Search results
No results found.
Try different keyword
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Everything you need to know about a Merchant of Record vs a Seller of Record

Morgan Williams



Morgan Williams


January 26, 2024


Never worry about sales tax headaches with Lemon Squeezy. As the leading merchant of record for 1,000's of software companies, we keep your business compliant with sales tax so you can focus on your business.

Managing e-commerce doesn't have to be complicated; understanding the distinction between a Merchant of Record and a Seller of Record can help you outline a business model and best practices.

Think of the Merchant of Record (MoR) as the foundation for sales transactions, managing financial intricacies and legal obligations. These include companies like Lemon Squeezy, which processes and manages payments for you as a "silent partner" that the shopper never knows about.

The Seller of Record (SoR) is the brand a customer buys from and is who a customer thinks of when making a purchase.

The challenge is that these terms are often used interchangeably but are very different things. Understanding these nuances is the secret ingredient that can define the success of online businesses. Let's delve into everything you need to know about the differences between merchants and sellers of record.

What is a Merchant of Record?

A Merchant of Record is a third party responsible for handling financial and legal aspects of online transactions for your online business. They're the behind-the-scenes conductor ensuring compliance and financial smoothness.

Having a global Merchant of Record partner means the universe of admin, tax, and compliance burdens are eliminated so you can focus on your digital products or services.

The MoR is a buffer between the buyer and you that manages financial administration, payments, taxes, and fees and then sends you the net amount from the transaction. The Merchant of Record can act as a seller or reseller of digital products. Everything happens almost instantly in the background keeping your engineers, accountants, counsel, CEO, and CTO happy.

Here are some of the things a MoR will take care of:

  • Facilitation of payments from an online platform
  • Integration of payment processors such as Stripe or PayPal or digital wallets
  • Managing payment processor fees and charges
  • Manage taxes and compliance in multiple markets
  • Ensuring regulatory compliance
  • Currency conversion for international transactions
  • Implementation and maintenance of fraud detection measures
  • Ensuring PCI compliance
  • Dispute resolution and handling of refunds and chargebacks
Learn more about Lemon Squeezy as a MoR

What is a Seller of Record?

A Seller of Record directly provides digital goods or services to customers while shouldering the weight of transactions. Their role encompasses payment processing, tax collection, compliance adherence, and managing customer service.

For example, if you opt to sell products directly to consumers from your website, your company has taken on the role of SoR. Your team will manage the entire sales process, from transactions to customer support, with the latter likely being your primary focus. As a business scales up, it will transition from operating as a Seller of Record to working with a Merchant of Record.

In today's complicated online landscape, most companies are working with a reputable Merchant of Record, such as Lemon Squeezy, to ensure that everything runs smoothly while giving you more time to focus on business development and growth rather than compliance and taxes.

Some of the duties of a Seller of Record include:

  • Operating as a frontline seller of a digital product
  • Hands-on customer service and interactions, including questions and refunds
  • All aspects of the sales process
  • Managing taxes, currency exchange, and all aspects of the actual transaction
  • Managing compliance with financial institutions

Do you need a Merchant of Record?

Have you ever thought about having someone handle your payments for you? That's what a Merchant of Record does – they take care of all the money when you sell things online. The most practical benefit if you sell digital products is they can ensure that payments are processed and tracked correctly.

Additionally, companies often consider adding a MoR to the mix during times of expansion. Imagine expanding your business worldwide and having to consider dealing with various currencies, taxes, and rules. An MoR can make that a breeze by handling these tricky bits, letting you focus on what you do best.

They also manage payment systems, ensuring everything's secure and following the rules. This helps you avoid headaches and concentrate on making your digital products awesome.

A reputable MoR, such as Lemon Squeezy, is also good at spotting fraud and keeping your money safe. That's a load off your mind!

If you would like someone else to handle these functions while you focus on selling digital products, a Merchant of Record is likely a good fit:

  • Deal with compliance and legal requirements for payments
  • Handle payment processing, gateways, and security
  • Serve as a global partner to handle currency exchanges, taxes, and compliance in other countries
  • Mitigate risk for financial systems and fraud
  • Allow you to focus on your core business while payment process happens in the background

How Lemon Squeezy makes MoR easy

Exploring a real-world example, we look to Tony Dinh of TypingMind who first switched to Lemon Squeezy in an attempt to simplify his sales tax process. "Managing sales tax was a constant headache. It was a complicated and intimidating task."

Thankfully Lemon Squeezy handles all sales tax, payments, and compliance globally. This allows merchants to truly scale their sales globally without having to figure out sales tax and VAT implications for each new jurisdiction they operate in. Learn more about Lemon Squeezy as a Merchant of Record.

Read the full case study

In this case, TypingMind not only alleviated all of their tax concerns by powering their payments with Lemon Squeezy, but they also managed to increase their MRR by 1300% in the process, boasting an impressive $200k revenue in the first 4 months after switching to us. Here's what founder Tony Dinh had to say about working with Lemon Squeezy as a MoR ...

Selling digital products online? It's easy peasy

From payments and taxes to subscriptions, Lemon Squeezy makes it easy for digital sellers to manage the financial aspects of business without headaches. We are an all-in-one payment platform for running your SaaS business. We handle payments, subscriptions, global tax compliance, fraud prevention (plus AI fraud prevention), multi-currency support, failed payment recovery and more.

Lemon Squeezy - Get Started
Sell your SaaS or digital products with Lemon Squeezy and we'll handle global sales taxes for you
If you're looking to sell digital products online, be sure to check out Lemon Squeezy or follow us on Twitter @lmsqueezy


Industry insights you won’t delete, delivered to your inbox weekly

Join 10,000+ founders, get early access to Lemon Squeezy features, and learn how to squeeze every drop of revenue from your online business.

Thanks! We have received your subscription request
Oops! Something went wrong while submitting the form.

Related articles

Looking for more juicy goodness?

Read all 

Whatever stage of your journey, we’re here to help

No matter the stage of your company, we stand behind our promise to provide exceptional customer support, from initial setups to massive migrations and everything in between.

Invest in your business with peace of mind that we're here for you whether you need technical help or business advice.


Creator Guide

Looking for some advice on how to sell and market your digital products? Download the creator’s guide to dive deep into getting your idea off the ground.


Merchant of Record Guide

Free guide for all entrepreneurs and organizations explaining why partnering with a Merchant of Record is more important than you might realize.


Want merch?

Want some fresh Lemon Squeezy swag with all the lemon puns you could ever imagine? The wait is almost over as we’re gearing up for a limited-time merch drop.


Need help?

If you’re looking to get in touch with support, talk to the founders, or just say hello, we’re all ears.

We’re giving away $250,000 in credits. Enjoy 0% transaction fees on all sales until the end of January!

No tricks. No gimmicks. 0% fees on all sales, invoices and payments until the end of 2022.

In our biggest release to date, we’ve added a bunch of powerful SaaS tools for no additional cost. To celebrate, we’re giving away $250,000 in credits.*

Here’s a quick look at what’s new:

  • A fresh coat of paint on our website
  • All-new SaaS-focused features
  • New customizable dashboard
  • Expanded API + documentation

And for the rest of January...

  • 0% transaction fees (Woohoo!)

Turn off transaction fees for the next month by clicking the button below.

*Offer applies to new merchants Learn more →