What Is a Merchant of Record, and Does Your Brand Need One?

A merchant of record is the business that legally sells to your customer: the name on the card statement, the party that owes the sales tax, and the one the bank debits when a chargeback comes in. On your own store, that's you. This guide explains what the role carries, how it differs from a seller of record, a PSP and a payment facilitator, and when a DTC brand should hand it to someone else.

What is a merchant of record?

The merchant of record (MoR) is the legal seller of a transaction. The customer pays it, its name identifies the purchase, and it carries the obligations that come with selling: tax, refunds, disputes, card network rules and consumer law.

The card networks don't use the phrase "merchant of record". They just say Merchant, and the definition is the same idea:

Visa also requires the customer's card statement to identify that merchant, or the sponsored merchant and its payment facilitator, with a way to contact it.1Visa Core Rules and Visa Product and Service Rules, April 18, 2026 That is why customers buying from a reseller see the reseller's name, not the brand's.

For an ecommerce brand, the default is simple: if you sell on your own Shopify, WooCommerce or headless store, with a payment account in your company's name, you are the ecommerce merchant of record. Stripe states it plainly: on its standard products the merchant of record is "your business"; only on Stripe Managed Payments is it Stripe.3Stripe Docs, Managed Payments The role changes hands only when someone else sells the product in its own name: a marketplace, a platform charging on your behalf, or an MoR provider that resells your product.

What a merchant of record is responsible for

MoR providers describe the job in almost the same words. Lemon Squeezy says the merchant of record "takes responsibility for everything relating to the purchase, including collecting sales tax, processing refunds and chargebacks, and ensuring PCI compliance".7Lemon Squeezy Docs, Merchant of Record FastSpring describes itself as "essentially buying your product from you, then reselling it to your customer".9FastSpring, Merchant of Record In practice, the responsibilities fall into six groups.

Two of these are worth reading in the providers' own documents. On tax, Stripe Managed Payments says it "handles sales tax, VAT, and GST compliance in more than 80 countries, along with fraud prevention, dispute management, and transaction-level customer support".3Stripe Docs, Managed Payments On consumer law, Stripe adds that it applies requirements "such as regional cooling off periods", and can issue refunds within 60 days of purchase, including to reduce chargebacks.4Stripe Docs, Managed Payments eligibility That second line shows the trade-off: the MoR decides some refunds, not you.

The card network obligations follow the merchant account too. Visa requires an ecommerce merchant's checkout to show "the country of the Merchant Outlet" on the same screen as the final amount or within the checkout pages; a link to another page doesn't count.1Visa Core Rules and Visa Product and Service Rules, April 18, 2026 When an MoR sells your product, that's its country and its customer service contact, and its dispute ratio that your customers' chargebacks feed.

Merchant of record vs seller of record

This is the comparison most people search for, and the one with the least official backing. "Seller of record" isn't a card network term and isn't defined in the tax laws below. Vendors use it in two ways:

• Seller of record as the product owner. Stripe's explainer splits the roles on large marketplaces: the platform is the merchant of record, handling payments and showing its name on the statement, while each seller remains the seller of record, responsible for inventory, shipping, product compliance and returns.6Stripe, Merchant of record vs. seller of record: Key differences and similarities
• Seller of record as a synonym. Many vendors and glossaries use it to mean the merchant of record itself. If a contract uses the phrase, read the clauses that follow, not the label.

Stripe's own conclusion is that a business selling through its own website is usually both.6Stripe, Merchant of record vs. seller of record: Key differences and similarities

The legal systems that matter use their own words for the party that owes the tax on a sale it didn't make: deemed supplier in EU VAT, online marketplace in UK VAT, marketplace facilitator in US sales tax, electronic distribution platform or specified platform in Australia and Japan. They're covered in the tax sections below. "Importer of record" is a third thing again: the customs party responsible for an import, which can be neither of the above.

Merchant of record vs PSP vs payment facilitator vs marketplace

Every one of these roles touches your payments. Only some of them make someone else the seller.

Visa's rules show the difference between the payment facilitator and the marketplace. A facilitator contracts with an acquirer "on behalf of a Sponsored Merchant": the merchant is still you.1Visa Core Rules and Visa Product and Service Rules, April 18, 2026 A marketplace, to qualify, must handle "payments for sales and refunds on behalf of the retailers", be "financially liable for Disputes", and resolve disputes between cardholders and retailers with a binding decision or a money-back guarantee it funds.1Visa Core Rules and Visa Product and Service Rules, April 18, 2026 Visa also lists merchants that can't be marketplaces or sell through one, including travel agents and High-Integrity Risk Merchants.1Visa Core Rules and Visa Product and Service Rules, April 18, 2026

On Stripe Connect, the charge type decides who is the merchant of record. Stripe's explainer puts it this way: with direct charges each connected business is the merchant of record; with destination charges or separate charges and transfers, the platform is.2Stripe, What a merchant of record does and why it matters The Connect documentation shows what follows from that choice:5Stripe Docs, Understand how charges work in a Connect integration

Who collects the tax: EU, UK and US rules

Tax is the main reason brands look at an MoR. Two different mechanisms put the tax on someone other than the brand.

The MoR resells in its own name. EU VAT has a specific rule for this. Under Article 28 of the VAT Directive, "where a taxable person acting in his own name but on behalf of another person takes part in a supply of services, he shall be deemed to have received and supplied those services himself."13Council Directive 2006/112/EC on the common system of VAT, Article 28, and Article 14a as inserted by Directive (EU) 2017/2455 A reseller of your software or digital content is the supplier for VAT, so it charges and pays the VAT.

The law makes the platform the seller. The EU, the UK and US states have moved the tax on goods sold through marketplaces to the platform, whatever the contract says:

HMRC's definition of an online marketplace is useful because it reads like a description of an MoR: a website or app that sets the terms of supply, is "involved in any way in authorising or facilitating customers' payments" and is involved in ordering or delivery.15HMRC, VAT and overseas goods sold to customers in the UK using online marketplaces Each US state has its own marketplace facilitator law and thresholds; check the state's tax authority for each state you ship to. California's applies to a person who contracts with sellers to facilitate their sales through a marketplace it operates, for a fee.16California Department of Tax and Fee Administration, Tax Guide for Marketplace Facilitator Act

Inside Tagada

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Merchant of record in APAC: Australia, Singapore and Japan

Asia-Pacific tax authorities use the same idea: the platform that collects the payment for an overseas seller is treated as the supplier. Each country scopes it differently.

What this means for "merchant of record APAC" decisions:

• Digital products sold into the region. An MoR provider sells in its own name, so it's the supplier in these countries. Stripe Managed Payments, for example, lists Australia, Hong Kong, Japan and Singapore among the business locations it accepts.4Stripe Docs, Managed Payments eligibility Without an MoR, you track each country's registration threshold yourself.
• Physical goods shipped into the region. Japan's platform rule doesn't apply to goods. Australia's and Singapore's low-value goods rules do, so a cross-border store or its platform may owe GST at checkout on small parcels.
• Selling through an app store or marketplace. The platform is usually already the supplier for tax. Adding an MoR on top changes nothing for those sales.

Merchant of record providers and what they accept

MoR providers differ less on what they do than on what they agree to sell. Read the acceptable-use page before the pricing page.

Provider	Built for	Physical goods	What its own pages say
Stripe Managed Payments	Software, games, digital media, online courses, web services	No	Stripe is the merchant of record; physical goods, professional services and live events are unsupported; no Connect platforms3Stripe Docs, Managed Payments4Stripe Docs, Managed Payments eligibility
Paddle	Software and digital products	No	Lists "physical products or products that require physical delivery" as prohibited; 5% + 50¢ per checkout transaction10Paddle, Pricing, read October 14, 202611Paddle Help Center, What am I not allowed to sell on Paddle, updated April 13, 2026
Lemon Squeezy	Digital goods fulfilled through its site	No	Prohibits "Physical goods of any kind" and "Services of any kind"8Lemon Squeezy Docs, Prohibited Products
FastSpring	"AI, SaaS, software, video games, mobile apps, and other digital goods businesses"	Not mentioned on its MoR page	Defines an MoR as "an entity that sells digital goods or services to a customer"9FastSpring, Merchant of Record
Shopify Managed Markets	Cross-border sales from a Shopify store	Yes	"Global-e becomes the merchant of record"; handles tax remittance, local payment methods, duties and import tax; for merchants in the continental US and certain stores in Canada and the UK12Shopify Help Center, Managed Markets

The pattern is clear: the best-known MoR providers are built for software and digital content, where tax applies to a download and nothing ships. For physical goods, the MoR option is mostly cross-border, attached to a store platform, and limited by where the merchant is based. A product category that the provider or its acquirers treat as high-risk is a separate filter: Lemon Squeezy's list, for instance, also excludes regulated products.8Lemon Squeezy Docs, Prohibited Products

Should a DTC brand use a merchant of record?

The usual question is blunt: at which point should you switch from a payment gateway to a merchant of record, or back? The answer depends on what you sell and where.

The less visible costs come from the transfer of control:

Authorization rates are another open question. With an MoR, your payments run through its merchant account, country and statement name. That can help where the MoR has local acquiring, or hurt if issuers see an unfamiliar name. No network publishes a general figure, so compare on your own traffic. Approval mechanics are covered in payment acceptance rate.

If you stay the merchant of record

Most DTC brands do. Then the job is to run the role well:

For subscriptions on top of that, the billing layer is covered in subscription billing software, and the difference between processing and the other payment roles in payment gateway vs payment processor.

Where Tagada fits

Whatever you choose, write down who is the merchant of record for each sales channel you run: your store, each marketplace, each reseller. That one line tells you who owes the tax and who pays the chargebacks.