Merchant of record
What a merchant of record is, and which payment liabilities it takes over from the software vendor.
As Paddle publishes it
Every statement on this page restates Paddle's public documentation, linked under Sources.
In short
- A merchant of record is the legal entity responsible for selling to the end customer.
- The buyer buys from the MoR, sees its name on the card statement and directs disputes to it.
- It takes on sales tax, payment compliance, refunds and chargebacks, currency, fraud and merchant accounts.
Definition
- A merchant of record (MoR) is the legal entity responsible for selling goods or services to the end customer.
- It manages all payments and takes on the associated liabilities: the buyer buys from the MoR, the MoR's name appears on the buyer's card statement, and the buyer directs disputes to it.
- Paddle acts as the merchant of record for the software it sells on a vendor's behalf.
What the merchant of record takes on
- Sales tax and VAT — calculating, filing and remitting software sales tax in the locations where the customers are.
- Payment compliance — PCI-DSS security standards and payment data requirements across jurisdictions.
- Refunds and chargebacks — payment reconciliation, refunds and chargebacks.
- Currency — payments made in foreign currencies by international customers.
- Fraud — systems that flag fraudulent orders, and manual review of suspicious transactions.
- Merchant accounts — merchant bank accounts in different countries to accept different currencies.
Because the MoR is the liable party in each sale, the vendor does not run this payment infrastructure itself. How Paddle models products, transactions and webhooks is on Paddle facts.