Merchant of Record Changes the Global Game for Retailers

There are many ways for ecommerce brands to stand out – poor payment processing capabilities should not be one of them. Yet many merchants are unwittingly projecting that precise image to consumers, losing lots of sales in the process (as cart abandonment figures bear out). It’s something that can be easily avoided, while costing both the merchant and consumers quite a bit less! We call it “the merchant of record model” and it really does change the global game for retailers. 


Cross-border Transactions Take a Complicated, Expensive Journey


When merchants take the time to really dig in and understand the process, it always astounds them to realize just how many steps and organizations touch a cross-border transaction. At each step, each intermediary is paid a “toll” of sorts, to secure passage across their system. Only then can a payment move on successfully to the next step. 

This all happens in seconds, which is why it’s so easy to not consider. But each transaction ultimately ends up at an acquiring bank that processes transactions on behalf of a retailer or other merchant. These acquirers allow merchants to accept payments made on credit cards from the issuing banks. When you add in other possibilities - gateways, fraud providers, multiple banks, fx providers, and more - there are a lot of places a transaction can get held up. 

It follows that successful cross-border transactions require relationships amongst multiple banks, as there’s lots of work to collaborate on, including:

  • Converting cost to local currencies
  • Completing local processing of transactions
  • Connecting to local banks  
  • Complying with local regulations 
  • Reaching the acquiring bank 
  • Making it through each regulator’s fraud restrictions

Each transaction gets stuck with fees at each step of the journey – charges that are levied on both the merchant and consumer side. The amounts vary wildly, but typically, as the distance between the issuer and the processor gets larger, so, too, does the interchange rate charged for that transaction. It’s similar to data roaming on a mobile phone: The farther one gets from the original source, the more likely one is to incur charges.

The whole process brings to mind the fairy tale genre bridge troll. The passage offered between steps is tenuous, rife with danger and mystery, and consumers are often gobbled up in the process, never reaching the other side of the bridge. Customers who face this troll can’t complete the sale, and they certainly won’t be back. 


Transactions Denied: The Cross-border Kicker


A good number of consumers do make it through, of course, but at great cost. Those fees levied along the way are likely not even tallied till weeks (or months!) later, as an unexpected additional charge on the consumer’s credit card statement. These consumers will never return – and may share the unfavorable experience with others.

Consider also that you’ve paid a significant cost to acquire this customer and then another cost for cross-border processing – but what you’re really paying for is an opportunity to alienate a customer. Ouch. 

When you consider how many transactions get declined when processed cross-border, you see how frustrated a customer could be. On average, when a merchant makes the leap to process locally, they see an immediate boost in approval rates. A merchant seeing a 79% approval rate with cross-border might see approvals raise to 92% at the moment they switch processing. That's a lot of customers that were turned away, now being let through the checkout with ease.

What’s a merchant to do? It’s a lot to think about on top of everything else on a global market penetration strategy list. Fortunately, a merchant of record model makes most of those barriers, toll takers, regulations, and hidden charges - disappear. 


What is The Merchant of Record (MOR) Model?


Merchants can avoid cross-border interchange fees by establishing local entities in multiple countries, of course, but it’s a logistical nightmare - not to mention wildly financially impractical - can you imagine operating a physical office in over 100 countries? Merchants must be in compliance with local regulations, maintain local entities staffed with various levels of employees and ensure they have money flowing through these entities. And then they must manage local bank accounts and relationships there, as well. It’s a lot to take on, so most retailers understandably do not. 

But imagine having the ability to reach into every market worldwide, as if you were maintaining a local entity - and not have to do any of those things. This would be a game changer for merchants. It is, actually. And calling it a game changer is an understatement. It’s transforming business worldwide.

Using a third-party service provider that is fully compliant with up-to-date local regulations, and gives retailers a one-stop shop for international payment processing, the MOR takes flash title of the goods that are being sold to the end consumer, offering local acquiring and payment methods while avoiding the difficulty of maintaining regulatory compliance.

The merchant is then limited only by the reach of its MOR – and Reach is “local” all over the world. So all lights are green here.

There’s no need to set up local administrative and organizational expertise to manage local payment methods and local banking relationships. No need to direct efforts toward ensuring money flows through these offices or sort out complex and varied regulatory compliance models. All this, while offering local payment options that make the consumer’s life easier. 

This last part is essential, as a vast majority of global customers show a preference for using the currency of their home countries when buying online. And as of 2018, fewer than 10% of the 1,000 largest online retailers actually offered transactions in multiple currencies. Talk about waiting to be disrupted! And that retailer could be you (from either side of that scenario)!



Traditional Cross-Border Processing is full of roadblocks. The Reach Way makes it easy for a merchant to reach the shopper.

Traditional Cross-Border Processing is full of roadblocks. The Reach Way makes it easy for a merchant to reach the shopper.


Merchants Firing on All Cylinders with MOR


The MOR model fires on all cylinders, taking care of payment options, currency types, local regulations, helping to detect fraud, and costing less overall. So much less. It’s all very clear to understand – with one clear fee instead of many compounding ones hidden deep in processing statements.

The best part? With purchase friction and with hidden fees eliminated, the path is entirely straightforward and desirable to consumers who will come back again and again. So, the only real question is – why aren’t you doing it now?

The cost of doing business internationally can prevent many merchants from entering the global market in a meaningful way. This is unfortunate as the potential is amazing. And it’s also unnecessary, as there are ready savings to be realized on so many fronts, making it not only accessible but wise long-term strategy to partner with an MOR.


Reach out and we’ll show you how it can look for you – and how you can get started today!

Reach simplifies cross-border ecommerce for forward-thinking organizations with ambitious global expansion goals.