Payrails has launched a Merchant of Record (MoR) product that lets companies combine MoR coverage with their own direct acquiring on one platform.
In each market a company assigns to the MoR, Payrails becomes the legal seller. It calculates, collects, and remits sales tax, VAT, and GST, and it manages invoicing, compliance, fraud prevention, and disputes. The product is aimed at AI, SaaS, mobile app, and digital goods companies selling internationally, including subscription apps and AI products billed by usage.
The main feature of the product is what Payrails calls 'graduation'. A company can move a market from the MoR to its own merchant IDs, either gradually or all at once, without re-integrating. Saved payment credentials are held in Payrails Token Vault, which is independent of any single payment provider, so returning customers and subscribers do not need to re-enter card details when a market is moved.
Addressing the lock-in issue in the usual MoR model
Payrails positions the launch against how merchant of record arrangements typically work. In those setups, the MoR provider holds saved cards, payments often run through a single acquirer, and merchants have limited insight into why transactions fail. Payrails says this becomes a constraint once a few markets account for most of a company's revenue, because leaving can require a new integration, a new checkout, and re-collection of customer card data.
The company links demand for MoR services to faster international expansion among software businesses. According to Stripe, 100 AI companies on its platform, ranked by size, earn 48% of their revenue outside their home market. Each cross-border sale brings local payment method expectations, such as Pix in Brazil, BLIK in Poland, and UPI in India, as well as tax obligations. EU VAT on digital services is charged based on the buyer's country. US states apply sales tax once sellers pass economic nexus thresholds, often USD 100,000 in annual sales. Payrails notes that MoR fees are typically around 5% plus a fixed per-transaction charge, and that the cost advantage over in-house compliance narrows as volume in a market grows.
Orchestration and performance data
All MoR payments run on Payrails' orchestration layer, with multi-processor routing, local acquiring, and automatic retries across more than 100 integrations. These are the same capabilities Payrails offers its enterprise merchants, which include Preply, DeepL, and Eneba. Merchants can view authorisation rates, fraud, and chargeback data in the Payrails portal, down to individual decline reasons. In addition, a dedicated MoR analytics dashboard tracks performance by market and product.
The MoR uses the same API and SDK as Payrails' orchestration service. Merchants can embed a drop-in checkout or use a hosted payment page, with their brand shown on the checkout, co-branded invoices, and card statements. Onboarding involves three steps: business verification (KYB), configuration and approval of the product catalogue, and integration of the checkout. Existing customers can add the MoR in a new workspace alongside their current setup.
Emre Talay, COO and Co-Founder of Payrails, said the hybrid model was developed at the request of existing customers who wanted MoR speed without splitting payments across two setups or losing visibility.
