Any business that has tried to sell across the African continent has had to deal with navigating complex logistics, regulatory hurdles, and fragmented payment systems. Here’s how it typically goes.
Say a Nigerian company wants to expand to Kenya, they have to consider a lot of things: registering a local entity, opening a local bank account, set up a payment system that allows them to receive payments in the local currency (Shillings) and convert it to Nigerian currency (Naira).
After all of this is done, the company has to ensure that it’s tax compliant – regularly filing necessary taxes. Supposing sales start picking up and the company decides to hire a Kenyan employee, it ideally has to pay the employee in Shillings and also pay necessary employee tax requirements.
If they manage to do all these, they still have to keep an eye out for changes in regulations that could change the course of their business.
What if there was a way to circumvent all this stress legally? To expedite market expansion and maximise revenue, businesses often seek streamlined solutions. One such option is a Merchant of Record (MoR), which eliminates many of the complexities associated with international expansion.
What is Merchant of Record
A Merchant of Record (MoR) is a legal entity that handles transactions, ensures legal compliance, manages currency changes, and provides customer support for another company. The MoR acts as the official seller in a transaction and takes on the legal and financial responsibilities.
By connecting to a Merchant of Record, a business can start doing business in a new market within a shorter time window.
What does a Merchant of Record do?
- Payment Processing: The MoR manages the entire payment process, ensuring transactions are secure and efficient.
- Tax Compliance: The MoR calculates, collects, and pays taxes according to local laws, making sure the business follows all regulations.
- Currency Conversion: The MoR handles currency changes, allowing customers to pay in their local currencies while the business gets paid in its preferred currency.
- Fraud Prevention: The MoR uses advanced security measures to detect and prevent fraud, protecting both the business and its customers.
- Customer Support: The MoR provides customer service, dealing with transaction issues, refunds, or disputes.
How does the merchant of record model work?
When selling through a Merchant of Record (MoR), your customers continue to visit your website to browse and purchase products. However, the MoR acts as a reseller, facilitating two transactions: one between the end customer and the MoR, and another between the MoR and you.
Upon completion, the customer’s credit card statement reflects the MoR’s name, making them the technically liable party in case of disputes. This arrangement shifts the responsibility of handling customer interactions and potential issues to the MoR.
How does the MoR model impact your customer relationships?
While the MoR assumes certain obligations, such as sales tax calculation and remittance, your primary relationship remains with the end customer. You retain full control over product presentation, ongoing customer interactions, and marketing efforts. This includes implementing separate terms and conditions governing product use.
Is Startbutton a merchant of record?
Founded to simplify cross-border transactions, Startbutton offers comprehensive Merchant of Record services that help businesses expand across Africa and beyond. By using Startbutton, businesses can:
- Accept Local Payments: Startbutton lets businesses accept payments in multiple currencies, catering to local customer preferences and increasing sales.
- Get Settlements in Preferred Currency: With Startbutton’s unique solutions, you can receive payouts in your preferred international currency without hassle.
- Ensure Compliance: Startbutton’s deep understanding of local regulations ensures all transactions comply with tax laws, reducing legal risks.
- Provide Customer Support: Startbutton offers dedicated customer service, addressing transaction issues and enhancing customer satisfaction.
- Prevent Fraud: Startbutton uses advanced security measures to protect businesses from fraud, ensuring safe transactions.
In the global market, Startbutton is a strategic partner for businesses seeking to expand into Africa. With our comprehensive suite of payment solutions and expertise in navigating Africa’s regulatory landscape, Startbutton offers tailored services to streamline cross-border transactions and ensure compliance with local regulations. By leveraging Startbutton’s innovative solutions, your business can overcome the complexities of Africa’s business environment and unlock the vast opportunities it offers.
Send an email to [email protected] or visit www.startbutton.africa to get started today.
