Merchant of Record (MoR) Explained: Key Responsibilities and Obligations

This article is part of our Merchant of Record (MoR), Explained series:

• Part 1: Definition, Role, and Impact
• Part 2: Key Responsibilities and Obligations (You are here)
• Part 3: Strategic Advantages For Market expansion
• Part 4: Coming soon

When businesses explore the Merchant of Record (MoR) model, the first question is usually what is an MoR? The next, and relatively more important question is, what does a Merchant of Record actually handle?

This article breaks down the core responsibilities an MoR takes on:

1. Payment Processing & Fund Management
2. Tax Calculation, Collection, & Remittance
3. Regulatory & Legal Compliance
4. Fraud Prevention & Risk Management
5. Refunds, Chargebacks, & Customer Disputes
6. Reconciliation & Payouts

This is also a guide for businesses in different industries such as gaming, dating, e-book, crypto, and more who want a clear, practical understanding of how the MoR model works in real-world operations. 

What is the role of a merchant of record

At its core, an MoR is the legal seller in a transaction. This single distinction is what transfers a wide range of operational, financial, and regulatory responsibilities away from the business and onto the MoR. 

Rather than simply processing payments, the MoR assumes end-to-end responsibility for the transaction’s lifecycle; before, during, and after the purchase is made.

payment processing & fund management

One of the most visible responsibilities of an MoR is handling payments. This includes:

• Processing customer payments across cards, wallets, and local payment methods
• Managing payment authorization, settlement, and reconciliation
• Appearing as the seller on customer bank and card statements
• Handling currency conversion where applicable

Because the MoR is the seller on record, it is also responsible for ensuring payments are accepted in compliance with local financial regulations in each market.

Tax calculation, collection, & Remittance

Tax compliance is one of the more complex and high-risk areas of global commerce. It’s also one of the primary reasons businesses adopt an MoR model. An MoR is responsible for: 

• Determining the correct tax treatment for each transaction
• Calculating applicable VAT, GST, sales tax, or similar indirect taxes
• Collecting taxes at the point of sale
• Filing and remitting taxes to local authorities
• Managing tax registrations and reporting obligations

This applies across jurisdictions, even as tax rules change or new requirements are introduced.

Regulatory & Legal Compliance

Beyond taxes, selling globally exposes businesses to a wide range of local regulations. An MoR takes responsibility for complying with relevant rules, such as: 

• Payment and financial regulations
• Consumer protection and refund laws
• Digital commerce and data-related requirements
• Country-specific sales restrictions or rules

Because the MoR is the legal seller, it carries the compliance burden associated with these regulations rather than passing it back to the business.

Fraud prevention & Risk Management

Every transaction carries some level of fraud and payment risk. Under the MoR model, the Merchant of Record:

• Implements fraud detection and prevention measures
• Assesses transaction risk and authorizes payments accordingly
• Absorbs liability for fraudulent transactions
• Manage payment disputes and chargeback processes

This shifts both operational effort and financial exposure away from the business and unto the Merchant of Record.

Refunds, Chargebacks, & Customer disputes

Post-purchase operations are another key responsibility area where a Merchant of Record typically handles:

• Processing refunds in line with local regulations
• Managing chargeback responses and evidence submission
• Communicating with payment networks and financial institutions
• Ensuring dispute handling complies with consumer protection laws

This ensures a consistent and compliant approach to customer resolution across markets for the brand and business.

Reconciliation & Payouts

While the MoR handles transactions, businesses still need visibility into performance and revenue. Most Merchant of Record setups include:

• Transaction-level reporting
• Revenue and fee breakdowns
• Settlement and payout reconciliation
• Documentation for accounting and audits

This is majorly helpful for finance teams to maintain clarity without managing the underlying complexity.

What remains with the business

Even with an MoR in place, not everything is outsourced. Typically, businesses retain control over several aspects such as: 

• Product development and delivery
• Pricing strategy and promotions
• Branding and customer experience
• Customer support outside of payment disputes

Essentially, the MoR focuses on transaction responsibility, while the business focuses on growth and value creation.

Final thoughts: Is aN MoR needed?

As businesses scale, these responsibilities can become harder to manage, especially across multiple markets and jurisdictions. By consolidating them under a single Merchant of Record such as Coda, companies can reduce operational overhead, minimize compliance risk, and accelerate global expansion. 

Coda can also unlock more than 400 local payment methods in over 70 markets worldwide, enabling access to alternative payment options and support for local currencies.

An MoR is far more than a payments provider. It’s a comprehensive commerce partner that can take on a seamless expansion.

Ready to grow? We’re ready to go.

Find out more here.