MoR - Who invoices whom?

[mhrvth]

Hello, as I understood Square is a Merchant of Record, but when I look at Square Invoices, they contain the shop's business name, but no address or any other identifier. Does this mean the name is there just for reference and the invoice is in fact sent to the end customer from Square?

If I try to withdraw money from Square to my business bank account, do I in my own accounting put Square as the customer, and not the actual end customers?

So in fact there are 2 invoices, one invoice from Square to the end customer, and a second from my business entity to Square. Is that correct?

Also just to verify, since Square is a MoR, can I use Square Checkout in my own eshop that sells physical goods?

I'm based in France (in case I got it wrong and Square is not a MoR here).

Thank you in advance for your advices.

[TheRealChipA]

Hi there @mhrvth.. Square is not a Merchant of Record (MOR), but rather a Payment Service Provider (PSP).  MORs are legal entities that sell goods and services to a customer for another company and in doing so take on the legal liabilities related to the transactions.  That is not what Square does -- they only provide you with payment processing services and the tools you need to fulfill those orders and to satisfy your legal liabilities.

[mhrvth]

Hi @TheRealChipA , thank you!

So this information is not correct?
https://squareup.com/us/en/the-bottom-line/operating-your-business/merchant-of-record 

[TheRealChipA · Accepted solution]

@mhrvth That's the first time I've seen that particular article, so I had to read it thoroughly.  That article is true as far as it goes.  Square does handle the PAYMENT side of things completely.  As a Square seller you are using their merchant account, and they are the customer insofar as Mastercard, Visa, etc, are concerned.  They handle PCI compliance, they are your go-between for disputes and such.  This is why Square is so strict about what we can and can't do with our accounts -- we are not the customer of record as far as the card companies are concerned, Square is and violations potentially affect us all if Square loses that privilege.

Square invoices are sent by Square, yes, with us as the business sending them.  There aren't two invoices, but rather one that we create and that Square handles for us if the customer chooses to pay via card, ACH, etc.  Any payments made by card/ACH, etc, are placed in our Square balances and we transfer those to our bank accounts as we wish.  We do NOT directly receive payments from customers unless they pay by cash/check -- Square is the middleman for electronic payments.

So, I guess my original answer went too far.  What I probably should have said is that Square is behind the scenes here, mostly.  We sell products and services using Square tools.  We invoice customers using Square tools.

Some MoRs do things like tax collection and remittance.  Square does collect taxes for us, but we are responsible to set up our accounts to tell Square what to collect.  Some MoRs file and remit sales taxes -- Square does not, though they do provide reports to help us do that.

Square does handle chargebacks/disputes for us, but they work with us to gather necessary information for those.

Square does Risk Management for us, at least the basic and required sorts of risk management.  They also provide tools for us to do more risk management, if we desire.  But they don't do it all.

I guess I was a little too general in my original reply.  Hopefully that helps clarify my lack of detail earlier.  Feel free to ask any more questions.

[mhrvth]

@TheRealChipA You're correct, I just got a reply from Square directly. It's bizzare, they claim to be a MoR but not really in the standard definition, there are no 2 invoices, and shops directly invoice customers, Square does not, they just send the invoices but are not the seller. So in fact not sure in what way they are a MoR as they claim.

[TheRealChipA]

That's why that article you found surprised me, @mhrvth.. I share the same definition of MoR that you do, which is why I posted my initial reply.  Anyway, I did a little more research, and even used some AI tools to do some parallel research with me.  Overall, it seems that there are slightly different kinds of MoRs that exists.  Some do everything, others are more payment oriented (like Square and Stripe).

This murkiness seems to be mostly centered in the USA, go figure.  These days we seem to be embracing double-speak and obfuscation.  I've had this "debate" with Square in other areas where they seem to appropriate a word to mean something other than its industry-standard definition.  My current beef is the word "sales" which, in some instances, Square defines to include tips and sales taxes -- things that DEFINITELY ARE NOT sales!  Hmmmm.  Anyway, France and the EU might have a stricter definition, and if so I understand your initial confusion (and mine!).

I have a few connections that I think I'll use to raise this subject with people who might be able to shed light on it, if not actually correct it by either removing or clarifying that article.  I'm glad you were able to get confirmation of what I believed to be the case.

Best.