Key takeaways
- The seller of record (SoR) owns the product, price and customer; a merchant of record (MoR) resells it and takes legal and financial responsibility for each payment.
- When you use an MoR, you usually stay the seller of record for your product.
- Some providers sell a tax-only 'seller of record' service, so check which meaning a contract uses.
- For an Indian business, an MoR becomes your customer: you invoice it, usually as an export of services, and its payouts arrive as foreign inward remittances.
What is the difference between a seller of record and a merchant of record?
The seller of record (SoR) owns the product and the customer relationship, while the merchant of record (MoR) is the legal entity that sells it to the customer and takes full financial and legal responsibility for the transaction. The SoR sets the price and delivers what was bought; the MoR buys the product from the SoR, resells it, collects the payment and handles sales tax, fraud and chargebacks.
If you sell on your own website through your own payment account, you are both. For the full role, see our guide to the merchant of record.
Merchant of record vs seller of record: key differences at a glance
The table compares the two models: selling through an MoR, and selling directly as your own seller of record.
| Feature | Merchant of record (MoR) | Seller of record (SoR), selling directly |
|---|---|---|
| Primary role | Legal reseller: owns the transaction, payment collection and tax remittance | Owns the product, brand, pricing, fulfilment and customer relationship |
| Name on bank statement | The MoR's name | Your business name |
| Payment and cash flow | Collects the full payment, takes the financial risk and pays you net revenue after its fee, taxes and refunds, on its payout schedule | Payments come straight to you through your own payment provider |
| Tax and legal liability | Liable for sales tax, VAT, GST and duties on each sale, and answers to tax authorities | Liable for product compliance and, unless it uses a tax-only partner, for its own sales tax in each market |
| Refunds and chargebacks | Handles payment disputes, chargebacks, fraud checks and refunds | Handles product returns, service problems and delivery issues, plus its own chargebacks |
| Best used for | Selling SaaS or digital products to consumers in many countries without local entities or tax registrations | Selling in one market, B2B invoicing, or keeping full control of checkout, data and margins |
| Checkout | The MoR's checkout or an embedded MoR form | Your own checkout and payment methods |
| Pricing and margins | You set prices, but the MoR may show tax-inclusive local prices and takes a fee on each sale | Full control of prices, discounts and margins |
| Customer data | The MoR holds billing and payment data and shares what its terms allow | You hold all customer and payment data |
| Tax registration | Already registered; tax applies from the first sale because the MoR counts its total sales | You register where you cross a local threshold, or from the first sale where none applies to you |
| Invoices to customers | Issued in the MoR's name | Issued in your name |
| Entering a new country | Usually immediate, using the MoR's registrations | Register for tax, and often set up local payments, first |
| Typical cost | A published rate such as 5% plus 50 cents per transaction | Payment processing fees plus your own tax and compliance costs |
Put simply, the seller of record vs merchant of record split is this: the SoR answers 'who is selling this?' and the MoR answers 'who is legally responsible for this payment?'. When you use an MoR, you keep the product side of the SoR role (product, brand, pricing, delivery and support) and the provider takes over everything in the MoR column, including collecting the payment.
How the money moves
A customer in Germany buys a €100 annual plan from an Indian SaaS company that sells through an MoR.
- The customer pays €119 at checkout, including 19% German VAT, and the MoR's name appears on the card statement.
- The MoR declares and pays the €19 of German VAT, usually through the EU's one-stop-shop VAT return.
- It keeps its fee and pays the balance to the SaaS company in its next scheduled payout.
- If the customer disputes the charge, the MoR deals with the card network; if the customer cannot log in, the SaaS company fixes it.
Why do sources define 'seller of record' differently?
Because the term is used in three ways, and providers describe it to fit what they sell. Once you know which meaning a page or contract uses, the advice stops contradicting itself.
- The legal seller, the most common meaning: the business that owns and sells the product. It stays the SoR even when an MoR processes the sale, and this is how most payment companies and marketplaces use the term.
- A tax-only service: a third party becomes the seller only for indirect tax, while you keep your own checkout and payment provider. Cross-border e-commerce compliance providers offer this, and one sells it under a registered 'Seller of Record' name.
- Another name for the MoR: some contracts and articles use the two terms interchangeably for the party legally responsible for the sale.
Before you sign, ask a provider three questions. Whose name will appear on the customer's card statement? Who registers and files sales tax or VAT in each country? Who handles a chargeback? The answers tell you which model you are getting, whatever it is called.
Can one company be both the seller of record and the merchant of record?
Yes. A business that sells on its own website or invoices clients directly, through its own payment account, is both. The roles split when a platform or provider takes over the transaction.
- Your own website or invoices: you are both. You take the payment, charge any tax and handle refunds, which is how most Indian B2B exporters work.
- A global marketplace: in some setups the marketplace acts as MoR, taking the payment and handling disputes, while each vendor remains the seller of record for its products, delivery and returns.
- An Indian marketplace: the roles do not split. The seller stays the legal seller and issues the invoice; the marketplace collects the payment on the seller's behalf and deducts 0.5% GST TCS on its sales.
- Software sold through an MoR: the MoR resells each licence or subscription, and the software company stays the seller of record for the product and support.
- Shopify stores: Shopify itself is not a merchant of record, but for eligible international orders Shopify Managed Markets uses Global-e as MoR while the store stays the seller of record.
- App stores: the store takes the payment, keeps its commission and handles sales tax in most countries, while the developer owns the app.
When is a merchant of record worth it?
A merchant of record is worth it when you sell to consumers in many tax systems, such as the EU, the UK, several US states and Australia, and do not want to register and file in each one. It is rarely worth it for B2B sales on invoice or for selling into one market.
| Your situation | Usually better | Why |
|---|---|---|
| SaaS or digital products sold to consumers in the EU, UK and US | Use an MoR | VAT applies from the first sale for sellers based outside the EU and UK; the EU can be covered by one one-stop-shop registration, but the UK, US states (most use a $100,000 sales threshold) and other countries each need their own |
| B2B software or services invoiced to companies abroad | Sell directly | Business buyers usually account for VAT themselves under reverse charge, so there is little tax to hand over |
| Physical goods shipped cross-border | Compare an MoR with a tax-only service | Duties and import VAT matter as much as sales tax |
| Selling mainly in one country | Sell directly | One registration is easy to manage in-house |
| High fraud or chargeback exposure | Use an MoR | It absorbs disputes and fraud screening |
What a merchant of record really costs
A common published MoR rate is 5% plus 50 cents per transaction, against roughly 3 to 4% for cross-border card processing alone. On $10,000 of monthly sales across 200 transactions, that is $600 a month to the MoR, against about $350 at 3.5% for processing only. The extra $250 or so buys tax registration, filing and dispute handling in every country you sell to.
Also weigh the costs that do not show in the rate: payouts on the MoR's schedule rather than as each payment settles, less direct billing data on your customers, tax charged from the first sale in markets where you would otherwise sit under a threshold, and the work of moving subscriptions if you leave the MoR later.
What changes for an Indian business that sells through a merchant of record?
The MoR becomes your customer. Your end users buy from the MoR, and you sell to the MoR, so your invoices, GST position and proof of payment all point to one foreign company.
You invoice the MoR for each payout period, rather than invoicing each end user. Under GST, a supply of services to an MoR located outside India, paid in foreign currency, usually qualifies as an export of services under section 2(6) of the IGST Act, so you can make it under a letter of undertaking without paying IGST; see export of services under GST.
If the MoR sells to customers in India, GST on those online sales is the MoR's responsibility as a foreign supplier, not yours. Each payout reaches you as a foreign inward remittance, usually in US dollars or euros by bank transfer, so you need a FIRA with the right purpose code to match it to your invoice.
Ask the MoR for a payout statement listing sales, fees, refunds and chargebacks for each period, because that statement is what you reconcile against.
Payment platforms such as Xflow issue an eFIRA within 24 hours for every international transaction; see FIRC vs FIRA for the documents themselves.
An MoR is also different from an RBI-authorised cross-border payment aggregator, which moves money for a business but does not resell its product; see MoR vs PA-CB.
Frequently asked questions
No. A payment service provider only processes the payment, and you remain responsible for tax and refunds. An MoR resells your product and takes on those duties.
No. Shopify is the store platform and you are the seller. For eligible international orders, Shopify Managed Markets uses Global-e as the merchant of record while you stay the seller of record.
Not by default: with standard Stripe payments, you are the merchant of record. Stripe's Managed Payments option, launched in 2025, acts as merchant of record for eligible digital product sales.
Yes. The MoR takes on the transaction, but you still own the product, its pricing, delivery and support, and you remain responsible for your own income tax.
With an MoR, the MoR registers, charges and pays sales tax or VAT on the sales it makes. Without one, the seller does, once it crosses each country's threshold or, for digital sales to consumers in some countries, from the first sale.
In everyday use, a seller is anyone who sells, while a merchant is a business that trades regularly. In payments, 'merchant' means the business that accepts card payments, which is why the party responsible for them is called the merchant of record.
SoR stands for seller of record and MoR for merchant of record. In retail, SOR can also mean 'sale or return', an unrelated stock arrangement.
