The “Merchant of Record” (MoR) takes away the risks and burdens of processing payments internationally. The MoR handles the end-to-end payment orchestration, carrying all operational activities from the user payment request to the merchant payout. The MoR is also legally responsible for processing and managing customer transactions, hence bearing liability for any risk involved with these activities, such tax management, compliance, chargebacks, etc.
A Merchant of Record takes full operational and legal responsibility regarding:
- Tax management (calculation of the right amount and remittance to the right authorities in the right time)
- Compliance, covering regulated activities such as funds collection, payment authorization, data storage (PCI Data Security Standards) etc.
- Connection to payment processors via connectors and APIs to facilitate payment routing and flowing, maximizing capture of genuine transactions and blocking fraudulent ones
- Integration with global and local payment methods to fit with local payment habits
- Fraud detection process construction and monitoring to address fast-evolving fraud patterns
- Chargeback handling to dispute the payments being challenged
- Volatile payment processor fees and payment methods fees replaced by a stable and predictable fee
- Currency conversion: handling the conversion of payments made in foreign currencies by international users
FAQs
What difference does it make to have Merchant or not?
With Merchant, Cleeng plays the role of Merchant of Record detailed above. WIthout Merchant, Cleeng will not handle any payment activities including the ones mentioned above. We will connect to your tool or provider to monitor the subscriptions’ status and revenue retention reporting.
Read more about the difference between Merchant and non-Merchant.
What currencies does Merchant support?
Cleeng supports 29 currencies, meaning customers can see the amount shown on their checkout page in any of 29 currencies. If a customer wants to pay in another currency that is supported by one of our payment processors (Adyen, PayPal), then he can. For all other currencies, the default currency chosen by the broadcaster will be shown on the checkout page.
What payment methods does Merchant support?
All transactions are processed directly through the Cleeng server using SSL encryption; our solution is fully PCI DSS compliant ensuring safe and secure payments. We also use Adyen B.V. and PayPal as Payment Service Providers (PSPs) to enable and process these methods and currencies.
Payment methods available in Cleeng:
- Major credit cards through Adyen (Cleeng Merchant)
- PayPal (Cleeng Merchant)
- In-app payments
Cleeng also integrates local payment providers and Telcos based on client requests to activate new methods. Find out more on viewer payment methods.
How does Cleeng block fraudulent payments?
Cleeng has a series of fraud detection mechanisms. We have created a smart security system that efficiently takes into account the behavior of both regular customers and fraudsters to identify suspicious behavior based on industry benchmarks. Risk checks are triggered when there are multiple payment refusals within a specific time frame that exceeds the specified threshold Cleeng has set. We are also leveraging Machine Learning to detect fast-evolving fraud patterns, which can be customized for a broadcaster.
How are payments processed?
When a customer checkouts, chooses his payment method, input his payment details and clicks on “Pay”, then:
- We assess if the transaction is genuine or fraudulent, based on various data such as card data, user data, environment data, charge signals, etc.
- Once the transaction is approved, we route it to the most relevant payment gateway for this transaction
- We validate the payment method being used (if it’s active and if all information is correctly entered)
- The payment gateway checks the funds availability (if the card can be used to make a purchase)
- We send the transaction to the bank/issuer approval (if the bank allows to process a payment).
- The transaction is approved (or rejected) by the bank/issuer.
For more information on the subject basis check What is an authorization hold?
How does Cleeng automatically recover recurring payments?
When a subscription is renewed, Cleeng automatically processes the payment without the need for any action from the customer. Most payments are successful on the first payment renewal attempt (on payment due date). For those that fail, Cleeng applies a retry schedule following our constantly-tested and optimized dunning settings. The payment authorization process is run at specified intervals after the payment due date to maximize the chances of successful authorization.
Find out more in Dunning notification & automated payment retrial.
How does Cleeng manage tax?
In a world where tax regulations on digital goods are evolving fast and are very fragmented, tax calculation and remittance is tedious. First, Cleeng calculates the right tax amount based on the customer’s location, leveraging some dedicated tools such as Avalara for complex jurisdictions such as the USA. Then, Cleeng remits the total tax collected over a period of time to the right authorities, holding liability in any mistake or late remittance it might have incurred. This takes away all the risks involved with tax compliance from the broadcaster.
What’s the difference between a merchant of record and a payment service provider (PSP)?
The main difference between an MoR and a PSP is that a merchant of record is in charge of the entire order process, which includes taking on the related liabilities, whereas a payment service provider only handles the transaction process – basically collecting the money from a user’s account.
A PSP, like Stripe, doesn’t take on any of the financial or taxation responsibilities of the transactions processed through their gateway. From an operational standpoint, a PSP does not manage tax calculation and remittance. Also, while they share some reporting, they do not optimize payment settings based on performance analytics. When a transaction leads to a chargeback, they do not handle the dispute process to try to recover the revenue loss. They also transfer all types of fees (interchange, schemes, cross-border, FX, chargebacks, etc.). Finally, payment service providers are only one part of wider payments infrastructure; hence the need to manage and integrate other (often costly) tools to build a sufficient billing stack.
What is the difference between refunds and chargebacks?
If a customer is dissatisfied for some reason and wants to dispute their transaction, they have two options: refund or chargeback. Both are about returning money to your customers. The main difference between them is who reverses the money:
- in case of a refund - a customer contacts the issuing bank of their payment method directly and the bank returns the money (if the chargeback is granted)
- in case of a chargeback - if the content bought is not as described, or if the service/content wasn’t delivered according to the SLA, or if the customer wants to fraud, a customer might fill a chargeback request from a merchant. Then it’s the merchant who returns the money to a customer (if they are entitled to a refund of their purchase).
Cleeng disputes all chargebacks on the broadcaster’s behalf to try to recover the revenue loss.
You can read more about chargebacks and how Cleeng Merchant can help you minimize and avoid chargebacks.
What does a payout look like?
Every month, under the conditions described in the Merchant schedule we proceed with a payout of your earnings.