Global payments expansion: LCA vs MoR
Compare Local Acquiring (LCA) and Merchant of Record (MoR) models for global subscription expansion, evaluating tax liabilities, chargebacks, compliance, and seller of record responsibilities.
Scale · Global payments expansion
LCA vs. MoR
Who sells to the customer, who owns the tax bill, and who eats a chargeback — the first decision in any market entry.
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LCA vs. MoR
Two ways to sell in a new market
Before you enter a new market, decide who is legally selling to the customer: you, using your existing gateway relationships (local acquiring), or a merchant of record who steps in as the seller of record on your behalf. That choice determines who calculates and remits tax, who absorbs chargebacks, and whose name shows up on the customer's statement.
Local acquiring
- You stay the seller: your payment gateway is a financial courier only — you never transfer ownership of the sale.
- You handle tax: you're solely responsible for calculating, collecting, and remitting local VAT or sales tax.
- You handle risk: chargeback and fraud liability sits entirely with your business.
- Local upside: direct access to local payment methods and local bank routing, which typically means higher success rates and lower fees.
Merchant of record
- They own liability: the MoR takes full responsibility for disputes, chargebacks, and fraud.
- They handle tax: the MoR calculates, collects, and remits sales tax, VAT, and GST on your behalf.
- They handle compliance: PCI-DSS, data privacy rules, and fraud prevention become the MoR's job, not yours.
- Trade-off: the MoR's name (or a combined name) appears on the customer's card statement, not yours alone.
Stay with local acquiring if you already have gateway relationships and the market's tax and compliance load is manageable in-house. Move to a merchant of record when that overhead outweighs the value of owning the customer relationship directly — a common trade in markets with unfamiliar VAT/GST rules or licensing requirements.
IMPORTANT: Some regions require merchants to have a local payment acquirer.
Confirm which markets your merchant of record partner actually supports. Coverage varies by provider, and finding a gap mid-rollout is more disruptive than checking it upfront.
Updated about 1 hour ago