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A merchant of record or seller of record are two routes businesses can take when it comes to handling how they sell products or services. The former is an all-in-one solution to help you scale faster and give you more time to focus on growing.
If you want to know more about each model and are trying to figure out which one is best for you, read on to understand the difference between a merchant of record vs seller of record.
Explore our Merchant of Record series
Seller of Record vs Merchant of Record: What’s the Difference?
A seller of record is the entity that directly sells the product or service to the customer. The seller of record also looks after taxes and compliance, but on top of that, there’s also owning the entire payment and transaction process, customer service, fighting fraud - all whilst you’re trying to improve your products and grow.
They might get a third party to handle payment processing, like Stripe or Paypal, but that still leaves the seller of record to handle the rest because they usually own the company.
On the other hand, a merchant of record handles everything from payment processing, handling transactions, fighting fraud, calculating tax and remitting it. You get many different solutions all in one platform (like Paddle), rather than managing and paying for separate platforms like a payment processor or tax compliance software.
Think of a merchant of record as your business partner, giving you complete control over your product and customer relationships, whilst making sure you’re compliant with payments, global sales tax and VAT.
When comparing a merchant of record vs seller of record, an MoR like Paddle is key for the operational efficiency and scalability of your business.
Seller of Record vs Merchant of Record: Key Features
How are the two different from each other? Compare both models below:
Seller of Record
- Owns the products they're selling. A seller of record manages everything from fulfilment and delivery, payment stack, customer service queries, fraud, chargebacks, product development and tax compliance
- The seller of record either requires someone in-house to calculate and file taxes in the relevant jurisdiction, or pay for additional tax software
- Someone in-house also needs to manage customer service, and anything to do with refunds, fraud and chargebacks
- High level of admin involved
- Best for: physical goods and e-commerce
Merchant of Record
- A merchant of record does not own the product being sold. They manage anything to do with payments, global tax compliance, customer service, fraud and chargeback management. This frees up time for product development and growing your business
- They are fully tax compliant - taxes are calculated and remitted on the seller's behalf, covering regional and global sales tax, as well as VAT
- Customers (both sellers and end users) can leverage support from a merchant of record, freeing up more of the seller's time
- Opting for a merchant of record like Paddle means there's a lower level of admin involved for sellers, thanks to our API-first approach
- Customer service is provided for both sellers and their customers
- Best for: SaaS, digital products, apps sold on the web and online games
Take the headache out of growing your software business
We manage your payments, tax, subscriptions and more, so you can focus on growing your software and subscription business.
Bottom line: MoRs are your ticket to growth
Businesses with a seller of record approach have to shoulder a lot of responsibilities. Many app and software founders struggle to scale as a result of all these moving parts they look after.
Paddle’s global merchant of record handles all the heavy lifting, so you can focus on growth.
