How the Merchant of Record Became a Global Commerce Engine

Picture the scene; a U.S. developer discovers that one of their fastest-growing markets is overseas. For many digital businesses, the first signs of international opportunity develop quickly. However, new local markets also mean new local complexities. Brazilian customers expect support for Pix. In India, UPI dominates the payments landscape. In Poland, BLIK accounts for as much as 70% of e-commerce transations annually. Across any market, local regulations, payment preferences, and fraud considerations can vary significantly.

This is how an exciting growth opportunity becomes an operational challenge.

These local complexities and risks have fueled the rise of the Merchant of Record (MoR) model, in which a third-party partner assumes liability for key functions such as tax obligations, regulatory compliance, and chargeback handling.

While these platforms deliver benefits across all these areas, the evolution of cross-border commerce has transformed MoR solutions from a tax workaround into a critical component of international business operations.

In a recent PaymentsJournal podcast, Bridger Bullock, Senior Business Development Manager at Nuvei, and Don Apgar, Director of Merchant Payments at Javelin Strategy & Research, discussed the evolution of the Merchant of Record model, the criteria that differentiate these solutions, and how the operational advantages MoR platforms provide can equal—and potentially surpass—the tax and compliance benefits that originally drove their adoption.

Far Beyond Orchestration

One reason for MoR solutions rise in popularity over recent years is the landscape for international growth becoming exponentially more complex.

“Just in the U.S., if you want to manage all of the sales tax collection, there are 13,000 different jurisdictions that you would have to adhere to in making sure that you are compliant,” Bullock said. “Outside of the U.S., you can only imagine how many different rules and jurisdictions you have to be compliant with, and that's just from a tax perspective.”

“There's also fraud, which is getting much more complex depending on the region,” he said. “Lastly, there are so many different payment methods for each region that it's critical that merchants offer those payment methods in those local regions so that there is a frictionless customer experience.”

Along with domestic real-time payments systems like Pix and UPI, alternative payment methods (APMs) now include everything from stablecoins and buy now, pay later services to digital wallets.

As these payment types have emerged, many merchants have sought to increase payment flexibility by leveraging payment orchestration systems that route transactions through the optimal payment rail.

While these solutions offer clear value, payments are only one component of successful cross-border commerce.

“Orchestration connects the dots from an authorization and a settlement perspective so you can transact globally fairly easily,” Apgar said. “But when you get into complexities such as local APMs, local fraud and risk tools that are available, local tax, and local banking, the complexity really multiplies. Being global today goes way beyond just orchestration.”

Taking Gaming Global

One of the industries that has been a trailblazer for the MoR model is gaming. Gaming platforms built for digital commerce often face relatively few barriers to expanding their products into new territories.

In their zest for expansion, gaming companies have frequently taken a proactive approach to the operational realities of global expansion.

“Forward-thinking companies like Roblox or Epic Games look at it holistically, so a local payment method in each region is critical to them,” Bullock said. “Say they want to be able to create the best customer experience in Korea. They need to make sure that GCash is set up as a payment method. Once the customer purchases, the sales tax is collected without Roblox or Epic having to deal with what that sales tax l