they are already scaling. > > \- Ayush Agarwal, Co-founder & CPTO at Dodo Payments Navigating the confusion of multi-regional tax laws can be extremely challenging for EdTech platforms. For instance; In the EU, digital services fall under the One Stop Shop (OSS) scheme, which replaced the older Mini One Stop Shop in July 2021. It lets a seller file a single return covering VAT due across member states, but the VAT itself is still charged at the learner's local rate, so you need to determine and evidence buyer location on every sale. The [EU VAT guide for SaaS](https://dodopayments.com/blogs/eu-vat-saas-guide-2026) covers the place-of-supply rules in detail. In the US, the situation is no less complex, as sales tax rules differ from state to state, and states differ on whether digital products and online courses are taxable at all. A Merchant of Record (MoR) will make it easier for Edtech companies and startups by automating tax calculations, filings, and remittances. **Compliance Burden** EdTech companies operate in a highly regulated environment where compliance is critical. They must follow diverse legal standards, such as GDPR in Europe for data privacy and COPPA in the US to protect children's information. Additionally, each country has its own set of payment regulations that add to the complexity. Merchant of Record platforms can effectively manage and adhere to all these regulatory frameworks, significantly reducing legal risks and avoiding potential penalties. **Operational Ease** Managing payments, taxes, and compliance internally demands significant resources, which can be particularly challenging for small and medium-sized EdTech businesses. A Merchant of Record simplifies these processes by centralizing and automating critical functions. This operational efficiency not only minimizes administrative burdens but also allows companies to redirect their focus toward innovation and growth, ultimately enhancing their overall market competitiveness. ## Merchant of Record Impact on EdTech **Streamlined Payments** An MoR simplifies payment processing by: - Supporting multiple payment methods (credit cards, digital wallets, etc.). - Handling currency conversions and reducing transaction fees. - Providing a seamless checkout experience for users. **Tax Handling** With an MoR, EdTech platforms can: - Automate tax calculations based on the user's location. - File and remit taxes to the appropriate authorities. - Stay updated with changing tax laws. **Global Reach** A Merchant of Record enables EdTech platforms to: - Expand into new markets without worrying about local payment regulations. - Offer localized pricing and payment options. - Build trust with international users. **Risk Mitigation** By acting as the legal entity for transactions, an MoR: - Reduces financial and legal risks for EdTech businesses. - Handles chargebacks and disputes. With Dodo Payments a dispute costs a flat $30, including Visa RDR cases, and a refund costs $1. - Ensures compliance with anti-fraud measures. ## Dodo Payments: The Ideal Merchant of Record - Dodo Payments takes care of global tax requirements by automating tax calculations and tax filings across over 190+ countries, ensuring you remain compliant with international tax regulations. - It offers seamless integration with your existing EdTech platform, making setup quick and hassle-free. - It also provides [Localized payment options](https://dodopayments.com/payments/local-payment-methods), supporting region-specific methods to boost conversion rates. - Tailored payment solutions are designed specifically for small and medium-sized businesses, addressing your unique needs. - Analytics and reporting, invoicing, license keys and digital product delivery are all included at no extra cost, which matters when a course platform needs to gate access as well as take payment. See the [merchant of record documentation](https://docs.dodopayments.com/features/mor-introduction) for how liability is split. If you are still comparing providers rather than models, the [best merchant of record platforms](https://dodopayments.com/blogs/best-merchant-of-record-platforms) roundup sets out the trade-offs. ## FAQ ### Why do EdTech companies need a Merchant of Record? EdTech companies often sell globally, which creates tax, compliance, and payment obligations in multiple jurisdictions. A Merchant of Record centralizes those responsibilities so teams can focus on product and learning outcomes. ### Can an MoR handle student payments in different currencies? Yes, a good MoR supports multi-currency checkout and local payment methods across regions. This reduces friction for international learners and improves payment success rates. ### How does a Merchant of Record help with EdTech tax compliance? It automates tax calculation, filing, and remittance based on where each learner is located. That helps platforms avoid manual tax operations and lowers compliance risk. ### Is an MoR useful for smaller EdTech startups too? Absolutely, because smaller teams usually lack dedicated tax and legal operations for global expansion. An MoR lets startups enter new markets faster without building heavy internal infrastructure. ## Conclusion As the EdTech industry continues to grow, so will the complexities of managing payments, taxes, and compliance. [A Merchant of Record](https://dodopayments.com/payments/merchant-of-record) (MoR) like Dodo Payments offers a comprehensive solution, enabling EdTech platforms to focus on their core mission while ensuring seamless operations. Partner with [Dodo Payments](https://dodopayments.com/) today and experience the benefits of a trusted Merchant of Record. --- - [More Merchant of Record articles](https://dodopayments.com/blogs/category/merchant-of-record) - [All articles](https://dodopayments.com/blogs)