When a software company sells to customers across different countries, someone has to be the legal party responsible for that sale. That entity is the Merchant of Record (MoR): the company that appears on the customer's bank statement, collects payment, remits taxes, handles refunds, and complies with local regulations in every market where a sale occurs.
How a Merchant of Record works
The MoR acts as the legal intermediary between your software company and your customers. Instead of your SaaS selling directly, the MoR is the seller of record. Your company licenses your software to the MoR, and the MoR handles everything transactional: collecting payment, calculating and remitting taxes, issuing invoices, and processing refunds.
The flow is straightforward: your customer pays the MoR, the MoR collects applicable taxes, retains its fee, and transfers the remainder to you as a payout. From your customer's perspective, the purchase experience is seamless. From your perspective, the tax and regulatory obligations in each country where you sell disappear.
How it differs from a payment processor
A payment processor like Stripe or PayPal moves money from point A to point B. But it does not assume legal responsibility for the sale. When you use only a payment processor, your company is still the seller. That means you are responsible for registering to collect taxes in every jurisdiction, calculating the correct rates, filing tax returns, and complying with consumer protection regulations.
A Merchant of Record absorbs that entire layer of complexity. The MoR is the legal seller, so tax and regulatory obligations fall on them, not on your company. This distinction is critical for SaaS businesses selling internationally, where the tax landscape spans hundreds of jurisdictions with different rules.
Why SaaS companies need a Merchant of Record
SaaS companies sell to customers worldwide from day one. A startup in Latin America can have customers in the United States, Europe, and Asia without opening offices or legal entities in those markets. But that global distribution brings tax complexity: sales tax in the US varies by state and locality, VAT in Europe has different rules per country, and electronic invoicing requirements exist across multiple Latin American markets. For a closer look at the region-specific challenges, see Billing for LATAM SaaS Companies.
Without a MoR, a SaaS company would need to understand and comply with all of these regulations. For a product team focused on building software, that is a costly and risky distraction. The cost of a tax or compliance error can far exceed the cost of using a MoR.
Beyond taxes, a MoR handles chargebacks, refund policies, and consumer protection compliance. These operational burdens compound as you grow into more markets. A MoR lets you expand globally without scaling a finance and legal team to match.
Benefits for LATAM companies selling globally
For software companies in Latin America selling to customers worldwide, the Merchant of Record solves region-specific problems. Collecting payments in US dollars from Argentina, Brazil, or Colombia means navigating currency controls, service export regulations, and tax regimes that change frequently.
A MoR with presence in developed markets lets your SaaS charge in each customer's local currency without your company needing to operate entities in those countries. The MoR handles payment settlement, destination-market taxes, and sends funds to your account. Your company invoices the MoR for your software license, simplifying your accounting.
For Latin American customers, a MoR can offer local currency pricing, reducing purchase friction and increasing conversion rates in markets where international credit cards have high decline rates.
How Commet works as a Merchant of Record
Commet operates as the Merchant of Record for SaaS companies and AI products. This means Commet is the legal entity selling your software to your customers. Commet handles tax collection, payment processing, refund management, and compliance with regulations in each market. See how this compares to handling payments yourself in Stripe.
Your team focuses on building the product. Commet focuses on getting you paid, from any country and in any supported currency, without your company needing to register for tax obligations in every jurisdiction where you have customers.