Merchant of Record vs local entity: why not do it yourself?
You can. With your own local entity, your company is the seller and runs everything behind each sale itself. This guide sets out what that involves, what a Merchant of Record takes on instead, and when doing it yourself is the right call.
Where each model sits.
Five dimensions that usually decide it. Positions are indicative; the specific market and channel set the detail.
Time to first sale
Weeks through a Merchant of Record. Months of incorporation, banking and registrations with your own entity.
Upfront commitment
Variable, transaction-based cost with a Merchant of Record. Fixed setup and running costs with an entity.
Burden on your team
The seller stack is operated for you, or your team assembles and runs it.
Control of local infrastructure
Delegated under the Merchant of Record model. Owned outright with your own entity.
Transaction responsibility
The Merchant of Record is the legal seller for supported transactions. Otherwise your local entity is.
What your own entity has to run.
All of this sits behind every sale. With your own entity you build and run it market by market; with a Merchant of Record it comes with the operating layer. Treat it as a starting point, then validate the legal, tax and operational detail for the specific market.
| Behind each sale | Doing it yourself | With ExpandNow as Merchant of Record |
|---|---|---|
| The company | Incorporate locally, open a local bank account, and keep the company’s filings and accounts up to date. | No local entity, bank account or tax registration of your own. |
| Sales tax, VAT and GST | Register in each market, then calculate, collect, file and remit it yourself. | ExpandNow calculates, collects, files and remits it within the supported model. |
| Payments | Open merchant accounts and add each local payment method yourself. | Cards, wallets and supported local methods come through ExpandNow, with no merchant account for each one. |
| Fraud and chargebacks | Screen transactions and fight disputes yourself, and carry the losses. | Fraud protection and chargeback handling are managed behind the sale. Connect and Commerce include zero fraud chargeback liability, subject to your service agreement. |
| Seller obligations | Your entity is the legal seller, so each market’s seller obligations are yours. | ExpandNow is the legal seller and manages applicable merchant and commerce compliance. |
| Payouts and reporting | Reconcile settlements across your payment providers and tax accounts. | Automatic daily payouts, with reporting for reconciliation. |
| Customer support | Yours. | Still yours, so the experience stays consistent. ExpandNow provides tools for actions such as refunds. |
Match the model to the market.
Three signals point to each model. Most brands recognize their situation in one column.
Choose a Merchant of Record when
- You need speed. The market opportunity matters now, and months of entity setup would delay learning and revenue.
- You want to test before committing. Use a variable-cost operating layer while you validate demand and unit economics.
- You are entering several markets. A common operating model reduces the number of entities, payment projects and tax workstreams.
Build your own entity when
- The market is strategically permanent. You know you want a substantial local organization and infrastructure footprint.
- Volume supports the fixed cost. At sufficient scale, owning more of the infrastructure may improve long-term economics.
- You need capabilities outside the MoR model. Your operating requirements may call for local contracts, licenses or structures the MoR does not provide.
You don’t have to choose on day one.
The models can be sequential. Enter with a Merchant of Record, then decide on an entity with evidence rather than forecasts.
- 1ExpandNow
Enter with a Merchant of Record
First local sales in weeks, on variable cost, with no entity, bank account or tax registration of your own.
- 2Together
Prove the market
Validate demand, unit economics and channel fit with real transaction data rather than a business case.
- 3You
Decide on permanence
Keep the operating layer, or incorporate where volume and strategy justify owning more of the infrastructure.
Want to compare the economics for a specific market?
We can map the infrastructure you would need to build directly versus the operating responsibilities ExpandNow can take on.