Joshua D'Costa
Growth & Marketing
Feb 24, 2025
|
5
min
The global education market is set to become a $10 trillion industry by 2030, with dramatic increases in both K-12 and post-secondary graduates.
Asia 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 is expected to grow by $170.8 billion at a CAGR of 15.9% from 2025 to 2029, with AI-powered platforms like Squirrel AI and Thinkster paving the way for personalized learning with AI. 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, the EU alone has over 27 different VAT rates, while payment gateways must follow local rules such as PSD2 in Europe or PCI DSS globally. 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
Navigating the confusion of multi-regional tax laws can be extremely challenging for EdTech platforms. For instance;
In the EU, digital services must adhere to VAT MOSS (Mini One Stop Shop) regulations, which require careful tracking and reporting of tax liabilities.
In the US, the situation is no less complex, as sales tax rules differ from state to state—some even mandate taxes on digital products.
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.
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 150+ 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, supporting region-specific methods to boost conversion rates.
Tailored payment solutions are designed specifically for small and medium-sized businesses, addressing your unique needs.
Advanced Real-Time reporting tools and analytics for smarter decision-making.
Conclusion
As the EdTech industry continues to grow, so will the complexities of managing payments, taxes, and compliance.
A 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 today and experience the benefits of a trusted Merchant of Record.
