Merchant of Record vs Seller of Record

Running a successful eCommerce business goes beyond just having a stunning website and attractive products. As you scale up the business and website, two of the key backend processes you need to focus on are the Merchant of Record (MoR) and the Seller of Record (SoR).

These two entities handle the nitty-gritty of your operations and transactions, from secure payments to tax compliance. But what exactly sets them apart? While MoR takes care of payment, taxes, and legalities, SoR focuses on order fulfillment, inventory, service, etc.

Let us tell you a bit more about Merchant of Record vs Seller of Record. Plus, you will learn what we at Gapp Group offer as part of our MoR solutions.

What is a Merchant of Record?

In eCommerce, a Merchant of Record is an entity that the payment processors recognize as the legal seller of products and services. It takes on the responsibility of handling the financial aspects of your sales. That means the MoR is the middleman between you and your customer for the payment process.

Here are a few of the key MoR responsibilities:

  • Payment Processing: The MoR securely processes all customer payments, including credit cards, debit cards, and digital wallets. They ensure the smooth flow of funds and handle any complications that might arise.
  • Tax Compliance: The MoR takes care of calculating, collecting, and remitting sales tax (or VAT/GST) to the appropriate authorities. This saves you the hassle of navigating complex tax regulations across different jurisdictions.
  • Financial Liability: The MoR assumes financial responsibility for the transaction. This includes chargebacks, refunds, and fraud prevention. They have the systems and expertise in place to minimize these risks.
  • Compliance with Regulations: The MoR ensures adherence to various financial regulations, including PCI compliance for credit card security. This frees you up to focus on running your business without worrying about regulatory hurdles.

You can opt for our MoR services to streamline your eCommerce operations and avoid the payment and tax complexities. That way, you can focus on what you do best, i.e., creating and selling your products or services.

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What is a Seller of Record

In the eCommerce process, the Seller of Record (SoR) acts as the frontman for the sale. It takes responsibility for the product or service itself along with the customer experience. Unlike a Merchant of Record (MoR), which focuses on financials, the SoR deals with the operational side of things. Here's how an SoR typically functions:

  • Order Fulfillment: The SoR handles the logistics and gets your product or service to the customer. This may involve managing inventory, packing, and shipping orders, and potentially even coordinating returns.
  • Customer Service: The SoR is often the point of contact for your customers. They address inquiries, handle complaints, and provide support throughout the buying journey.
  • Product or Service Delivery: Depending on the agreement, the SoR might be responsible for delivering the digital product or service directly to the customer. This could involve managing access to downloads or online platforms.

While the MoR deals with the money, the SoR ensures a smooth customer experience. They take ownership of the operational aspects, freeing you to focus on product development and marketing efforts. If you lack the necessary resources for handling the eCommerce fulfillment and customer service, go for a third-party SoR.

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Merchant of Record vs Seller of Record

Feature Merchant of Record (MoR) Seller of Record (SoR)
Primary Role Handles payment processing, fraud prevention, and compliance Manages product/service offerings and fulfillment
Legal Responsibility Liable for chargebacks, refunds, and compliance with payment regulations Liable for product delivery, customer satisfaction, and returns
Customer Interaction Interacts with customers mainly for payment-related issues Directly interacts with customers for sales and support
Revenue Recognition Recognizes revenue from transaction fees and services Recognizes revenue from the sale of products or services
Compliance Ensures compliance with local and international payment regulations Ensures compliance with product/service-related regulations
Data Storage Stores customer payment information, transaction details, and compliance data securely Stores product/service information, customer order details, and sales data
Contractual Agreements Engages in agreements with payment networks and acquirers Engages in agreements with suppliers, manufacturers, and customers
Merchant of Record (MoR) Seller of Record (SoR)
Handles payment processing, fraud prevention, and compliance Manages product/service offerings and fulfillment
Liable for chargebacks, refunds, and compliance with payment regulations Liable for product delivery, customer satisfaction, and returns
Interacts with customers mainly for payment-related issues Directly interacts with customers for sales and support
Recognizes revenue from transaction fees and services Recognizes revenue from the sale of products or services
Ensures compliance with local and international payment regulations Ensures compliance with product/service-related regulations
Stores customer payment information, transaction details, and compliance data securely Stores product/service information, customer order details, and sales data
Engages in agreements with payment networks and acquirers Engages in agreements with suppliers, manufacturers, and customers

What Does Gapp Group Offer in MoR Solutions?

Let’s say you want the best MoR services for your eCommerce business. Then here’s what Gapp Group is prepared to offer you:

  • Global Payments: We can handle secure payment processing for customers worldwide, with support for various currencies and payment methods.
  • Sales Reporting: Gapp Group provides comprehensive reports on your sales transactions, including details like revenue, taxes collected, and chargebacks.
  • Tax Compliance: As a core MoR function, Gapp Group handles tax calculations, collection, and remittance to the appropriate authorities.
  • Fraud Management: Our MoR services include robust systems to identify and prevent fraudulent transactions, protecting you from financial losses.
  • Dispute Resolution: Gapp Group can handle customer disputes related to payments and chargebacks, taking the burden off your shoulders.
  • System and 3rd Party Integration: We offer integration with your existing eCommerce platform and other relevant software, streamlining data flow and simplifying operations.

With our Merchant of Record solutions, we aim to reduce your workload, simplify operations, enhance security, and ensure a global reach.

Conclusion

Remember, the ideal choice depends on your specific needs. If you are trying to navigate through complex financial regulations and payment security, then MoR is what you need. But if you want complete control over the customer experience with fulfillment managed in-house, SoR would be more suitable.

Ultimately, both MoRs and SoRs play crucial roles in streamlining e-commerce operations. MoRs take the financial and legal weight off your shoulders, while SoRs ensure a smooth customer journey.

If you need help with the best Merchant of Record services, contact the Gapp Group experts today!