What a merchant of record does for a game studio

What a merchant of record is

A merchant of record (MoR) is the company that sells your in-game item to the player. The player pays the MoR, the MoR’s name is on their card statement, and the MoR is the party that tax authorities, card networks and consumer regulators deal with for that sale. You supply the item and get paid by the MoR.

The term comes from the payments industry, not from the card networks. Visa’s rulebook of 18 April 2026 never uses the phrase “merchant of record”. It defines three roles that matter here:

An MoR is the merchant in Visa’s sense. That is the whole difference from a payment service provider (PSP). With a PSP you are the merchant, and the PSP moves money for you.

MoRs describe themselves the same way. FastSpring says “we become the legal seller of your products.” Paddle says that when a buyer purchases through it, “we act as the seller to them.” Xsolla calls itself “the legal merchant of records.” Lemon Squeezy says the MoR is responsible for “collecting sales tax, processing refunds and chargebacks, and ensuring PCI compliance.”

Whose name the player sees on the card statement

Visa requires the merchant to use “the name it primarily uses to identify itself to its customers,” and to use it consistently on the receipt, the authorization request, the clearing record and dispute records. With an MoR, that name is the MoR’s, usually with your store name after it.

Two published examples: Lemon Squeezy charges appear as “LEMSQZY* STORE”, and Stripe’s merchant of record product shows “LINK.COM*” followed by your descriptor, with Onelink named as the merchant of record on the receipt. With a PSP, the statement shows your own name.

A player who does not recognize the line on their statement is more likely to call their bank than your support team. Before you sign, ask to see the exact descriptor and receipt your players will get.

How the reseller model works

Most MoRs that serve games use a reseller structure. FastSpring’s documentation puts it plainly: it “purchases products and services from you (the publisher, creator, or provider) and resells them to the end customer.” The steps are:

1. You list items and set a recommended price.
2. The player buys from the MoR, under the MoR’s terms of sale. FastSpring says the payment terms “need to be FastSpring’s Terms and Conditions, as opposed to your own,” while you keep your own end-user license for the game.
3. The MoR charges the player the price plus the local VAT or sales tax, and remits the tax.
4. The MoR owes you the agreed trade price: the sale price less its fee, refunds and any costs the contract passes back.
5. The MoR pays you on a schedule and sends a self-billed invoice or statement for the sale from you to it.

Three consequences follow for your finance team. You do not charge consumer VAT, because your customer is the MoR, a business. Your revenue line depends on how the principal and agent tests apply to your contract; the accounting guide covers that. And the money you are owed between sale and payout is a receivable from the MoR, which is a credit exposure.

Who is responsible for what: MoR, PSP and app store

The table sets the three set-ups side by side. “App store” means in-app purchase through Apple or Google billing, where the store is the seller.

Two rows cause most of the surprises. The first is chargebacks. The card network sees the MoR, but most contracts send the cost back to you. Paddle charges $20 per chargeback and keeps it when the dispute is won. Aghanim’s terms deduct chargebacks from the developer’s share and add a $15 fee. Read the chargeback clause as closely as the headline rate.

The second is monitoring programs. Visa’s VAMP counts fraud reports plus disputes against settled card-not-present transactions, and the “Excessive” merchant threshold fell to 1.5% in the US, Canada, the EU and Asia Pacific on 1 April 2026. With an MoR, your disputes are part of its ratio. With a PSP, they are yours alone.

Why tax law often makes the platform the seller anyway

Several tax systems do not leave the question to the contract. If a platform takes part in a digital sale, the law treats it as the seller.

In the EU, games are electronically supplied services. Article 9a of Implementing Regulation 282/2011 presumes that a platform “taking part in” such a supply, including through “a marketplace for applications,” acts in its own name. The platform can rebut the presumption only if the contracts, invoices and receipts name you as the supplier. It loses even that option if it authorizes the charge to the player, authorizes delivery, or sets the general terms of sale. The EU Court of Justice confirmed the rule is valid in Fenix (C-695/20) on 28 February 2023. Article 9a(3) excludes a business that “only provides for processing of payments” and does not take part in the supply.

The UK reaches the same place through section 47(4) of the VAT Act 1994: a digital service supplied through an agent acting in its own name is treated as a supply to and by the agent. HMRC’s guidance for businesses selling digital services through platforms says “the digital platform is responsible for accounting for VAT on the supply instead of you.”

Other markets have similar rules. Japan made designated platforms with more than ¥5 billion of platform sales the deemed supplier of foreign digital services from 1 April 2025. India’s IGST Act section 14 deems an overseas intermediary to be the supplier unless it meets four conditions, including that it does not authorize the charge or set the terms.

So Apple, Google and any MoR that runs the checkout and sets the terms are the seller for VAT, whatever their contract with you says. A PSP is carved out, so when you sell through a PSP, you are the seller and every one of those registrations is yours. The tax guide lists the countries.

When a merchant of record is not worth it

An MoR charges a percentage of every sale. Your own cost of running tax, fraud and disputes is mostly fixed: registrations, filings, advisers and people. So the MoR looks expensive at scale and cheap when you are small or entering many countries at once.

Published list prices show where the lines cross. On the site calculator’s default assumptions ($20 average order, 25% of sales on foreign cards, 0.35% disputes), Stripe’s variable costs including its tax engine come to about 6.3% of sales, against 8.5% for Paddle’s published 5% + 50¢. A PSP therefore beats Paddle’s list price as long as your in-house tax and payments staff and advisers cost less than about 2.2% of revenue: $22,000 a year at $1M, $220,000 at $10M, $1.1M at $50M. The full comparison shows the arithmetic.

The in-house route tends to win when most of these are true:

• You already have VAT registrations in the EU and UK and sales tax registrations in the US states where you sell, from other products.
• You have a tax and payments team that runs filings and disputes today.
• Your dispute rate is low and stable, so an MoR’s pricing for average risk overcharges you.
• You want control the MoR will not give: your own receipts and statement name, your own refund policy, your own checkout on your own domain.
• You sell enough that 2 points of revenue pays for that team several times over.

Take-Two is the public example. On its February 2026 earnings call, it said mobile direct-to-consumer sales had their strongest quarter on record, and President Karl Slatoff said “It improves our margins.” On who runs it, the company said: “primarily, this is an internally driven thing for us.” Take-Two did not give a D2C revenue figure.

MoR terms can also rule a studio out. Paddle lists games among the businesses it serves, but its acceptable use policy prohibits “Virtual currency or stored value.” Stripe’s MoR product accepts only Stripe-hosted checkout, does not support custom domains, and says Stripe “might issue a refund without your approval” if you do not answer a support escalation within 48 hours. A studio that sells gems and runs its own player support should check both before integrating.

The credit risk you take on with an MoR

Between a player’s purchase and your payout, the money sits on the MoR’s balance sheet, and the MoR owes it to you. Published hold periods are long: FastSpring applies a 14-day settlement delay to every transaction and a 45-day hold on new accounts, and Aghanim pays within 30 days of month end and withholds a 5% rolling reserve.

Digital River shows what that exposure means. At its peak it had processed over $30 billion of online transactions, according to Digital Commerce 360. Its chief executive said that from 2 January 2025 it was “unable to tap into advanced funding of our revolving credit facility” and would wind the business down. Provisional liquidators were appointed to its Irish company and insolvency proceedings opened for its German subsidiaries. Former clients reported delayed or missed payouts, though those reports come from third parties and we could not confirm amounts.

Weekly or on-demand payouts, small reserves and a financially sound counterparty reduce the exposure. Ask for the MoR’s latest accounts and whether player funds are held separately from its operating cash.

What to check in an MoR contract

Two last checks. Put the MoR’s published prices for your average order value into the calculator, since fixed per-order fees weigh heavily below $10. And compare the fee schedule with others on the provider fees table before the first call with sales, so you know which lines to negotiate.