Glossary · payments and processing
What is a merchant of record?
The merchant of record is the legal entity that sells to the customer. It appears on the receipt, owes the tax, carries the liability for the transaction, and is the party the customer disputes with.
Why a definition this dry matters commercially
Being merchant of record is not an administrative label. It decides who registers for VAT in each country a customer sits in, who files it, who answers a chargeback, and who is on the hook if a regulator disagrees with any of it.
This is why merchant-of-record services exist. A platform sells your product as the legal seller, takes the tax and compliance burden, and pays you a share. You lose margin and some control of the customer relationship, and you stop having to register for tax in thirty jurisdictions.
The distinction people miss is that a payment provider is usually not your merchant of record. It moves money on your behalf. You are still the seller, and the tax and liability stay with you.
Worth knowing before a sales call, because a vendor saying it handles compliance may mean its own compliance rather than yours.
Compare
Who is responsible for what
The same three parties appear in most stacks, and only one of them is selling.
| Party | Sells to the customer | Owes indirect tax | Answers a dispute |
|---|---|---|---|
| You, as merchant of record | Yes | Yes | Yes |
| A merchant-of-record service | Yes | Yes | Yes |
| A payment provider such as CoinGate | No | No | No |
The first two rows are identical because they are the same role held by different companies. Which row you sit in is a commercial decision, not a payments one.
What it changes for you
Three consequences that follow from where the merchant of record sits.
Tax registration follows the seller
If you are merchant of record, indirect tax obligations follow your customers, not your office. A merchant-of-record service moves that to them.
Frequently asked questions
Is my payment provider my merchant of record?
Usually not, and CoinGate is not. A provider processes payments for you. A merchant-of-record service sells on your behalf. Read the contract rather than the marketing, because both describe themselves as handling compliance.
Does using a merchant of record remove my tax obligations?
It moves the indirect tax obligation on those sales to them. It does not remove corporate tax on the income you receive, and it does not apply to sales made outside that arrangement.
Who is merchant of record when a customer pays in crypto?
You are, unless you have a separate merchant-of-record arrangement. The payment method does not change who is selling.
Are there chargebacks to answer?
Not on confirmed crypto payments, which cannot be reversed by the payer. Refunds still exist and you initiate them. How refunds work