How it works
When a customer pays, one party contracts with the card processor and answers for that payment. It handles disputes, absorbs chargebacks, and must keep its business within the processor's rules. Platforms that process payments for many businesses either act as merchant of record themselves or connect each business's own processor account.
The choice affects who can sell what. A platform that is merchant of record carries its sellers' risk, so it restricts which businesses can use it. A business using its own processor account carries its own risk and is limited only by its processor's rules.
Example
A $40 credit pack is bought through a platform's account. The platform is merchant of record, so a $40 chargeback, plus Stripe's dispute fee, hits the platform first. Bought through the seller's own Stripe account, the same chargeback is the seller's to handle.
Merchant of record in Cred
Which party is merchant of record depends on the payment rail: with Stripe Connect it is Cred, with your own Stripe keys it is you, and x402 stablecoin payments involve no processor at all. That is why not every business can use every rail.
Payment Rails docsRelated terms
Questions
- Why would a platform decline my business?
- When the platform is merchant of record, a high-risk seller can cost the platform its processor relationship for everyone. Restricted categories are therefore excluded from platform accounts even when they are lawful.
- How do I tell who the merchant of record is?
- Look at the sale from the customer's side: whose brand is on the checkout and receipt, whose name is on the card statement, and who handles refunds and disputes. Stripe's guidance is that the merchant of record follows that customer-facing arrangement, not the technical payment setup.
- Can I switch merchant of record later?
- Yes, by moving to a different payment setup, but it takes planning: saved cards, active subscriptions, and refunds for past purchases are tied to the processor account that took the original charges.
