Payment processing is the most important thing for any business for it relates to the revenue that the company generates. Also, one needs to understand the importance of revenue generated by any business and difference between Merchant of Record vs Payment Gateways. Revenue is not just about the money that the business owner or all the stakeholders earn. Revenue is also a way to attract investors. This is because the revenue shown in the form of KPIs is the depiction of the health of the business. For instance, subscription businesses monitor their recurring revenue from KPIs. This include Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR) etc.
Thereby, one needs to be all attentive when deciding on the payment processor for the business. Here, in this article, we are going to explain merchant account vs payment gateway so that you will be able to decide the right payment processor for your business and earn recurring revenue to scale and grow.
What is a Merchant of Record (MoR)?
At the centre of e-commerce, the Merchant of Record (MoR) assumes crucial duties in the complex world of online transactions. Acting as the backbone of the financial system, the MoR oversees every aspect of the payment process, from obtaining transaction data to guaranteeing adherence to various regulations. This organization is essential to negotiating the intricacies of financial settlements since it manages consumer cash, steers transactions through several phases, and settles payments with merchants in the end. In addition to facilitating transactions, the MoR plays a crucial role in risk reduction, adhering to tax regulations, and guaranteeing the overall financial stability of online businesses. To sum up, the Merchant of Record plays a crucial role in offering businesses and customers alike a safe, legal, and smooth payment experience.
What is a Payment Gateway?
A payment gateway is a platform that helps in processing international payments. When payments are to be processed across borders, there are certain rules and regulations with which a company must comply to complete transactions. Payment gateways help in complying with these rules. Also, today, customers are not satisfied with just one payment method that you allow to receive payments. So, what to do? Here, once again, your payment gateway comes for assistance. Payment gateway enables you to offer more than one payment method to your customers so that they will pay you with their preferred payment gateway. Even you can allow them to pay with multiple payment methods so as to cater to customers from all sectors. Coming towards multiple currency support. Payment gateway enables you to offer customers multiple currency support so that they can pay in their local currencies.
Merchant of Record vs Payment Gateway
Coming towards the differences between Merchant of Record and payment gateway, there are many points of differences.
Roles & Responsibilities
MoR is responsible for overseeing financial settlements, managing transaction data, guaranteeing compliance, and managing the entire payment process.
However, payment gateways with an emphasis on technical facilitation, specialize in safely delivering payment information during transactions.
Financial Responsibilities
MoR is specifically engaged in money transfers, business dealings, and upholding financial honesty in online sales.
Payment gateways are not directly involved in payment transfers but their main role is to transfer payment information securely.
Compliance Responsibilities
MoR ensures compliance with regulations, including tax compliance and other legal requirements within the e-commerce landscape.
On the other hand, payment gateways contribute to secure data transmission, indirectly supporting compliance efforts but not handling compliance directly.
What to Choose Merchant of Record vs Payment Gateway?
Now, it is time to tell you what to choose for your business, Merchant of Record vs payment gateways. Experts suggest that one needs to opt for a payment gateway if a secure and efficient way of payment transfer is required. Also, for international transactions where customers themselves demand integration with a certain payment gateway, you need to integrate the payment gateway that will help you process payments in that region. On the contrary, go for MoR service providers if you need an end-to-end solution, compliance management, reduced complexity, for payment processing.
In conclusion, for payment processing, whether you need MoR services or payment gateways, you need to contact team SubscriptionFlow. It offers MoR features so that subscription businesses can seamlessly process payments. Also, here, you will find the range of payment gateway integration options for your business.
