Glossary term
Merchant of Record (MoR)
The legal entity responsible for a transaction with the payment processor. When a platform is the MoR, it carries direct liability for what its creators sell.
The Merchant of Record is the legal entity that is responsible for a transaction in the eyes of the payment processor and card networks. It is the party that holds the processor relationship, remits tax where applicable, handles chargebacks, and answers to the processor for compliance.
Many creator economy platforms operate as the Merchant of Record on behalf of their creators. This simplifies the experience for creators, who do not need their own processor accounts, but it concentrates liability on the platform. When a platform is the MoR, every non-compliant creator is, in effect, the platform's own compliance problem.
The alternative is a pass-through model, where each creator onboards directly onto the processor and becomes their own merchant. Pass-through reduces the platform's MoR liability but also changes the platform's relationship to compliance risk. Understanding which model a platform operates is the starting point for assessing how much processor exposure it actually carries.
This definition is provided for general educational purposes and is not legal or compliance advice.
Related terms
Payment Facilitator (PayFac)
An entity that lets sub-merchants process payments under its own master account, taking on responsibility for onboarding and monitoring them.
Payout Compliance
Vetting which creators a platform is safe to pay, mapped against payment processor prohibited-business policies, before money moves.
Acquiring Bank (Acquirer)
The bank that holds a merchant's account and processes card transactions. It absorbs card network fines and passes them to the merchant or platform.
Prohibited Business List
A payment processor's published list of business categories it will not process payments for, such as piracy, counterfeit goods, or unlicensed regulated products.