Taxes, fraud, chargebacks. The nightmare fuel of any game developer. But what if a payment partner handled them, letting you focus on building epic worlds? Enter the merchant of record (MoR), your essential gaming business partner.  In this blog, we explain how they handle the practical details of payment transactions so you can concentrate on the core aspect of your business. We'll also explore the differences between a gaming-focused MoR and a generic one - and explain why you should choose the first one for your gaming business.

Understanding the payment lingo

Have you ever bought something online and wondered at the magic that allows a click to turn into a box on your doorstep or a cosmetic to appear in your in-game inventory? The back-end ecosystem has three main players: payment service providers (PSP), payment gateways, and merchants of record (MoR). 

• The PSP handles the actual process of obtaining money from the buyer and getting it to the seller. They directly connect with banks and payment methods (like Visa or PayPal) to make this happen. And that’s it.
• A payment gateway is the bridge between your online checkout and the PSP. You enter your credit card info, click "buy," and the gateway sends that information off to the PSP, which then moves the money from one place to another. But it’s the merchants’ responsibility to negotiate individual agreements with every payment method they want to use.
• The MoR does a lot more. They are the official "seller" on the receipt, even if the item is purchased from someone else. They take on all the legal responsibility and handle all ecommerce requirements, like fraud protection, tax remittance, local regulation compliance, managing refunds or chargebacks, and more. 

If you plan to sell or monetize your games, you'll want to understand how these three function on the back end so you can choose the correct payment solutions for your business. For more in-depth information about existing ecommerce business models, tax compliance, and local regulations worldwide, download our free ebook on “Global Reach, Risk Mitigation, and Compliance Made Easy.”

The benefits of using a MoR

Think of an MoR as an all-in-one partner for your business. They handle the invoicing, billing, processing, taxes, security, fraud, disputes, and even customer support for payments. That lets you, the developer, focus on building incredible products without getting bogged down in the nitty-gritty of global payments. To use a restaurant analogy, MoRs are more than just the chefs. MoRs run the entire restaurant. They oversee everything from managing the ingredients (tax collection and remittance) to safety standards (PCI DSS compliance) and even take care of customer issues (fraud protection and dispute management). They also take on the biggest responsibility and risk for your payment flow. Here's how MoRs go beyond your typical PSP:

• Tax Master. You don't need to decipher confusing tax codes. MoRs collect and remit taxes on your behalf.
• Compliance Guru. Local regulations and security standards? MoRs got you covered, ensuring everything complies with legal standards in all regions of your global empire.
• Fee Negotiator. MoRs use their bulk buying power to get you the best deals on transaction fees.
• Customer Care Hero. Confused or frustrated customers? MoRs take on their payment-related questions and issues and manage refunds and chargebacks.

MoRs are popular payment partners in software as a service (SaaS) and software companies, but they're not one-size-fits-all. Like a restaurant specializing in a particular cuisine, MoRs can be tailored to specific industries. For example, a gaming-focused MoR understands the unique needs of the gaming world, from virtual currencies to subscription models. They'll have the expertise and partnerships to handle those complexities.

How a gaming-focused MoR differs from a SaaS-focused MoR

Sure, you could use a general MoR for SaaS, like a basic toolbox for your game. However, a gaming-focused MoR is built like an entire workshop that understands the industry challenges and player behavior. It's got specialized tools to stop fraud, protect your revenue, and keep your players happy. Here are a few ways a gaming MoR is better for your gaming business. Checkout optimization Buying stuff in your game should be smooth and enjoyable, right? That's what gaming-tailored MoRs like Xsolla focus on. Xsolla offers different checkout options to meet your game needs and how you want players to buy things:

• Hosted Checkout. This is like a pre-built store you can plug into your game. It's ready to go with a familiar look and feel.
• Components Checkout. This allows you to seamlessly embed a checkout right into your own store.
• Headless Checkout. Think of this as building your own payment store, piece by piece. You control everything, from the colors to the buttons, making it truly unique to your game.

Additional distribution channels for your in-game catalog A gaming-focused MoR can support your title with extra ecommerce solutions, like alternative distribution channels for your games and in-game items. For example, Xsolla helps mobile game developers build on their monetization strategy with Web Shop. The solution lets you manage and auto maintain your in-game catalog by creating, editing, importing (including subscriptions, consumables, bundles, currency, packs, and more), and effortlessly selling items, all in one comprehensive catalog management tool. It's like having your own branded store with built-in tools to make purchases tempting and boost your profits. Personalized comms with players Of course, general or SaaS-focused MoRs can offer some customization, but it's often limited. To unlock the full potential of your payments, you need MoRs that can tailor their services to your specific needs. With a gaming MoR, you can customize messages like a master strategist, targeting specific groups based on who they are, where they're from, and how they pay (credit cards, digital wallets, in-game currency). This kind of direct personalized communication is a game-changer. Based on Xsolla data, our partners who've used it saw over 50% revenue increase and over 240% more unique paying users. After all, players like being in the loop, plus who can resist exclusive offers tailored just for them? Compliance with local requirements Navigating the legal landscape of the video game industry can be complicated due to varying regional regulations. Understanding and staying up-to-date with local laws ensures compliance, avoids penalties or market access restrictions, and protects children. Gaming-focused MoRs are specifically equipped to monitor and comply with local standards worldwide, so you don't have to worry about them.

• Spending limits. Some countries, like South Korea, restrict how much money minors and adults can spend on in-game purchases. 
• Virtual currency regulations. Some countries have specific laws for virtual currencies used in games, like Japan's reporting imperative about unused balances exceeding 10 million JPY.
• Local entity and licensing requirements. Certain countries, like Vietnam, require foreign video game developers to establish a local entity since cross-border operation is prohibited. 
• Youth protection. Several countries have strict regulations on youth game playing time. For example, China limits online gaming for minors to 3 hours per week, and Vietnamese law restricts children's playtime to 180 minutes per day.

Fraud safeguards for gaming transactions Protecting your game from fraud isn't just about preventing financial losses. It's about building trust with your players and creating a fair and enjoyable gaming experience for everyone.  Choosing a payment solution partner who understands the games industry and its unique challenges will set you up for long-term success. A gaming-focused MoR is your security sidekick. Equipped with tools specifically designed for the video game industry, including in-game parameters, cross-game analytics, and custom protocols, you can better prevent or mitigate fraudsters. Also, it's important to note that protecting young players, in particular, is a growing challenge. Gaming-tailored MoRs like Xsolla come with innovative solutions, such as Parental Control:

• Age gating. This feature verifies a player's age (with parental consent, of course) before letting them access content - no more worries about inappropriate content in the wrong hands.
• Guardian account. Parents get their own in-game account with special powers. They can approve purchases, set spending limits, and keep a watchful eye on their child's gaming activity.
• Payment alerts. Parents stay in the loop with instant notifications for every purchase or request. No more surprises on the credit card bill!

Dedicated customer support team Imagine having a customer support team that speaks fluent "gamer." That's exactly what you get with gaming-tailored MoRs. Their dedicated team consists of industry experts who understand the unique needs of game developers, publishers, and players. Players can receive 24/7 multilingual support and get help anytime, anywhere, from a friendly team available around the clock. They're on email, live chat, social media, and even Discord or help desks. Developers also get a dedicated support team to help them achieve their goals and maximize their MoR experience. That can include diverse roles, such as:

• Integration Manager. This tech pro can answer your integration questions, help you get set up smoothly, and assist you in adding new features to your plan later.
• Business Development. Looking to expand your reach? Your BD rep can connect you with new opportunities and help your game grow.
• Account Manager. Think of them as your day-to-day sidekick. They're there to answer questions, solve problems, and ensure you're always happy.

Key takeaways

There are many benefits in working with a gaming-focused MoR vs a generic SaaS one, like access to customized industry solutions and player-centric features.  A gaming-focused MoR:

• Is optimized for the games industry, offering various checkout options for different game types and player preferences
• Can support additional game distribution channels for in-game items and virtual currency, like Xsolla Web Shop
• Allows targeted messaging based on player demographics and buying behavior, leading to increased revenue and user engagement
• Ensures compliance with regional regulations as they pertain to the gaming industry, like youth protection and spending limits
• Has industry-specific tools, protocols and triggers to prevent game purchase fraud and protect players, especially young ones
• Employs gaming experts to assist players and buyers with specific gaming or payment issues and developers with integration, business development, and account management

Xsolla's suite of global video game commerce solutions includes operating as an industry-leading gaming MoR. Whether you're ready to take the first step or the next step in your game development, reach out to an Xsolla expert and learn how you can improve and protect your gaming business with Xsolla as your MoR.