How a merchant of record works
The merchant of record contracts with an acquirer, or with a payment facilitator, and processes payments under its own merchant ID. The buyer's contract of sale is with the merchant of record, which issues the receipt or invoice and accounts for the tax on the sale.
When a company outsources the role, the provider buys the product from the company and resells it to the buyer at the same moment, or sells as the company's appointed agent. The provider then pays the company the proceeds less its fee.
Who uses a merchant of record
Sellers of software and digital goods that want to sell in many countries without setting up tax registration and acquiring in each one. Marketplaces and platforms meet the same choice: to be the merchant of record for the sales on the platform, or to let each seller be the merchant.
Merchant of record and the rules
Merchant of record is a commercial term. The Visa Core Rules of 18 April 2026 and the Mastercard Rules of 2 June 2026 do not use the phrase: they define merchants, payment facilitators and marketplaces.
Payments law looks at who handles the funds. In the EU, PSD2 does not apply to payments made through a commercial agent authorised by agreement to negotiate or conclude the sale or purchase of goods or services on behalf of only the payer or only the payee (Article 3(b)). A business that collects money for others outside an exclusion of that kind may be providing a payment service.
Merchant of record, payment facilitator or marketplace?
- Payment facilitator
- Signs up sub-merchants, each of which remains the seller to its own customers. A merchant of record is itself the seller.
- Marketplace
- In the Visa Core Rules, an entity that brings cardholders and retailers together on a website or app, and processes transactions and receives settlement on the retailers' behalf.
- Payment service provider
- Processes payments for a merchant. The sale, and the liability for it, stay with the merchant.
Where a merchant of record shows up in a platform
Modules that do the work
- Merchant onboardingBusiness sign-up, verification and underwriting, from application to first payment.
- Card acquiringCard acceptance on the phone, in store and online, through the acquirer you choose.
- PayoutsMoney out to bank accounts, cards and wallets, on the rail that fits each payment.
- LedgerThe double-entry book of record behind every balance, fee and transfer.
Platforms that need it
Guides that go deeper
Where it is written
The laws and standards this page's facts come from.
- Directive (EU) 2015/2366, PSD2, Article 3(b) and recital 11 (EUR-Lex)
- Visa Core Rules and Visa Product and Service Rules, 18 April 2026: glossary, Merchant and Marketplace (Visa)
- Mastercard Rules, 2 June 2026: definitions (Mastercard)
General information, not legal advice: what applies to you depends on your services and your market.