what is a merchant of record?
Every transaction has a seller of record: the entity legally responsible for the sale. For most software companies that entity is themselves, in every market they sell into, whether they realise it or not. A merchant of record changes that. This page explains what the model is, what it carries, where it fits, and why it matters more in Africa than almost anywhere else.
the short definition
A merchant of record is the legal seller of a transaction. It sells to the customer in its own name, so the contract, the tax, the invoice, the chargeback and the consumer-protection duties sit with it, not with the business whose product is being sold.
You sell your product to the merchant of record. The merchant of record sells to your customer, in-market, as a local seller. Your customer gets a local transaction with a recognisable name on the statement. You get settled in the currency you run your business in. The obligations that come with being a seller move to the party built to carry them.
merchant of record vs payment service provider
The two get confused constantly, and the confusion is expensive. They solve different problems.
what a psp does
A payment service provider moves money. It connects you to card rails, processes the transaction and settles the funds. That is real, necessary work. But you remain the seller throughout. The contract of sale is yours. The tax registration in the customer's country is yours. The chargeback lands on your merchant account. The refund rules of the customer's jurisdiction bind you. A PSP changes how money moves. It does not change who owes what.
what a merchant of record does
A merchant of record is a licensed, in-market entity that transacts as the seller itself. It holds the local merchant accounts, signs the local payment agreements, registers for the local taxes and answers for the sale under local law. Payment processing still happens underneath, but the legal structure above it changes. That structural change is the product.
side by side
| comparison | payment service provider | merchant of record |
|---|---|---|
| legal seller of the transaction | you | the merchant of record |
| local tax registration and filing | yours | the merchant of record's |
| chargeback and dispute liability | yours | the merchant of record's |
| consumer-protection obligations | yours | the merchant of record's |
| name on the customer's statement | often yours, often foreign | local, recognisable |
| local payment rails (mobile money, bank mandates) | limited, needs local status | native, contracted in-market |
| FX and settlement | per market, your problem | consolidated, your currency |
| what you keep | everything, including all the liability | the product, the brand, the customer relationship |
merchant of record vs seller of record vs reseller
The terms overlap and the industry uses them loosely. Seller of record and merchant of record describe the same role: the entity legally selling to the end customer. Merchant of record is the payments-flavoured term, seller of record the tax-flavoured one. A reseller is the broader commercial category both belong to, but a classic reseller buys your product and sets its own price. A merchant of record sells at your price, under your brand, on your commercial terms. You keep the pricing power and the customer relationship. It keeps the obligations.
what the merchant of record takes on
vat and digital services tax registration
Most major African markets now run destination-based VAT on digital services. The customer's location creates the tax, not yours, and registration regimes exist specifically for foreign suppliers, several with no minimum threshold. As the legal seller, the merchant of record registers, calculates, invoices and files in each market, including e-invoicing where mandated. Our country by country map of these regimes is here: VAT on digital services across Africa.
local acquiring and payment rails
Card scheme rules tie a merchant account to the merchant's domicile, so a foreign company cannot present transactions as domestic. Mobile money and bank mandates mostly require a local contracting entity. The merchant of record holds the local merchant IDs and the rail agreements, which is what makes domestic card presentment and local rails like M-Pesa, MTN MoMo and Capitec Pay available at all.
fx and settlement
Collections happen in local currency across markets. The merchant of record consolidates them and settles you on a monthly cycle in the currency you elect, itemised gross to net. One counterparty, one receivable, one clean number for your CFO. The mechanics live here: treasury and settlement.
chargebacks and dispute liability
Disputes are defended by the merchant of record and the liability sits on its side of the contract, along with the scheme monitoring exposure that comes with dispute ratios. A serious merchant of record underwrites its merchants at onboarding precisely because it is carrying this.
consumer protection and refund obligations
Subscription sales attract specific duties: consent before the first charge, notice before renewals, cancellation a consumer can actually execute, refunds that follow local rules. These bind the seller. When the merchant of record is the seller, they bind us.
invoicing and statement descriptors
The customer sees a local descriptor they recognise, receives a compliant local invoice, and has somewhere to ask about a charge without emailing your support team. That last mile is where confusion-driven disputes are won or lost.
why this matters specifically in africa
fragmented tax regimes
Africa is 54 jurisdictions, and the digital-services VAT map moved three times in the last year alone. South Africa, Kenya, Ghana, Mauritius and Rwanda all run active regimes for foreign suppliers, each with different rates, thresholds, filing cadences and e-invoicing systems. Tracking one moving regime is work. Tracking six is a function.
cards are not how africa pays
In most African markets the majority of buyers do not reach for a card. Mobile money, instant bank transfer and voucher rails carry the spend, and nearly all of them require the seller to be a local business. A foreign seller with a global PSP is structurally locked out of the rails that matter most.
the local-entity problem
The conventional answer is to incorporate in each market, register for tax, open bank accounts and sign acquiring contracts. That is a multi-year, multi-million project that makes sense for a handful of giants. The merchant of record model exists for everyone else: one commercial contract that replaces the entity, the registrations and the acquiring relationships in every live market.
when you do not need a merchant of record
Honesty about the edges. If you already hold in-market entities, tax registrations and acquiring relationships across your African markets, and you are happy operating them, an MoR adds a layer you do not need. If you sell physical goods, this model is not built for you. And some activities cannot be carried by any merchant of record because they need their own licence in each market: gambling and betting, lending, insurance, deposit-taking, securities and crypto exchanges. We say the same on who we serve.
An MoR also costs more than raw processing. It should. It is carrying tax, disputes, consumer protection and rail contracts that raw processing leaves with you. The comparison that matters is not MoR versus PSP fees. It is MoR versus entities, registrations, advisors and unpriced liability.
how settld works as your merchant of record in africa
Settld is the Africa-native merchant of record. We become the legal seller in each market we operate in: South Africa, Kenya, Ghana, Mauritius and Rwanda. One integration covers hosted checkout, recurring collection, local card acquiring, mobile money and voucher rails, with tax, disputes and risk carried as the seller and settlement on a fixed monthly cycle in your currency. The four-step flow is on how it works. If you want to see it against your own flows, book a technical walkthrough.
frequently asked questions
The merchant of record is the legal seller of a transaction. When Settld is your MoR, we sell to your customer in-market: the contract, the tax, the invoice, the chargeback and the consumer-protection obligations sit with us. You keep the product, the brand and the customer relationship.
A payment provider moves money on your behalf, and you remain the seller with every obligation that carries. A merchant of record replaces you as the seller in-market. Card-scheme rules also prevent a foreign business from simply plugging into a local processor, which is why the distinction matters.
No. You can run on Settld's billing engine, or keep your own engine as the owner of the billing schedule and call Settld to execute each charge. Either way there is one integration and one settlement relationship.
Settld does, with a descriptor configured for recognition in each market. Because we are the seller, billing questions and disputes route to us, not to your team.
You elect a settlement currency and are settled on a fixed monthly cycle: transactions accrue through the month, the payout is created on the first, and funds are sent by the fifteenth. Every payout is itemised from gross collections to net settlement.
Settld does, as the seller. Registration, calculation, compliant invoicing and filing in every market we sell in, including e-invoicing where it is mandated.
We are building South Africa first, with Kenya, Ghana, Mauritius and Rwanda to follow. Market entry is sequenced by licensing and banking readiness in each corridor.
Global software, AI and digital subscription businesses selling to African customers. Some categories require additional review during onboarding, and activities that need their own in-market licence, such as gambling or lending, sit outside what a merchant of record can carry.