Merchant of Record
What is a Merchant of Record?
A Merchant of Record (MoR) is the entity responsible for processing payments, managing disputes, and ensuring compliance with financial regulations. Most payment processors simply move money on behalf of merchants and do not want to take on the additional burden of being the merchant of record.
Trustap, acting as a MoR, sits between a buyer and a seller as a trusted party, holding fees until both parties are happy that a transaction is finished and managing all the complexities around payments and compliance.
Benefits of using a MoR
By acting as the Merchant of Record, Trustap provides marketplace and eCommerce operators with a range of regulatory, operational, and tax compliance advantages including the following.
Simplified Regulatory Compliance - Trustap manages financial compliance on behalf of its partners by working with fully certified payment processors. This allows marketplaces and merchants to avoid handling complex regulatory requirements such as PCI DSS and AML compliance themselves. This reduces legal complexity and overhead.
Reduced Operational Burden - Trustap handles payment processing, dispute resolution, and chargebacks, allowing operators to focus on growth rather than managing backend financial operations. Partners also avoid the need to manage their own merchant accounts.
Automated Tax Compliance - Trustap, through payment processors, automatically calculates and applies the correct tax rates based on buyer and seller locations. It can assume responsibility for VAT/GST collection, ensuring compliance with EU VAT, U.S. sales tax laws, and other jurisdiction-specific requirements.
Reporting & Reduced Liability - Trustap generates tax reports for sellers and operators, helping maintain proper documentation for authorities and reducing the risk of non-compliance penalties. This enables marketplaces to expand across regions without needing to navigate complex tax frameworks themselves.
Scalable global payments - With support for multiple currencies and localized payment methods, Trustap enables marketplaces to enter new markets without additional compliance work.
Enhanced security and risk management - Trustap leverages payment platform's fraud prevention tools to protect both buyers and sellers. All transactions are handled in accordance with Trustap’s Terms of Service, ensuring transparency and trust.
Responsibilities of a MoR
A MoR is responsible for the following.
- Payment Processing: Managing transactions, refunds, and chargebacks.
- Tax Compliance: Applying correct sales tax, VAT, and other regulatory requirements.
- Risk and Fraud Management: Protecting buyers and sellers from fraudulent activities.
- Regulatory Compliance: Meeting financial regulations, including PCI DSS and anti-money laundering (AML) standards.
What a MoR is not
A Merchant of Record (MoR) is not the same as a payment processor. Payment processors manage the flow of funds between a buyer and seller.
- Payment processors do not handle taxes or compliance.
- Payment processors are not the legal seller of record.
A MoR goes beyond payment processing. It assumes legal, tax, and regulatory responsibilities on behalf of the marketplace. Depending on what is most appropriate for the use case and geography in question, Trustap chooses from a network of payment platforms to securely manage payments, whilst also handling liability for chargebacks, disputes, tax reporting, and customer protection.