What is a merchant of record (MoR)?

A merchant of record is a term used to describe the legal entity selling goods or services to an end customer. When a customer makes a purchase, they are buying from the merchant of record. The merchant of record is responsible for handling all payments and takes responsibility for everything relating to the purchase, including collecting sales tax, processing refunds and chargebacks, and ensuring PCI compliance.

Businesses can choose to be their own merchant of record. However, this is a complex and technical process and involves taking on a lot of liability. For example, the business would need to take responsibility for:

  • Managing transactions, cancellations, refunds, and disputes
  • Maintaining financial liability for the goods sold
  • Ensuring compliance with PCI-DSS standards
  • Managing all tax calculation, collection, and remittance
  • Maintaining a direct relationship with payment service providers
  • Staying up-to-date with the ever-changing card association regulations
  • Providing billing-related customer support
  • Fraud prevention

Is Lemon Squeezy a merchant of record?

Yes, Lemon Squeezy acts as a merchant of record. Part of Lemon Squeezy’s mission is to make selling digital goods online easy peasy. As such, we take on all of the liability mentioned above so that sellers don’t have to worry about it. Instead, they can focus their talent and energy on building great products to sell.

How does the merchant of record model work?

From a customer’s point of view, they will still go to your store/website to purchase a product from you. However, during the sale, the customer is actually purchasing the product from Lemon Squeezy who is acting as the merchant of record. Technically, Lemon Squeezy is acting as a reseller who is licensed to resell your products. When the transaction is complete, Lemon Squeezy’s name will appear on the credit card statement and we will be responsible for fulfilling the purchase. This is how Lemon Squeezy becomes the liable party. 

More info on “merchant of record”

Do I need to report & pay tax?

As Lemon Squeezy is a merchant of record, you shouldn’t need to report sales tax for sales you make through Lemon Squeezy. However, you may need to pay tax on the income you receive from Lemon Squeezy in the form of payouts. Each business is different, so we recommend you get some legal advice from a tax expert in your country to find out exactly where you stand on this.