Merchant of Record vs. payment provider
A payment provider moves money on your behalf. A Merchant of Record also becomes the legal counterparty and takes on the obligations around the payment.
Definition
With a payment provider, your business generally stays the payer. You usually remain responsible for collecting invoices and tax details, applying the right VAT treatment and, where rules require it, checking who you pay. The provider mainly executes the transfer and runs its own checks under its own rules.
With a Merchant of Record, the MoR is the payer of record.12 Most obligations around each payee move to the MoR, within the scope of your agreement, and your business deals with one counterparty.
Side by side
- Legal counterparty to the payee: you (payment provider) or the MoR
- Invoices per payee: you collect them, or the MoR issues them
- Tax details and VAT treatment: your team, or the MoR
- Invoices in your books: from every payee, or from one counterparty, the MoR
- Liability for payout-related obligations: you, or the MoR for the obligations it takes on
How to choose
A payment provider can be enough if you pay a small number of payees in your own country, all of whom invoice correctly. When the number of payees, countries or tax questions grows, the hidden cost of the paperwork can exceed the cost of an MoR.
How Talentir helps
As Merchant of Record, Talentir is the one counterparty for your payouts, instead of thousands of payees. See Merchant of Record
Further reading
Related topics
What is a Merchant of Record?
A Merchant of Record (MoR) is the legal entity that is the counterparty to a transaction and generally carries the tax, invoicing and compliance obligations for it.
Self-billing
Self-billing means the buyer creates the invoice on behalf of the supplier, so creators do not have to write an invoice themselves.
KYC and KYB
KYC (Know Your Customer) verifies a person's identity. KYB (Know Your Business) verifies a company, its owners and the people who act for it.
DAC7 (EU platform reporting)
DAC7 makes digital platforms report what their sellers earn to EU tax authorities, including platforms outside the EU with EU-resident sellers.
Sources
What is a Merchant of Record?
A Merchant of Record (MoR) is the legal entity that is the counterparty to a transaction and generally carries the tax, invoicing and compliance obligations for it.
Liability in creator payouts
When a creator payout breaks tax or compliance rules, the business that paid can be held responsible. A Merchant of Record can take on much of that liability, within the limits of its contract and the law.