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Merchant of Record for Ecommerce: Complete Guide for Brands Expanding into New Markets
Merchant of Record (MoR) explained
A Merchant of Record for Ecommerce takes on the legal and operational responsibilities of international sales: tax compliance, fraud management, payment processing, and regulatory requirements, so you can focus on growing your business.
Selling internationally means navigating different tax regulations, payment methods, currencies, and compliance requirements in every market.
For most ecommerce businesses, this creates a choice: build complex infrastructure internally or partner with a Merchant of Record to handle it for you.
Here, we’ll explain what the MoR model is, how it works, and why many ecommerce businesses choose this approach for international expansion.
What is a Merchant of Record for Ecommerce?
A Merchant of Record (MoR) is a legal entity responsible for selling goods or services to customers. They manage all payments and take on associated liabilities, including collecting tax, ensuring Payment Card Industry (PCI) compliance, and handling refunds and chargebacks.
Ecommerce businesses can choose to be their own MoR, setting up the infrastructure needed to manage global payments and compliance.
Alternatively, Merchant of Record service providers exist to remove the burden of managing international operations from businesses that would rather focus their resources on product development and customer acquisition.
This is different from a payment service provider or PSP, which only handles payment processing, we’ll explain the full differences below.
How Does a Merchant of Record for Ecommerce Work?
When you sell through a Merchant of Record, customers still visit your website and experience your brand. However, legally, there are two transactions occurring: one between the customer and the MoR, and another between the MoR and your business.
The MoR’s name appears on the customer’s credit card statement, and they become the liable party for the transaction. This is how a Merchant of Record can take responsibility for tax compliance, fraud liability, and regulatory requirements while you maintain your customer relationships and brand experience.
Why Your Ecommerce Business Needs a MoR for Global Sales
When you sell internationally, you’re dealing with different tax systems, payment preferences, currencies, and compliance requirements in each market. This complexity grows exponentially with each new country you enter.
Simplifying International Tax and Compliance
Each jurisdiction has unique tax requirements. The EU has VAT, Australia has GST, and US states have varying sales tax rules. Missing compliance requirements can result in penalties, audits, and legal complications. A MoR handles registration, calculation, filing, and remittance across all markets where you sell.
Mitigating Fraud and Chargeback Risks
Cross-border transactions face higher fraud rates due to increased complexity in verifying international customers. Chargebacks from fraudulent transactions not only result in lost revenue but also incur additional fees and administrative overhead. MoRs implement sophisticated fraud screening and often assume liability for approved fraudulent transactions.
Streamlining Global Payment Processing
Customers prefer paying with familiar, local payment methods. While credit cards are widely accepted, many markets rely heavily on alternative payment methods like SEPA in Europe, Alipay in China, or bank transfers in Germany. Supporting these options requires relationships with multiple payment processors and understanding local preferences.
Unlock Seamless Global Growth with ExpandNow’s Connect Solution
Whether you are selling a digital or physical product, ExpandNow Connect serves as your Merchant of Record, handling the entire payment and compliance process so you can expand internationally without building complex capabilities in-house.
What Makes Connect Different for International Sales
Daily Payouts Instead of Monthly Settlement Unlike traditional MoR providers that hold your funds for 30+ days, ExpandNow is the first PayFac-compliant Merchant of Record that gives you access to funds daily. This means 4-5X faster cashflow compared to legacy providers.
Zero Fraud Chargeback Liability We don’t just screen for fraud, we take financial responsibility for it. If a fraudulent transaction passes our screening and results in a chargeback, we cover the cost. We also handle all dispute management, so your team doesn’t have to.
Setup in Weeks, Not Months Most international expansion projects take 3-6 months to launch. With Connect’s pre-built integrations for major ecommerce platforms and streamlined onboarding, you can be selling globally in 2-3 weeks.
True Cost Transparency Our pricing starts at 5% per transaction with no hidden fees, setup costs, or minimum commitments. Most businesses see up to 40% lower total costs compared to competitors or building in-house solutions. For example, a company processing €500K annually could save €20,000-€30,000 per year on operational costs alone. For high-volume merchants processing over €1M annually, we offer custom rates that scale with your growth.
Eliminate Cross-Border Complexity: Tax, Compliance & Payments Handled
Guaranteed VAT and Sales Tax Compliance
As your Merchant of Record, ExpandNow becomes legally responsible for tax compliance in every market where you use ExpandNow. We maintain registrations in required jurisdictions, calculate taxes in real-time during checkout, file returns, and remit payments to the appropriate tax authorities.
This includes managing complex regulations like EU VAT (including OSS and IOSS schemes), UK VAT (post-Brexit), Swiss VAT, US sales tax, GST across multiple territories, cross-border tax requirements, de minimis thresholds, and DDP (Delivered Duty Paid) scenarios. Whether you’re navigating EU one-stop-shop requirements or US state-by-state sales tax rules, we handle it all.
Effortless Multi-Currency Processing and Payouts
Connect supports transactions in multiple currencies and provides daily payouts in your preferred currency (USD, EUR, or GBP). This makes it easy for you to receive sales proceeds fast and in your preferred currency.
Protect Your Revenue: Advanced Fraud and Chargeback Management
Zero Fraud Chargeback Liability for Your Business
ExpandNow assumes liability for chargebacks resulting from fraudulent transactions that pass through our screening process. This transfers the financial risk away from your business while our fraud prevention systems work to minimize these occurrences.
Robust Fraud Prevention Tools
Our system performs pre-authorization screening using device signals and risk scoring before transaction approval. This screening includes rules-based checks and automated fraud detection that happens in real-time without adding friction to legitimate customer purchases.
Accelerate Market Entry: Sell Locally in Weeks, Not Months
Quick and Easy Setup with No Complex Integration
Connect integrates with existing ecommerce platforms through pre-built connectors for popular platforms like Shopware, WooCommerce, BigCommerce, and Adobe Commerce. This eliminates the complexity of global expansion.
Access New Global Markets Fast
Once integrated, enabling sales in new countries is just configuration. The same integration that powers sales in one market can be extended to others without requiring new vendor relationships or compliance work.
Focus on Growth: Offload Operational Burden & Boost Profit
Reduce Operational Costs by up to 40%
Instead of managing separate vendors for payments, fraud detection, tax compliance, and international banking, Connect provides everything in one place. This consolidation typically reduces operational costs compared to building these capabilities internally.
Gain Risk-Free Insights for Predictive ROI
Start with select test markets to validate demand before scaling. Self-service reporting provides visibility into sales performance, fees, and net proceeds, enabling data-driven expansion decisions.
MoR vs. Payment Gateway vs. Payment Processor: A Clear Distinction
If you’re researching payment solutions, you’ve probably seen these terms used interchangeably. They’re actually quite different, and understanding what each one does will help you choose the right approach for your business.
Understanding the Core Differences for Ecommerce Businesses
What a Payment Gateway Does
A payment gateway securely captures and transmits payment information from your checkout to payment processors. It handles the technical aspects of payment data collection and transmission but doesn’t process transactions or assume any liability. Examples include Stripe Checkout, PayPal‘s payment forms, or Square‘s online payment interface.
What a Payment Processor Does
A payment processor executes the actual movement of funds from customer accounts to merchant accounts. It communicates with banks and card networks to complete transactions but doesn’t handle compliance, taxes, or legal responsibilities. Examples include Worldpay, First Data, and many others that work behind the scenes to process transactions.
The Comprehensive Role of a Merchant of Record for Ecommerce
A Merchant of Record encompasses gateway and processor functions while also becoming the legal seller, handling tax obligations, managing compliance requirements, and assuming liability for transactions. It’s a complete solution rather than just a component of your payment infrastructure.
When Does a Merchant of Record for Ecommerce Make Sense?
Consider a Merchant of Record when:
- Expanding internationally without an existing local business presence
- Selling digital products to international customers to avoid non-resident tax obligations
- Wanting to minimize compliance and operational overhead
- Seeking to transfer fraud and tax liability to a partner
- Needing rapid market entry
A traditional payment setup might be preferable when:
- Operating primarily in one domestic market
- Having existing international infrastructure and expertise
- Requiring complete control over all payment processes
- Preferring to handle compliance internally
How ExpandNow’s Connect MoR Works: Your Path to International Sales
Connect integrates with your current platform without requiring significant changes to your existing operations. The setup process typically takes 2-3 weeks, including onboarding, technical configuration, and testing.
The End-to-End Global Payment Flow
When a customer makes a purchase:
- 1. Customer initiates checkout on your website
- 2. Payment information is securely processed through Connect
- 3. Real-time fraud screening evaluates the transaction
- 4. Taxes are calculated based on customer location and applicable rates
- 5. Payment is processed through our global payment network
- 6. ExpandNow remits and files taxes with the appropriate authorities
- 7. Net proceeds are transferred to your account on agreed schedule (i.e. daily)
Ensuring Global Tax and Regulatory Compliance
ExpandNow maintains tax registrations in major markets and monitors regulatory changes across jurisdictions. When new compliance requirements emerge or tax regulations change, our systems update automatically without requiring action from your team.
Proactive Fraud Prevention and Chargeback Liability Assumption
Every transaction undergoes risk assessment using multiple data points including device characteristics, transaction patterns, and behavioral analysis. Transactions flagged as high-risk are declined, while approved transactions that later result in fraud chargebacks are covered by ExpandNow.
Is ExpandNow’s MoR Right for Your Business?
Ideal for Digital Products, SaaS, Apps and Cross-Border Ecommerce
Connect works well for businesses selling:
- Software as a Service (SaaS) products
- Digital downloads and online courses
- Physical products to international customers, cross-border or in-country
- Subscription-based services
- Mobile apps and gaming products
Solutions Tailored for Small Businesses to Large Enterprises
The MoR model scales from startups testing international markets to enterprises selling globally. There are no minimum volume requirements, making it accessible for businesses at any stage of international expansion.
Transparent Investment: Understanding ExpandNow’s MoR Pricing
Factors That Drive MoR Costs
ExpandNow’s pricing starts at 5% per transaction, which includes payment processing, fraud protection, tax compliance, and daily payouts. This consolidated pricing model eliminates the need to manage multiple vendor relationships and contracts.
For businesses processing over €1M annually, custom pricing is available that scales with volume.
Calculate Your Potential Savings and ROI
Consider the alternative costs of international expansion:
- Legal entity setup in each market: $50,000-$200,000+ per country
- Tax registration and ongoing compliance: $25,000-$50,000 annually per market
- Payment processor setup and fees: Variable based on volume
- Fraud prevention tools: $500-$5,000 monthly
- Internal operating costs for managing compliance and operations
Most businesses find the MoR model provides significant savings compared to building these capabilities internally.
High-volume merchants can benefit from reduced rates based on transaction volume and specific business requirements.
Why ExpandNow is Your Trusted Merchant of Record for Ecommerce Partner
Proven Success: Client Testimonials
“We have been impressed by ExpandNow. D2C in the EU was a critical step for us, and their platform and expertise helped us get there quickly. The technical setup was so easy. We were able to keep our BigCommerce store and checkout, and it took just hours to get up and running.”
Douglas De Santi, Global Head of DTC at Nextbase
“The strategic partnership with ExpandNow represents an important milestone for 3stepIT as we continue to enhance and expand our service offering and capabilities. By integrating ExpandNow’s cutting-edge technology and capabilities, we are streamlining the employee purchase process and unlocking new opportunities to deliver value to our customers and end-users globally.”
Cecilia Lindvall, Director Product Management, 3stepIT
Unmatched Expertise in Global Ecommerce Compliance and Risk Management
ExpandNow’s team includes payment industry veterans, tax specialists, and compliance experts with experience processing international transactions across multiple industries and markets.
Dedicated Support for Your International Expansion Journey
Beyond providing technology, ExpandNow offers strategic guidance on market prioritization, expansion timing, and optimization strategies based on data from your international sales performance.
Frequently Asked Questions About Merchant of Record for Ecommerce
What is the main benefit of using an MoR for cross-border sales?
The primary benefit is simplified market entry. Instead of establishing legal entities, obtaining tax registrations, and building compliance infrastructure in each market, you can begin selling internationally within weeks while transferring operational complexity and liability to the MoR.
How does ExpandNow handle international tax compliance?
As your Merchant of Record, ExpandNow assumes legal responsibility for all sales tax, VAT, and GST obligations. We maintain registrations in required markets, calculate taxes during checkout, file returns with tax authorities, and remit payments on schedule.
Is ExpandNow’s MoR compatible with my existing ecommerce platform?
Connect offers pre-built integrations for major platforms including Shopware, WooCommerce, BigCommerce, and Adobe Commerce. We also provide APIs and hosted checkout options for custom integrations with other platforms or bespoke ecommerce solutions.
What types of products or services can be sold through an MoR?
Connect supports most digital and physical products, including software subscriptions, digital downloads, physical goods, and online services. Some product categories have restrictions based on legal or risk considerations, which we review during the onboarding process.
How does an MoR protect against fraud and chargebacks?
MoRs implement multi-layered fraud prevention including real-time transaction screening, device fingerprinting, and behavioral analysis. When fraudulent transactions bypass these controls and result in chargebacks, the MoR typically assumes financial liability rather than passing costs to the merchant.
Will I lose control over my customer data or relationships?
As the MoR, ExpandNow handles the legal and financial aspects of transactions, but you maintain ownership of customer relationships and data. You continue to control branding, marketing communications, customer support, and the overall customer experience.
Is a Merchant of Record for Ecommerce too expensive for a growing startup?
MoR services often cost less than building international capabilities internally. When you factor in the costs of legal entity setup, tax registrations, compliance management, fraud prevention tools, and ongoing operational overhead, the MoR model typically provides cost savings, particularly for smaller businesses.
Ready to Grow Your International Sales? Partner with ExpandNow Today!
If you’re considering international expansion or looking to simplify your existing global operations, ExpandNow Connect can help you achieve your goals while reducing operational complexity and costs.
Request a Free Consultation with Our Experts
Discuss your international expansion goals and learn how Connect can support your specific business requirements.
