Merchant of Record vs Reseller: The Difference That Actually Matters
Providers throw around 'reseller,' 'merchant of record' and 'seller of record' almost interchangeably, so it's fair to be confused about how they differ. Most of the confusion clears up once you separate the split that changes your obligations from the one that mostly doesn't.
The split that matters: processor vs seller
The big line isn't between reseller and MoR. It's between a payment processor and a Merchant of Record.
A payment processor, standard Stripe for example, just moves the money. You stay the legal seller. Your name is on the customer's invoice, and collecting and remitting VAT or sales tax is on you.
A Merchant of Record puts a third party in the seller's chair. Their name is on the invoice and the bank statement, they collect and remit the tax, they handle chargebacks. You're selling through them, and they pay you out.
Reseller vs true MoR: same result, different plumbing
The 'true MoR vs reseller' distinction lives inside that second box. Both make the provider the legal seller to your customer; they just structure it differently.
In a reseller model, there are two sales stacked back to back. You sell your product to the platform, and the platform sells it on to the customer under its own name. Digistore24, CopeCart and Ablefy work this way.
In a true, or agent, MoR model, the provider acts as the seller of record for payment and tax on your behalf, without literally buying your product as stock and reselling it. Paddle and Lemon Squeezy are the usual examples.
Why it rarely changes your day
For you and for your customer, reseller and true MoR come out about the same. Either way the provider is on the invoice and carries the tax liability, and either way you get paid on their schedule.
The distinction that actually changes your obligations is the first one: MoR or reseller versus plain processor. That's the one worth getting right before you sign anything.
The one question that settles it
Skip the labels and ask any provider this: do you issue the invoice to my customer as the seller, and do you collect and remit VAT and sales tax on that sale?
Yes to both means they're acting as your Merchant of Record, whatever word they print on their homepage. If your own name is on the invoice and the tax stays your problem, they're a payment processor, no matter what the marketing says.
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