Joshua D'Costa
Growth & Marketing
Feb 17, 2025
|
5
min
Building a successful eCommerce business involves more than just having an attractive website and appealing products.
Two key roles often come into play when businesses go global: the Merchant of Record (MoR) and the Seller of Record (SoR). While they may sound similar, they serve very different purposes. Understanding these roles is crucial for businesses looking to streamline operations, stay compliant, and focus on growth.
In this blog, we’ll break down the differences between a Merchant of Record and a Seller of Record, explore their responsibilities, and why the Merchant of Record model is often the better choice for a business expanding globally.
What is a Merchant of Record
Definition
A Merchant of Record (MoR) is the legal entity responsible for processing customer payments, handling tax compliance, and managing financial transactions on behalf of a business. Essentially, the MoR acts as the intermediary between the business and its customers, ensuring smooth and compliant transactions.
Responsibilities of Merchant of Record
Payment Processing
A Merchant of Record (MoR) handles all the transactions, ensuring that when your customers pay, their funds are processed securely and efficiently. This means managing everything from multi-currency support to fraud prevention, so you can rest easy knowing your revenue is protected.
Tax Compliance
Tax compliance can be a headache, but an MoR takes that burden off your shoulders. They handle all aspects of tax obligations including VAT, GST, and other applicable taxes, ensuring that every transaction complies with local and international laws.
Regulatory Adherence
Every country has its own set of rules when it comes to financial transactions. The MoR makes sure that your business meets all legal and regulatory requirements. Whether it’s adhering to anti-money laundering laws or following consumer protection standards, saving you time and potential legal headaches.
Chargeback Management
Disputes and chargebacks are inevitable in any business. An MoR handles the process of resolving customer disputes and processing refunds when necessary. This not only protects your revenue but also helps maintain customer trust, as the MoR acts quickly to address any issues that arise.
Subscription Management
For businesses that rely on recurring revenue, subscription management is key. Merchant of Record takes care of setting up, managing, and billing subscriptions, ensuring that your customers enjoy a seamless and hassle-free experience.
Each of these responsibilities is designed to simplify your operations and let you concentrate on growing your business. while it handles the complex backend processes.
Examples
Companies like Dodo Payments act as Merchant of Record for businesses, enabling them to sell globally without worrying about payment processing or tax compliance.
What is Seller of Record
Definition
A Seller of Record (SoR) is the entity legally recognized as the seller of goods or services in a transaction. The SoR is responsible for fulfilling orders, managing customer relationships, and ensuring product delivery.
Responsibilities of Seller of Record
Order Fulfillment
A Seller of Record is in charge of making sure every order is processed smoothly. This means keeping a close eye on your inventory, and knowing what’s in stock. It also means coordinating with reliable shipping partners to pack and deliver products on time. Which can lead to higher customer satisfaction and repeat business.
Customer Service
The Seller of Record is the frontline contact for your buyers. This involves promptly handling inquiries, resolving issues, and managing returns or refunds. Providing a friendly and responsive support experience, that not only solves problems as they arise but also builds trust with your customers.
Revenue Reporting
Accurate revenue reporting is crucial for understanding the performance of a business. As the Seller of Record, you’re responsible for tracking every sale, reconciling accounts, and managing all financial records.
Product Liability
Product liability is all about ensuring that the products you sell are safe and meet quality standards. As the Seller of Record, you need to implement strict quality control measures and ensure that all products comply with relevant safety regulations. This not only protects your customers but also shields your business from potential legal issues.
Examples
E-commerce platforms like Amazon often act as the Seller of Record for third-party sellers, handling order fulfilment and customer service on their behalf.
Merchant of Record vs. Seller of Record: Key Differences
While both roles are essential for global business operations, they serve distinct purposes. Here’s a breakdown of their key differences:
Why the Merchant of Record Model is the Smarter Choice
A Merchant of Record takes care of all tax obligations (VAT, GST, etc.), so you don’t have to worry about constant compliance updates. Whereas, in the Seller of Record the seller is fully responsible for managing these taxes.
MoR manages global payments seamlessly, eliminating delays and restrictions found in traditional gateways, while the Seller of Record model often struggles with fragmented payment processing.
MoR reduces your operational workload by handling complex backend processes, allowing you to focus on growth, Seller of Record forces you to juggle multiple administrative tasks.
A Merchant of Record enables faster market entry by bypassing the need for costly foreign business setups or offshore bank accounts.
MoR absorbs financial risks such as chargebacks and fraud, protecting your revenue.
An MoR also focuses on data security and compliance, ensuring that all sensitive payment and customer information is managed under international standards.
Overall, an MoR offers a comprehensive, efficient, and risk-mitigated solution that simplifies global operations, reduces overhead costs, and supports future growth
How Dodo Payments Make MoR Easy
Dodo Payments makes it super simple to handle the complexities of global payment operations. Here’s how we make the Merchant of Record experience easy and efficient:
Process payments in various currencies while supporting many localised payment methods.
Automatically handle tax calculations and remittances to ensure compliance with local regulations.
Offer flexible billing options with both one-time and subscription-based payment models.
Secure your transactions using advanced fraud prevention tools.
Generate invoices and manage recurring billing effortlessly.
Deliver seamless customer support and quickly resolve disputes.
Conclusion
In the end, it depends on your business's specific needs. If you’re looking to simplify complex financial regulations and secure your payments, a Merchant of Record is the way to go. Conversely, if you prefer full control over customer interactions and in-house fulfilment, a Seller of Record might be a better fit.
Ultimately, MoRs relieve you of financial and legal burdens while SoRs ensure a smooth customer journey. For businesses looking to streamline global expansion, the Merchant of Record model is often the smarter option.
Dodo Payments as your MoR, will help you focus on growing your business while we handle the intricacies of international transactions.
