Short answer
The legal seller in a transaction: the company responsible for taking the payment, charging sales tax or VAT, handling refunds and answering chargebacks.
Most businesses are their own merchant of record. Merchant-of-record services such as Paddle or FastSpring resell your product instead, taking on tax and payment compliance in many countries in exchange for a higher fee, often around 5% of revenue.
An MoR can make sense for small software companies selling worldwide. At larger volumes, the fee usually costs more than handling tax and payments yourself. See Stripe alternatives compared.
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Related terms
- Payment facilitator (payfac): A company that onboards other businesses as sub-merchants under its own master merchant account, so they can take card payments without their own processor contract.