Choose The Right Payment Partner: MOR vs. PSP

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Choose The Right Payment Partner: MOR vs. PSP

February 13, 2024•9 min

Let's be honest. You didn't dive into the video game world to master online payments, juggle fraud risks, or make sense of global ecommerce legalese. You're in the business of crafting epic adventures! But building a thriving game takes more than passion and caffeine. It takes choosing the right commerce partner – one who aptly handles the financial, legal, and technical details.

Two business models, two distinct roles

In this post, we’ll compare two types of partners that can help scale your game commerce so you can focus on the player experience, your brand, and succeeding long-term. Payment service providers (PSP) Imagine a PSP as your tech-savvy, gaming sidekick – a trusty gear-master who smoothly moves cash from buyers to sellers. PSPs connect buyers' wallets to sellers' bank accounts by partnering with banks and payment methods (like Visa or PayPal) to make it happen. But here's the thing: PSPs aren’t like all-in-one RPG companions who do everything. Companies like Stripe, Adyen, PayU, and others only handle payment transactions at a processing fee. Choosing a PSP often requires hiring third-party specialists or utilizing additional PSP services at an additional cost. Adding services from fraud protection companies like Sift or tax remittance partners like Avalara (plus others that manage local regulation compliance, refunds, chargebacks, and more) costs you more. Merchant of record? (MoR) A merchant of record is much more than a PSP. MoRs handle all the legal and financial headaches — like taxes, regulations, and customer protection. MoRs take on the legal responsibility for your transactions, freeing you to focus on your business. Think of them as your legal and financial wingmen. While you still need a PSP to handle the technical side of things, a knowledgeable MoR ensures that money moves without friction between you, your customers, and the payment network, keeping game transactions flowing while complying with the regulations. For example, Xsolla is a global, game-industry-focused MoR offering partners 700+ payment methods across 200 territories supporting 130+ currencies.

Why do you need a game commerce partner?

Ever wonder how that instant purchase in your game actually happens? Merchants, banks, and payment processors work together to send, receive, and keep track of your purchase, ensuring everyone gets the right goods, virtual currency, or a subscription plan. Like every good quest, there are rules to follow, including taxes, regulations, and security measures that change quickly. Keeping up with the ever-shifting game commerce landscape can be daunting for game developers and publishers. It's like trying to slay a dragon with one hand tied behind your back. That's where partner support comes in – your trusty sidekick to navigate the world of payments. Imagine battling through endless spreadsheets of tax laws and unlocking the riddles of global regulations. Sounds fun, right? Commerce support takes that pressure off, ensuring coverage in every market, properly and paid taxes, 100% compliance with laws and regulations, and that your payments are as secure as a dragon's hoard.

Key services you need

While payment service providers (PSPs) can open doors to wider customer reach and fancy payment options, that convenience often comes with extra costs and resource-draining complexity. Think about putting together a payment puzzle with missing pieces and incomplete instructions. For example, let's say you have to add resources to manage your anti-fraud system (AFS). In addition to paying the PSP, you would also need to sign an agreement with the specialist (or hire a full-time team member), and handle each integration separately. Here's where the MoR shines. Instead of juggling multiple agreements, integrations, and ad-hoc components (often cobbled together from PSP partners,) a merchant of record acts as your one-stop payment shop. You no longer need dedicated resources for AFS. An MoR like Xsolla handles that heavy lifting with expertise. Integration? Seamless and pre-baked, saving you precious time and energy. Imagine avoiding that "Frankenstein's monster" payment solution built from disparate parts. With an MoR, you get a streamlined, elegant system that simplifies operations and lets you focus on what truly matters: growing your business. It's like handing all the payment pieces to a master builder and getting back a complete masterpiece, ready to attract and satisfy your customers. So, while PSPs offer access, MoRs offer an easier, smoother ride where you can watch your resources flourish, your workload shrink, and your business soar. Now that you understand the value of partnering with an MoR, let’s review the most important types of game business support you want to consider. Fraud monitoring and protection The more money that flows through online gaming payments, the brighter the target becomes for fraudsters. As gamers shift to new platforms and payment methods, so do the scammers. Here are some meaningful statistics to consider:

Between 2023 and 2028, merchants worldwide will face an estimated loss of over $362 billion to payment fraud, according to Juniper Research.
One fraud prevention tool from a full-service PSP analyzing thousands of signals across one network reduced disputes by 41%. Others achieved a 50% reduction in false positives across all transactions analyzed and an average 200% improvement in fraud detection without impacting their approval rate.
In contrast to PSP's fraud prevention services, the same tools a game industry-experienced merchant of record provides can prevent up to 99% of fraudulent transactions. They can lower chargeback rates by as much as 60%.

Choosing a merchant of record gives you more than just powerful payment processing. You benefit from world-class fraud protection for both you and your players. Think of it as an army of invisible tech ninjas guarding your game, using cutting-edge algorithms to sniff out suspicious activity and keep your players' peace of mind secure and your revenue safe. Tax management Different regions have unique tax rules and rates. In the United States alone, over 40,000 postal codes have their own quirks! But navigating the tax complexities of selling gaming goods doesn’t need to be a major headache. While some payment service providers offer basic tax management features, navigating the complexities of tax can be a big undertaking. In these cases, relying solely on a PSP's tax tools might not be enough, especially for intricate tasks like tax remittance and reporting or filing returns. PSPs offer a variety of ways to tame it. Some provide comprehensive tax packages that cover all your bases, while others connect you with tax experts. Not all third-party services are created equal, so do the research before handing over your tax info. Remember, taxes are complex, and even the most robust PSP platform might not have all the answers to fit your needs. Where PSPs fail to tread, a merchant of record steps right in. An MoR expertly puts together the entire tax puzzle for you, ensuring every sale complies with every applicable tax, from federal to local, VAT to GST, and everything in between. At Xsolla, we even watch the rules, regulations, and industry shifts so you don't have to. Legal compliance Like taxes, compliance needs can vary based on where a company does business or the diverse needs and characteristics of game businesses that use payment services. Here are two examples.

Imagine you're a game developer working with a PSP in Japan. You must prepare to set up a local entity and iron out direct agreements with payment providers (like PayPay). However, you can avoid the headache by working with a global, game-savvy MoR — whether you prefer navigating the intricacies of local partnerships or just want a streamlined approach.
If you're a game publisher in South Korea, you've got a whole new set of local laws and regulations to navigate, unlike anything you might encounter in other markets. A global MoR ensures compliance with South Korea’s laws and regulations and constantly watches for local (or regional) changes that may need attention.

Both examples show why an MoR is like your compliance radar, helping you identify potential snags before they become roadblocks. We are your eyes and ears on the ground, keeping you on the right side of the rules so you can focus on taking your game to the next level. 360° customer support While PSPs can broadly support a game commerce business's broad technical needs, most PSP services are typically available to paying partners as part of a customizable package - and often through a 3rd party. Conversely, merchants of record can address the full range of a game company’s needs, from assisting players with specific gaming or payment issues to helping developers with integration, business development, and account management. You want a partner ready to address and resolve all your payment issues, minimize fallout, and preserve the trust and loyalty in your project that you’ve worked hard to build and maintain. With more than 18 years of experience as a game-tailored MoR, Xsolla supports your business and players’ needs 365 days a year. We know your company’s ongoing relationship with your users becomes even more critical to achieving long-term success. Our partner support team works 24/7 to deliver assistance in 20 languages, including English, Spanish, German, Japanese, Chinese, Korean, and more. Xsolla is the industry’s best choice for your merchant of record. We treat every opportunity to support you as a chance to impress every one of your users.

Unlocking global growth: Why your payment partner choice matters

A merchant of record with deep game-industry expertise is your all-in-one payment and business partner. At Xsolla, understanding your gaming business is about more than just managing generic commerce issues. It's about unlocking explosive growth in a rapidly growing, competitive industry. It's about matching your needs with the perfect business model — a blend of services that:

Extends your reach to 200+ territories with over 700+ payment methods
Helps reduce disputes by up to 60%
Eliminates up to 99% of fraudulent transactions
Lowers chargeback rates up to 60%
Supports you and your players 24/7

Let Xsolla guide you in crafting a business model that's as unique as your vision and unlocks your global audience's full potential. Because when we understand your business, you experience growth. With Xsolla as your global partner, that expansion has no limits. Whether you're ready to take the first or the next step in the evolution of your game business, reach out to one of Xsolla’s experts and learn how to improve and protect your gaming business.