The European advantage: why a local Merchant of Record changes everything for global vendors

Alexandru Banari, Regional Sales Manager at Nexway, shares insights into Merchants of Record and why choosing the right one makes a difference.

Alexandru, for those who may not be familiar, can you explain in simple terms what a Merchant of Record is and its exact role in selling in Europe?

A Merchant of Record (MoR) is the legal entity responsible for selling your product to the end customer. That means we handle the full operational and legal scope of the sale – processing payments, calculating and remitting taxes, ensuring legal compliance, managing refunds and chargebacks, and protecting against fraud.

In Europe, this role comes with a high level of responsibility because regulations such as VAT rules, GDPR, and consumer protection laws are very strict. This is exactly the framework in which Nexway operates as a European MoR. 

What are the main legal and regulatory differences between a Merchant of Record based in the European Union and one based outside the EU?

The key difference is jurisdiction. A MoR based in the EU operates under European law and is directly accountable to European tax authorities, data protection bodies, and financial regulators.

A non-European MoR – whether based in the US, UK, or elsewhere – is outside this jurisdiction. This means they might not be fully aligned with EU VAT obligations, data privacy standards, or local consumer protection rules. In some cases, this can lead to blocked sales, fines, or even forced market exits if compliance gaps are detected.

By contrast, choosing a European MoR ensures not only legal and financial compliance but also a smoother, more trustworthy experience for customers: correct tax handling, strong data privacy, transparent refund policies, and confidence that their rights as EU consumers are fully respected. All of this translates directly into higher satisfaction and stronger long-term relationships between merchants and their end customers.

Why is having a local legal presence in Europe so important for a Merchant of Record?

It comes down to trust and operational continuity. When you have a legal entity in the EU, authorities know exactly who they are dealing with. That makes audits, reporting, and dispute resolution faster and smoother.

From a consumer perspective, a local presence also builds trust. Customers feel safer buying from a company that operates under EU consumer laws, offers clear tax information, and provides payment options they know and trust.

What are the risks for an international merchant working with a non-European MoR?

The risks range from operational to reputational. On the operational side, you might face unexpected VAT liabilities, longer settlement times, or payment method restrictions. On the legal side, you could be non-compliant without even knowing it – and that can result in penalties or a suspension of your ability to sell in certain markets.

The reputational risk is also real: customers are increasingly aware of where their purchases come from and how their data is handled. If your checkout process doesn’t meet EU standards, conversion rates can suffer.

How does a European MoR like Nexway simplify tax management, especially VAT, for clients?

VAT in Europe is complex – rates vary by country, digital products are taxed differently from physical goods, and thresholds can change every year.

As a European MoR, Nexway takes full responsibility for VAT calculation, collection, and remittance in every EU country where our clients sell. We also stay ahead of regulatory changes – like the EU VAT One-Stop Shop rules – so our clients remain compliant without needing in-house tax experts.

And when it comes to compliance and fraud prevention, how does a European MoR add value?

We are subject to the strictest European financial regulations, which means our anti-fraud systems, KYC procedures, and payment security measures are designed to meet and often exceed compliance requirements.

Because we work with local acquiring banks and payment providers, we can offer higher authorisation rates and fewer false declines, which directly impacts our clients’ revenue

Can you share a concrete example of how Nexway’s status as a European MoR helped a client avoid a sales disruption?

Without naming names, one of our US-based clients was expanding into several EU markets when they were suddenly blocked from processing transactions in one country due to a regulatory compliance issue.

Because Nexway was the MoR, we were already registered with the local tax authorities and compliant with all payment and data protection rules. We stepped in immediately, rerouted their transactions through our infrastructure, and sales resumed within hours – without the client needing to register locally or negotiate directly with regulators.

What’s your main message to companies looking to expand into Europe when choosing a Merchant of Record?

Choose a partner that is truly embedded in the European ecosystem. A European MoR doesn’t just process your payments – it shields you from legal and operational risks, keeps you compliant across multiple jurisdictions, and helps you build trust with local customers.

If you want to scale in Europe without distractions, work with a MoR that speaks the language of both the regulators and the market. That’s exactly what we do at Nexway. For those who want to explore this further, Nexway recently published a Merchant of Record Guide that covers these aspects in more detail.

About the author

 

 

Alexandru Banari is Regional Sales Manager at Nexway, a global Merchant of Record and ecommerce solutions provider. He brings a deep understanding of how payments, tax, and compliance challenges impact digital businesses - and how to turn them into growth opportunities.

 

 

About the company

Transform and scale your online business with Nexway, a global ecommerce and payment solutions leader. With over 20 years of expertise, Nexway optimises every aspect of digital monetisation for medium to large enterprises. From global payment acceptance to subscription management and tax compliance, our 360-degree approach ensures streamlined operations and global market expansion.