Merchant of Record Legal Definition

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A registered merchant is a term used to describe the legal entity that sells goods or services to an end customer. The MoR is to whom the end customer must pay for his purchase, it processes all payments and assumes responsibility for each transaction. This includes sales tax collection, compliance with Payment Card Industry (PCI) regulations, and recognition of refunds and chargebacks. Businesses can choose to be their own registered merchant and have the necessary infrastructure and processes in place to manage payments and related liabilities. Alternatively, there are MOR service providers to ease the payment processing and compliance burden of those who prefer to spend their internal resources on more interesting parts of a company`s growth, such as evolving their product or attracting more customers. In addition, a company that advertises itself as a MOR business model may not recognize the need to comply with anti-money laundering and money transfer laws. The sale of goods or services by a merchant is a two-party transaction that generally does not involve such obligations, but the receipt of funds from one party for transfer to another is a transfer of funds subject to federal and state regulations. Also, while there are exceptions to money transfer laws for payment processors, a company cannot claim to be an MOR for one purpose and a payment processor for another. However, the term “merchant of record” does not appear in the most recent Visa or MasterCard rules. To our knowledge, the term MOR is not a formal designation, although it does provide a useful abbreviation for platforms, markets, and others whose business model involves meeting a trader`s criteria. This may be the case, for example, of a service platform that markets itself as MOR as part of payment processing for services sold through the platform.

In this scenario, the platform markets the Services to the User, arranges the provision of the Services through a network of contractors, processes payments, handles disputes, delivers sales and revenue, is responsible for chargebacks, and compensates its independent contractors through separate agreements. Taking financial responsibility for collecting payments worldwide can take a lot of time, money, and resources to set up and maintain properly. Plus, if something goes wrong, you could spend a lot of time and money solving financial and legal problems. Using a MoR solution, all of this is done for you. If you choose to sell through a registered merchant, your customers will still go to your website to access the products. However, since the MoR acts as a reseller, two transactions take place during the sale: one between the end customer and the MoR and the other between the MoR and you. They process actual payment for product services when a seller cannot do so due to legal restrictions or geographic access. Given the complexity of these issues, it is important that payment companies understand the nature of their services and how they fit into the card network rules, and that merchants seeking processing services understand what is available to them. Otherwise, payment companies risk entering into agreements that do not comply with network rules or applicable law. So it`s best for everyone involved if the real dealer stands up.

You can process these payments yourself by creating local merchant accounts, which is easily expensive and incurs a lot of overhead. Payment service providers exclude tax transfers, comprehensive fraud protection, compliance with globally recognized security standards (such as PCI DSS) or government regulations, refund request management, chargebacks or other risk assumptions on behalf of merchants. A PSP also helps merchants control online transactions, privacy, money transfers, fraud, and multi-currency processing. The way we buy and sell online is constantly changing, especially as merchants and customers expect simpler and safer payment options. If you don`t use a document dealer service, you`re acting like your own Department of Defence and assuming all the risks and responsibilities associated with it – a feat that could easily become a full-time job in itself. It`s much easier to be your own MoR if you only sell domestically. For global ecommerce, you need international merchant accounts that allow regional payment methods, payment contracts with any currency, calculation of global taxes, etc.

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