Merchant of record (MoR)

A merchant of record is the legal seller on the receipt. You build and support the product, but the MoR is the party on the hook for sales tax, VAT, and GST in every jurisdiction the sale touches, and the statement descriptor is usually theirs or a shared one they control (some plans let you get your own brand in there, so check). Paddle, Lemon Squeezy, Polar, FastSpring, and the mobile app stores all work this way.

Reach for one when you sell digital goods worldwide and do not want to register for VAT in forty countries or personally argue with a bank about a chargeback. The MoR files the tax returns and runs the dispute process with the acquirer, which is most of the work. You pay for the shelter: MoR pricing tends to land near 5 percent plus a fixed fee, roughly double a plain payment service provider, where you keep the tax and dispute work yourself.

Gotcha: 'their problem' is not the same as 'free'. Contracts commonly let the MoR pass refund and chargeback losses plus fees back to you through your balance, and they will ask you for the evidence (delivery logs, usage, support threads) because you are the only one who has it. They also own the customer relationship on paper: their risk team can freeze or offboard you, and refunds follow their policy and not yours. Leaving later depends on the vault: some vendors support a vault-to-vault migration of stored cards if you request it and pass the compliance checks, others leave you recollecting every card. Read the acceptable-use list, the loss pass-through clause, and the payout schedule before you build anything on top.