Merchant of Record in France
Joshua D'Costa
Growth & Marketing
Jul 14, 2025
|
5
min
France’s digital sector is worth €66 billion in 2023 and reached €70.5 billion in 2024. The French digital industry specifically saw growth in areas like Cloud computing, +17.5% growth in 2024, and in AI services, 22.9% growth.
Despite this thriving online market, many French companies struggle to grow internationally. Common issues include complicated cross-border payments, strict tax rules, and regulatory hurdles.
For example, France (like all EU members) requires any seller of digital services to register and charge VAT on French sales even if you have no physical presence in France. It’s no wonder businesses are looking for a solution that handles payments and compliance from end to end.
Fortunately, there is a proven solution: the Merchant of Record (MoR). An MoR like Dodo Payments can simplify everything from filing taxes to hassle-free global payments.
Let’s explore more on why French businesses face these expansion challenges, what payment and compliance issues they encounter, and how MoR can empower them on the global stage.
Why France Needs a Merchant of Record
France has made a big push to lead in tech and innovation. The government’s France 2030 plan alone invests €54 billion in digital and emerging tech. With 92.6% internet penetration and high digital engagement, French consumers are very online.
Payment-wise, France is advanced: nearly every French bank card is on the Cartes Bancaires (CB) system, and digital wallets like Paylib, Lydia and mobile payments are widely used.
However, this domestic strength doesn’t automatically translate abroad. Many global payment platforms still have barriers. Setting up an EU or French entity (and banking) just to get paid can be costly and slow for startups and SMEs. Plus, compliance keeps evolving: all digital sales to French customers must comply with French and EU VAT rules, and new laws like the Digital Services Tax add extra filing duties.
The Problem with French Global Expansion
Barriers to Payment Gateways
Even though France is in the EU, many payment gateways require a local presence. This leaves French businesses with limited ways to accept international payments seamlessly. The paperwork and costs of opening foreign bank accounts or companies can be a major hurdle for small and mid-size firms.
Tax and Compliance Challenges
France follows EU VAT rules strictly. Any foreign provider selling e-services to France must register for French VAT and collect 20% VAT on sales. Keeping track of different VAT rates adds significant bookkeeping work.
On top of that, France’s Digital Services Tax can apply to large online sellers, further complicating tax filings. These regulatory requirements can slow down growth and even risk fines if not handled properly.
Navigating Payment Options
French consumers have specific preferences. A payment solution that fails to support these local methods, like Paylib, Lydia, might miss out on the majority of French sales. At the same time, French merchants often still rely on SEPA bank transfers for large transactions.
Coordinating between all these payment types and ensuring international cards and wallets work too can be complex without a unified payment platform.
Dependence on Foreign Entities
To sell globally, many French companies find themselves establishing foreign subsidiaries or bank accounts. For example, some create a UK or US company just to use a payment gateway abroad.
This adds legal fees, banking costs, and administrative headaches. For startups and SMEs, the expense and delay of setting up these foreign entities can severely limit their ability to expand.
Together, these factors make global expansion a real headache for French businesses. Companies must weigh the cost of compliance and setup against potential overseas revenue.
What to Look for in a Merchant of Record
When looking for a payment solution or MoR provider in France, consider these criteria:
Ensure the platform can accept payments in euros (EUR) as well as other key currencies like USD, GBP, and JPY to reach more customers.
Accepts local and global payment methods. It should handle French-preferred options alongside international methods like Apple Pay, UPI etc.
Look for PCI DSS compliance, SSL encryption, fraud detection, and multi-factor authentication to protect both you and your customers.
Ideally, the platform should offer automated tax calculations, compliance support and handle VAT registration and filings for sales in France/EU.
Choosing a gateway that meets these criteria will greatly simplify your operations. Few providers on the market handle all of this seamlessly, which is where a Full-Stack Merchant of Record like Dodo Payments comes in.
Dodo Payments as Merchant of Record
We, as your Merchant of Record, take on payment processing, tax filing, and regulatory compliance so you don’t have to. Here’s how we make global selling effortless:
Seamless Global Payments:
Dodo Payments supports EUR, USD, and more, and handles conversion at competitive rates.
This means you can offer French shoppers their preferred payment methods (CB cards, PayPal, etc.) while also tapping markets like North America and Asia without extra integration work.
Regulatory and Tax Compliance:
We take care of VAT, GST, and digital taxes on your behalf. Dodo will manage VAT registration and ensure the correct VAT rate (20% in France) is applied and remitted.
We also monitor new regulations, for example, the Digital Services Tax, so you stay compliant automatically.
Reliable Payouts:
We process your sales and deliver timely payouts to your preferred bank account. You’ll know exactly when to expect funds, whether in euros or another currency.
This predictability helps with cash flow planning, unlike traditional merchant accounts, which may hold funds for weeks.
No Need for Foreign Entities:
You can sell internationally without setting up separate legal entities. Because Dodo is the Merchant of Record, we handle the local paperwork.
This saves you time and money, and lets you focus on growing your business.
Final Thoughts
The choice often comes down to MoR vs. building local entities for French SaaS startups. For a broad international reach, partnering with an MoR is the most scalable solution. MoR brings billing, tax, and customer support together in one place, making complicated rules easy to manage with a simple, ready-to-use platform.
Dodo Payments, as your Merchant of Record, can help you overcome the hurdles of cross-border transactions, tax compliance, and payout logistics. Revolutionise your international sales and sign up with Dodo Payments. Start selling beyond borders with ease.
