Merchant of Record in Mexico
Joshua D'Costa
Growth & Marketing
Jul 18, 2025
|
5
min
In 2024, Mexico’s SaaS industry brought in about USD 8.8 billion, and it’s expected to reach USD 19,986 billion by 2030. At the same time mobile usage is sky-high, 98% of internet users are on smartphones and technology adoption is rapidly increasing.
Global expansion from Mexico quickly runs into complexity. You have to juggle tax rules in multiple regions, payment barriers, and customer preferences.
For instance, Mexico passed laws taxing foreign digital services in 2020 and now requires overseas e-tailers to register and remit a 16% VAT on sales to Mexican consumers.
Growing globally means dealing with a web of taxes, multiple payment systems, and the cost/time of setting up new entities abroad. Mexicans are among the world’s top cross-border shoppers. Tech startups especially SaaS and fintech are attracting record funding, reflecting this digital growth.
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 why Mexican SaaS founders face these expansion challenges, what payment and compliance issues they encounter, and how MoR can empower them on the global stage.
Why Mexico Needs a Merchant of Record
Internationally, SaaS companies must navigate diverse VAT/GST regimes from EU digital-VAT requirements to U.S. state sales taxes and emerging levies on digital services.
At the same time, major global platforms like Stripe and PayPal only cover part of the picture in Mexico. Stripe MXN-only billing and high decline rates on Mexican cards leave gaps, while consumers increasingly expect SPEI transfers, local debit options, and newer methods such as MercadoPago or buy-now-pay-later. Stitching together all these channels demands multiple partners, each with its own API and compliance checklist.
Global cashless payments are set to grow over 80% between 2020 and 2025 and nearly triple by 2030. PayPal remains a top choice online, and Apple/Google Pay are expanding as banks support them. Without a unified solution offering both local Mexican methods and international options, many cross-border customers will abandon their carts.
A Full-Stack Merchant of Record like Dodo Payments steps in as your single legal seller worldwide, instantly enabling MXN and foreign currencies, and digital wallets, all with built-in tax compliance and dispute management.
The Challenges of Mexican Expansion
Expanding a Mexican business overseas brings several concrete hurdles:
Limited International Payment Access
Mexican SaaS firms often need separate EU or U.S. entities to onboard major gateways like Stripe or PayPal.
This forces them to juggle domestic and foreign providers, leading to fragmented data and costly reconciliation.
Complex Tax & Compliance
New 16% VAT rules in Mexico, EU OSS filings, and U.S. sales tax thresholds all demand local registrations.
Manually tracking and remitting across jurisdictions risks errors, audits, and drains focus from core product work.
Fragmented Integrations
Each method, payment transfers, Visa/Mastercard, regional wallets requires its own API and flow.
Building and maintaining multiple connections drives up development time, costs, and complicates dispute handling.
High Entity Setup Costs
Setting up foreign legal entities and bank accounts can cost $15–20K per country and take months.
Ongoing admin, local tax filings, payroll, compliance adds further overhead, slowing down your expansion.
What to Look for in a Merchant of Record
A good Merchant of Record (MoR) solution can solve these problems. When evaluating MoR or payment partners, look for:
1. Multi-Currency Support
Choose an MoR that lets you bill customers in their own currency (MXN, USD, EUR, GBP, etc.) instead of forcing everything through USD.
Ideally, you keep local reconciliations just as Dodo Payments lets you accept and settle in multiple currencies and global payment methods.
2. Local Payment Methods
Your MoR must cover the payment options your customers already use. In Mexico, that means local debit cards, and e-wallets like PayPal.
For other regions, look for support of UPI in India, iDEAL in Europe, and more, all unified under one provider. This avoids managing separate integrations for each market.
3. Strong Fraud Protection & Security
As online fraud rises (Mexico saw a 25% annual increase over the last decade), your MoR should be PCI-DSS certified and offer 3DS authentication.
Real-time fraud scoring and built-in chargeback handling under the MoR’s merchant ID keep disputes off your plate.
4. Automated Tax & Compliance
An effective MoR automatically calculates, collects, and remits taxes. Mexico’s 16% VAT on digital sales, EU SaaS VAT, and any new digital levies so you never miss a filing.
Look for built-in invoicing and monthly tax reports to save hours of manual work.
5. Transparent Pricing & FX Rates
Avoid hidden fees that eat into your margins. Seek clear, predictable transaction or subscription fees and competitive foreign-exchange rates.
You should see all costs laid out in detailed reports, with no surprise conversion markups.
6. Developer-Friendly Integration
Fast, reliable SDKs or APIs, webhooks for real-time notifications, and solid documentation are a must.
A smooth integration lets your engineering team launch global payments quickly without piecing together multiple plugins.
Dodo Payments: Merchant of Record
Dodo Payments offers a Merchant of Record solution for Mexican 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 Features
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.
Final Thoughts
Expanding a Mexican SaaS business into new markets brings huge upside but requires more than just finding customers.
You need reliable payment processing, full compliance with local and international tax rules, including Mexico’s 16% VAT on digital sales), and protection against fraud and chargebacks.
Partnering with a Merchant of Record like Dodo Payments lets you offload cross-border payments, tax remittance, and regulatory compliance. That way, your team can concentrate on product innovation and customer success, while experts handle the complexities of global expansion.
