The difference between Merchant of Record vs. Seller of Record

Are you confused about the difference between Merchant of Record (MoR) and Seller of Record (SoR)? Whop has got you covered, in this easy guide to MoR.

A Merchant of Record (MoR) processes payments and manages compliance on behalf of a business, while a Seller of Record (SoR) handles its own sales, taxes, and legal obligations.

The key difference: MoR's take on the heavy lifting: think payments, taxes, compliance, and liability, so you don’t have to.

If you’re building an online business, this difference really matters.

Here’s a quick breakdown of what each one actually means — and why partnering with a MoR like Whop can save you a ton of time (and headaches).

Understanding Merchant of Record (MoR)

A Merchant of Record is the legal entity that sells goods or services to an end customer and takes full responsibility for the transaction.

When you're a seller on Whop, we act as your Merchant of Record.

This means when your customer makes a purchase from your online store, the responsibility for handling that purchase falls to Whop.

This includes all of the critical ecommerce functions such as collecting sales tax, processing refunds, honoring chargebacks, and ensuring compliance with relevant laws and regulations.

Essentially, the MoR becomes the official seller in the eyes of payment processors, banks, and regulatory bodies (even though you're the one providing the product or service).

Understanding Seller of Record (SoR)

A Seller of Record is an entity that sells goods or services directly to customers and takes on full responsibility for transactions from a legal and financial perspective.

As a SoR, you process payments, collect and remit sales tax, ensure compliance, and handle customer service issues.

In many cases, the same entity takes on both SoR and MoR roles.

This typically happens when a business sells products or services directly to customers via its own website or ecommerce platform, managing everything in-house.

When you operate as a SoR:

• You're responsible for your own payment processing
• You handle sales tax collection and remittance
• You manage compliance with regulations in every jurisdiction you sell in
• You deal directly with refunds, chargebacks, and disputes
• You assume all liability for transactions

The term SoR is most commonly used when referring to individual vendors or businesses taking on full responsibility for their own operations.

MoR vs SoR: Key differences

When deciding between operating as a Seller of Record or partnering with a Merchant of Record, the main consideration is whether you want to be responsible for transaction processing, payment liabilities, customer service, and fraud prevention.

Here's some more detail:

A Seller of Record (SoR):

• Handles some responsibilities but doesn't cover all bases
• You maintain direct control over the entire transaction process
• You're listed as the seller on customer bank statements
• You deal directly with customers for disputes and refunds
• Best for businesses that want full control and have resources to manage compliance

A Merchant of Record (MoR):

• Takes care of everything on your behalf by definition
• Acts as an intermediary between you and the customer
• Their name appears on customer bank statements
• They handle customer disputes, refunds, and chargebacks as the first point of contact
• Best for businesses that want to reduce liability and administrative burden

What does a Merchant of Record provide?

The main thing a Merchant of Record gives both you and your customers is protection from all of the potential risks that online transactions involve.

Since they're intermediaries, they facilitate transactions and ensure security. This cuts down the risk of fraud and costly dispute situations such as chargebacks.

Merchants of Record also provide valuable extras that make them advantageous, such as customer service. When your customers encounter issues with their purchase, their first point of contact is Whop, not you.

This frees up your time to focus on what's truly important, although if a customer service situation needs to escalate to you, you can always step in and craft an equitable solution.

Key services offered by Merchants of Record:

• Facilitation of payments
• Integration of payment processors such as Stripe Express
• Managing payment processor fees and charges
• Establishment of merchant banking accounts in separate financial jurisdictions
• Ensuring and taking responsibility for regulatory compliance
• Currency conversion for international transactions
• Implementation and maintenance of fraud detection measures
• Investigating detected cases of fraud
• Dispute resolution and handling of refunds and chargebacks

How does a Merchant of Record work?

Your Merchant of Record serves as an intermediary between you as a vendor and the customer who purchases your products or services.

If you're using a MoR but selling via your own website, the customer experience isn't impacted at all – but it's the MoR that takes the initial payment and then sends you the required amount of money following deduction of fees and taxes.

Notably, the customer will see the Merchant of Record's name on their bank statement.

So if you're listed on Whop, it's not the name of your business but Whop itself that shows up on their transaction list. And as mentioned, it's Whop they'll contact for any disputes, not you.

How Whop helps you as a MoR

Having a Merchant of Record is already a big win, but Whop takes it further.

Setting up Whop as your MoR takes just a few clicks, and once active, Whop assumes full liability for every transaction processed on your behalf. That’s something most traditional payment providers don’t offer

Even better, Whop works seamlessly with the tools you already use.

If you’re familiar with Stripe Express, you can keep using it exactly as before, only now? Whop sits behind the scenes as your Merchant of Record, handling compliance, taxes, and risk so you can stay focused on growth.

Scale faster with Whop as your Merchant of Record

Skip the setup headaches and compliance stress.

With Whop handling payments, taxes, and liability, you can focus on building products and growing your community.

Join 100,000+ creators already using Whop Payments to sell smarter, go global, and get paid faster.