As an online entrepreneur, you’ve likely come across the terms “Merchant of Record” and “Seller of Record” when it comes to handling online transactions and payment processing. The waters tend to get muddied because the two tend to be used interchangeably, and entities or publications that do so aren’t helping vendors since the level of responsibility and liability represented by the two differ quite significantly.

This guide will define both the MoR and SoR, and help you understand when and why you might want to consider using a MoR like Whop rather than keeping your business a SoR.

What is a Merchant of Record?

A Merchant of Record, or MoR, is a third-party service provider that takes responsibility for payments. The term describes the legal entity selling goods or services to an end customer, so if you’re a seller on Whop, Whop acts as your Merchant of Record.

When your customer makes a purchase from your online store, the responsibility for handling that purchase falls to Whop. This includes all of the things that go with ecommerce, such as collecting sales tax, processing refunds, honoring chargebacks, and ensuring compliance with the relevant laws and regulations. 

What is a Seller of Record?

In comparison, a Seller of Record, or SoR, is an entity selling goods or services to a customer. Just like a MoR, is responsible for transactions from a legal and financial perspective. A SoR processes payments, collects and remits sales tax, ensures compliance, and also handles customer service issues. 

In some cases, the same entity takes the role of both SoR and MoR. You’ll see this usually when a business sells products or services directly to customers via their own website or ecommerce platform. In the case of listing your products on certain online marketplaces, you as the vendor become the SoR and need to look after product compliance and issues like refunds.

The term SoR is therefore more apt when referring to an individual vendor taking on responsibility for its own transactions, sales taxes, and payment processing. Most vendors elect to partner with a MoR like Whop when they scale up to a point that all of these responsibilities become a burden.

Merchant of Record Seller of Record
Can act as seller or reseller Legal entity selling goods to end customer
Takes over liabilities and responsibility for payment and fulfilment from the seller Takes on seller’s liabilities and responsibilities
Can handle the lifecycle of a sale and acts as a merchant with respect to payments, liability, and compliance Duties mainly revolve around handling the lifecycle of a sale
Responsible for monitoring and preventing fraud Not responsible for fraud prevention, management, or investigation

What a Merchant of Record Provides

The main thing a Merchant of Record gives both you and your customer is protection from all of the potential risks that online transactions involve. Since they’re intermediaries, they facilitate the transaction and ensure security. This cuts down the risk of fraud and costly dispute situations such as chargebacks.

Merchants of Record also provide additional services that can make them advantageous, such as customer service. When your customers encounter issues with their store, 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 for the customer.

Here are some of the most important 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 Whop Helps You as a MoR

The benefits of having a Merchant of Record in your corner are likely apparent by now, but Whop goes the extra mile! It’s extremely easy to set Whop up as your Merchant of Record, manageable in just a couple of clicks. You can read more about the process here.

One of the biggest advantages of having Whop as your MoR is that Whop assumes liability for the transactions processed on your behalf. The payment providers you may be accustomed to using don’t do that, so it’s a very significant distinction. Best of all, Whop integrates with other payment providers easily, meaning that if you’re used to Stripe Express, you can keep using it in exactly the same way, only now with Whop by your side as your MoR!

Start Selling on Whop Today! 

👉 Signing up for Whop is extremely easy, and you can be done in just a few clicks if you’re using a Google account or one of a selected few social passports. Even without those, your online store can be live and selling in under ten minutes, so just sign right up or talk to the Whop team today!

📚 Read next: What is a Merchant of Record?