Glossary
Merchant of Record
Meaning and details
A merchant of record, MoR, is not a payment processor; it is the legal seller of your product. Your customers technically buy from the MoR, which buys from you. In exchange for a percentage, typically five to ten, the Mo...
Merchant of Record meaning
A payments provider that legally resells your product, handling global sales tax, invoicing and compliance as the seller of record.
What is Merchant of Record?
A merchant of record, MoR, is not a payment processor; it is the legal seller of your product. Your customers technically buy from the MoR, which buys from you. In exchange for a percentage, typically five to ten, the MoR becomes responsible for global sales tax and VAT registration, invoicing, payment methods, fraud and a slice of chargeback handling. Paddle, Lemon Squeezy, Polar, Creem and Dodo Payments occupy this tier; Stripe and PayPal are processors, where the tax liability stays with you.
Why it matters to an indie builder: selling software worldwide as one person means being the defendant of record in 30 tax jurisdictions. VAT MOSS-style rules in Europe, GST elsewhere and US state sales tax together make a solo founder a part-time accountant. The MoR folds that entire function into a per-transaction fee, which is why it is the default recommendation for indie digital products sold globally.
A concrete example: a $19 monthly template subscription with 400 customers across 40 countries. Self-handled: you register where thresholds force it, file dozens of returns, chase invoices. Through an MoR at seven percent: $532 of monthly fee, and every invoice, currency conversion and tax filing arrives handled. One evening of your time per month saved is worth more than the fee, and the sleep-at-night factor is not priced in.
Common mistakes: comparing the MoR percentage to Stripe's 2.9 percent as if they were the same product (you are replacing accounting software and a tax advisor, not a processor), ignoring the payout schedule and reserve policies before committing, mixing models mid-funnel (subscriptions started under one legal seller cannot silently migrate; plan it), and assuming physical goods or services fit the MoR model, which is digital-products-first territory. The merchant-of-record blocks on IndieBoot compare the current field, and the billing category holds both tiers side by side.