Global ecommerce is booming, and with more online stores and marketplaces selling across borders, the Merchant of Record (MoR) model has become an essential part of doing business. For companies with global ambitions, it’s no longer just about listing products and accepting payments but navigating tax rules, regulation and payment infrastructure that differs in every region.
In our previous post, we explored what a Merchant of Record is and why it matters. But what happens if you decide to take that role on yourself rather than working with an experienced MoR provider?
On the surface, managing your own MoR responsibilities can seem like a way to save money and retain more control over your operations. And for some businesses, particularly those with the time, expertise and infrastructure, this can be true. But for most, the reality is that being your own MoR introduces a long list of risks and hidden costs that can impact your finances, operations, and even your brand reputation.
If you run an e-commerce store or a multi-vendor marketplace, here are some of the most significant risks you’ll need to prepare for.
1. Regulatory and Tax Compliance Risk
Compliance is one of the most underestimated challenges of selling globally. Being the MoR makes you the legal seller of record in every market you operate in, which brings with it a host of legal obligations, from consumer protection compliance to liability for products sold. Every country, and often individual states or provinces, has its own set of tax rules and documentation requirements. When you take on the MoR role yourself, you’re not just keeping track of these rules for one location; you’re responsible for every single jurisdiction you sell into. Missing a step can mean fines and penalties and, in worse cases, even losing the right to sell in that market.
If you are your own MoR, you must:
- Register for VAT, GST, or sales tax in every country or state where you sell.
- Keep up with frequent changes to tax rates and rules.
- File and remit taxes on time.
For e-commerce stores
A missed registration or late payment can lead to fines, interest charges and possibly restrictions on your ability to sell in certain regions.
For marketplaces
You’re responsible for ensuring tax compliance not only for your own sales, but for every transaction made by your sellers, which is a monumental task across multiple countries.
2. Financial Liability for Chargebacks and Fraud
Fraud and chargebacks are an unavoidable part of online commerce, but when you’re the MoR, they become your financial problem. That means every fraudulent order or unauthorised transaction comes out of your pocket (along with the time and resources needed to fight it). Without the right systems and expertise in place, these costs can quickly spiral.
As the MoR, you carry full responsibility for:
- Disputed transactions and chargebacks
- Fraudulent purchases
- Refunds and cancellations
For e-commerce stores
Without an expert team handling disputes, you risk high chargeback rates that you alone are responsible for managing.
For marketplaces
Fraudulent activity can cause platform-wide financial losses and jeopardise your payment processing capabilities.
3. Operational Complexity
Payments are more than moving money from buyer to seller. They involve compliance, integrations, security, and localisation. Acting as your own MoR means building and maintaining a payment infrastructure that can support multiple currencies, payment methods, and security standards. It’s a constant balancing act that requires significant technical and administrative investment, often pulling focus away from growth and customer experience.
Running your own MoR function means managing:
- PCI DSS compliance for cardholder data
- Integration of multiple local payment methods
- Foreign currency management and exchange rate fluctuations
For e-commerce stores
This adds complexity to your workday and takes valuable time away from building your brand.
For marketplaces
Every new country you enter increases operational complexity, as each brings its own payment regulations and seller onboarding requirements.
4. Slower Market Entry
Entering a new market is an exciting opportunity with access to new customers and new revenue streams, as well as greater brand reach. But without an MoR partner, the administrative hurdles can slow down this growth considerably. From securing local bank accounts to navigating licensing requirements, every step delays your ability to start selling. In fast-moving markets, those delays can mean losing out to more agile competitors.
Without an MoR partner, you may need:
- Local merchant and bank accounts
- Local entity formation
- Lengthy payment provider onboarding processes
For e-commerce stores
This slows your ability to capture new markets ahead of competitors and increases the risk of costly mistakes.
For marketplaces
Onboarding sellers from new regions becomes more complicated, as you must ensure every transaction is processed legally and compliantly.
5. Reputational and Customer Experience Risks
Acting as your own MoR means taking full ownership of the customer experience during the most sensitive part of their journey: when money changes hands. And in the eyes of customers, payment problems are brand problems. Whether it’s a failed transaction, a delayed refund, or a dispute, it’s your brand reputation on the line.
For e-commerce stores
Even a handful of poor payment experiences can damage reviews and reduce repeat purchases.
For marketplaces
Disputes between buyers and sellers can harm your overall brand reputation, even when you weren’t directly involved in the transaction.
The Bottom Line
While being your own Merchant of Record is possible, it’s rarely the smartest choice for businesses aiming to scale internationally without unnecessary headaches. The compliance, financial, and reputational risks are significant, and for marketplaces, they grow exponentially.
Working with a trusted MoR partner like Trustap removes these burdens, letting you focus on growth, customer satisfaction, and market expansion.
If you would like to discuss what this could mean for your business, please get in touch with us!
