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What is a merchant of record?

By Ben Tabas, Intrica Research · Updated

Answer

A merchant of record (MoR) is the company that is legally the seller in a transaction, so it collects and remits sales tax, handles chargebacks and carries payment compliance. Stripe's guide, updated June 10, 2026, defines the MoR as the entity that takes legal and financial responsibility for a sale. Software companies use one to sell abroad without registering for tax in every country.

What a merchant of record does

  • Registers for sales tax, VAT and GST, then collects and remits it.
  • Responds to disputes and absorbs chargeback losses from fraud.
  • Carries much of the PCI DSS scope and local payment rules.
  • Appears on the buyer's card statement. Paddle's docs, checked Oct. 28, 2026, say your name appears on the statement alongside Paddle's.

Merchant of record or payfac

A payfac moves money for you, but you stay the seller. Stripe's June 10, 2026 guide says the sub-merchant remains legally responsible for the sale under a payfac.

A merchant of record resells your product. It takes the tax and dispute work off your team.

What it costs and who offers it

  1. Paddle's pricing page, checked Oct. 28, 2026, lists 5% plus 50 cents per checkout transaction, covering tax compliance, fraud and chargebacks.
  2. Stripe's Managed Payments docs, checked Oct. 28, 2026, say Stripe acts as merchant of record and handles sales tax, VAT and GST in more than 80 countries.
  3. Check product fit. Stripe's docs say Managed Payments is for digital products and does not support Connect platforms or marketplaces.
  4. Compare the fee with what tax registration and filing in each market would cost you.

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Sources

  1. Merchant of record vs. payment facilitator: How to choose the right model · Stripe, June 10, 2026Supports: The MoR definition, its tax, dispute and PCI duties, and how it differs from a payfac.
  2. What is Paddle? · Paddle, Oct. 28, 2026Supports: Checked Oct. 28, 2026: Paddle as merchant of record, the statement name and no seller tax registration.
  3. Pricing · Paddle, Oct. 28, 2026Supports: Checked Oct. 28, 2026: the 5% plus 50 cents per transaction fee and what it includes.
  4. Managed Payments · Stripe, Oct. 28, 2026Supports: Checked Oct. 28, 2026: Stripe's merchant of record product, its 80 plus country tax coverage and unsupported integrations.

Related questions

General information, not legal advice.

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