Merchant of Record: The Working model of choice for American companies seeking to sell to Europe

June 9, 2022 by
Frank Calviño

Interview to Simone De Ruosi, CEO at Go Global Ecommerce.

What is a Merchant of Record (MoR)?

A MoR is a legal entity that acts as a reseller between a Brand (vendor) and its clients in an e-commerce transaction. The MoR is fiscally and legally responsible for the sales to final consumers around the globe. 

What difficulties do American merchants face when selling internationally?

USA is a huge market with 1 currency, 1 culture, 1-2 languages, 1 legal and fiscal framework. When it comes to going international, the complexity increases as those factors are multiplied by the number of countries. However, in many cases all the effort put into selling in other countries is rewarded by much smaller markets and figures than the US ones.
Therefore, companies are tempted to avoid the jump. 

How does the merchant of record model work?
It is very easy: the MoR manages thousands of B2C sales to final customers; the brand raises a monthly B2B invoice to the MoR. Risks and complexities are left to the MoR. 

What are the benefits that American companies get when working with a Merchant of Record?
They can concentrate on the core business - building and marketing their products - thinking in a “borderless strategy”. The MoR can be used as a business accelerator.

What types of businesses can benefit from an MoR and why?
Any kind of business can benefit from not having headaches, risks, and costs in non-core activities. However, highly regulated businesses like spirits and electronics can take even more advantage.

How can a merchant of record improve American companies’ relationships with their clients?
Being fiscally and legally transparent, compliant with the local regulations, and offering localized checkouts increases the shopping experience and trust. It is proven that this increases the conversion rate and return rate. 

What are the key differences between a Merchant of Record, a Seller of Record and a payment service provider?
The scope gets narrower.
The MoR is a re-seller who takes full legal and fiscal responsibility for the sales.
The SoR does not re-sell to customers; it helps provide payments and taxes management, but still, it acts on behalf of the Brand.
The PSP is a third party that allows Merchants to collect payments. It is just a means to transfer money from customers and does not intervene in any fiscal/legal operation.

How can a merchant of record help companies to reduce legal risks?

Well, legal risks are down to 0. The responsibility of the sales is on the MoR; the vendor/brand is only responsible for its products toward the MoR.

Why is working with a Merchant of Record entity the preferred option for American companies seeking to sell in Europe?EU is a very complex market: different languages, habits, cultures, and fiscal and legal framework.
This means huge complexity and risks to fail in performing fiscal/legal activities or giving poor experience to customers. An MoR is indeed a business accelerator.

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