How does the merchant of record model work?
In the standard model the store is its own merchant of record: it holds merchant accounts with PSPs or acquirers, sells under its own name and handles tax, refunds and disputes. In the reseller model a third party, the merchant of record provider, buys the product and resells it to the customer. Paddle’s documentation describes the merchant of record as the legal entity responsible for selling goods or services to an end customer, taking on liabilities such as collecting sales tax, ensuring PCI compliance and handling refunds and chargebacks. Stripe’s glossary uses a similar definition.
Why does it matter for cross-border e-commerce?
Whoever is the merchant of record has to register for and collect sales tax or VAT where the rules require it, follow each market’s consumer law and carry the chargebacks. As an illustrative example: a digital goods seller with customers in 25 countries can either register for tax in each of them and run its own payments, or sell through a merchant of record that does it in exchange for a larger share of each sale.
What are the trade-offs?
A merchant of record provider saves registration and compliance work, but it owns the customer transaction, its fee is usually higher than processing alone, and the merchant has less control over methods, routing and checkout. Running as its own merchant of record gives the merchant control and lower unit cost, with the compliance work that comes with it.
Where does Omno use it?
Omno is the technology layer, not the merchant of record. The merchant, or its own merchant of record provider, holds the merchant accounts with the PSPs Omno connects to. Multi-brand management, with roles, runs several brands or legal entities from one Omno account, and reporting can be filtered by merchant account and provider.