Introducing the Pocketsflow startup program: Win $100K if you are a startupWin $100K if you are a startup
Pocketsflow
Start building

LegalLast updated

Merchant of Record Policy

Pocketsflow's Merchant of Record Policy: how we act as the legal seller of record and handle tax, compliance, payments, and dispute resolution on your behalf.

Effective Date: September 28, 2025

1. Introduction and Overview

This Merchant of Record Policy outlines the comprehensive framework under which Pocketsflow, Inc. operates as the Merchant of Record (MoR) for all transactions processed through the Pocketsflow platform. By using Pocketsflow to sell digital products, you agree to this policy and acknowledge that Pocketsflow assumes full legal and financial responsibility for all customer transactions.

As your Merchant of Record, Pocketsflow is the legal seller of record for every transaction. This means we handle all compliance obligations, tax liabilities, payment processing, dispute resolution, and customer facing financial responsibilities on your behalf.

2. What is a Merchant of Record?

2.1 Definition

A Merchant of Record (MoR) is the legal entity that is authorized to process customer payments and is held responsible for the transaction by card networks, banks, and regulatory authorities. The MoR appears on customer credit card statements, is liable for chargebacks and disputes, and must comply with all applicable tax and regulatory requirements.

2.2 The Pocketsflow MoR Model

Unlike traditional payment processors where you remain the merchant of record, Pocketsflow operates as a full service MoR. This means:

  • Pocketsflow, Inc. is the legal entity responsible for every sale
  • Our company name appears on customer bank and credit card statements
  • We assume all liability for chargebacks, disputes, and fraud
  • We calculate, collect, and remit all applicable taxes worldwide
  • We handle all compliance and regulatory requirements in every jurisdiction
  • We issue compliant invoices and receipts to all customers

2.3 Benefits of the MoR Model

By operating as your Merchant of Record, we provide sellers with:

  • Zero Legal Exposure: You are not the legal seller and bear no seller liability
  • Global Tax Compliance: Automatic VAT, GST, and sales tax handling in 130+ countries
  • Chargeback Protection: We absorb all chargebacks and disputes
  • Simplified Operations: No need to register for tax in multiple jurisdictions
  • Risk Mitigation: Our fraud prevention protects your business
  • Compliance Confidence: We stay current with changing regulations

3. Entity Information

3.1 Business Entity Details

  • Legal Entity Name: Pocketsflow, Inc.
  • Entity Type: Delaware C Corporation
  • State of Incorporation: Delaware, USA
  • Principal Place of Business: United States
  • MoR Contact Email: chain@pocketsflow.com
  • Customer Support: support@pocketsflow.com

3.2 Regulatory Registrations

Pocketsflow maintains all necessary registrations to operate as a Merchant of Record globally:

  • Federal and state business registrations in the United States
  • Tax registrations in jurisdictions requiring collection and remittance
  • Compliance with PCI DSS (Payment Card Industry Data Security Standard)
  • Registration with relevant financial regulatory authorities

4. Global Tax Compliance

4.1 Our Tax Responsibilities

As your Merchant of Record, Pocketsflow assumes complete responsibility for tax compliance including:

  • Tax Calculation: Real time calculation of VAT, GST, sales tax, and other consumption taxes based on customer location
  • Tax Collection: Automatic collection of applicable taxes at checkout
  • Tax Remittance: Filing and payment of collected taxes to appropriate authorities
  • Tax Registration: Maintaining necessary tax registrations globally
  • Tax Reporting: Comprehensive record keeping and reporting

4.2 Geographic Coverage

We handle tax compliance in over 130 countries and territories, including:

  • European Union: Full VAT compliance including OSS/IOSS registration, reverse charge mechanisms, and country specific rates
  • United Kingdom: UK VAT registration and compliance post Brexit
  • United States: Sales tax nexus management across all applicable states
  • Canada: GST/HST and provincial sales tax compliance
  • Australia: GST registration and compliance
  • Asia Pacific: Coverage includes Japan, Singapore, India, and emerging digital tax jurisdictions
  • Latin America: Compliance with local digital services taxes

4.3 Tax Rate Determination

Tax rates are determined based on multiple factors:

  • Customer billing address and location
  • Product type and classification
  • Applicable tax treaties and exemptions
  • Customer tax status (B2B vs B2C)
  • Current tax rates and thresholds in each jurisdiction

4.4 B2B Transactions

For business to business (B2B) transactions in supported jurisdictions:

  • Valid VAT/GST registration numbers are verified against government databases
  • Reverse charge mechanism applied where applicable (e.g. EU B2B)
  • Compliant B2B invoices issued with required tax information
  • Proper documentation maintained for audit purposes

4.5 Seller Tax Obligations

Because Pocketsflow is the Merchant of Record, sellers generally do NOT need to:

  • Register for VAT/GST in countries where they sell
  • Calculate or collect taxes from customers
  • File tax returns related to customer sales
  • Maintain tax compliance across multiple jurisdictions

Note: Sellers remain responsible for their own income tax obligations on earnings received from Pocketsflow. Consult with a qualified tax professional regarding your specific income tax situation.

4.6 Complete Country Tax Reference

Below is a comprehensive list of countries where Pocketsflow handles tax compliance, including standard VAT/GST/Sales Tax rates for digital goods and links to official tax authority websites. Rates shown are standard rates as of the policy effective date and may vary based on product type or customer status.

European Union (EU) Member States

All EU countries operate under the EU VAT system. For B2B transactions with valid VAT numbers, reverse charge applies.

European Non EU Countries

North America

Central America and Caribbean

South America

Asia Pacific

Middle East

Africa

Central Asia

Russia and CIS

Disclaimer: Tax rates are subject to change and may vary based on product type, customer status, and specific circumstances. The rates shown are standard rates for digital goods as of the policy effective date. Pocketsflow automatically applies current rates at the time of transaction. For the most up to date information, please refer to the official tax authority websites linked above.

5. Fraud Prevention and Chargeback Management

5.1 Fraud Prevention

Pocketsflow employs comprehensive fraud prevention measures to protect both sellers and customers:

  • Real Time Transaction Monitoring: AI powered systems analyze every transaction for fraud signals
  • Identity Verification: Multilayer verification for high risk transactions
  • Velocity Checks: Detection of unusual purchase patterns
  • Device Fingerprinting: Identification of suspicious devices and behaviors
  • Address Verification: AVS and CVV validation for card payments
  • 3D Secure: Strong Customer Authentication (SCA) where required

5.2 Chargeback Handling

As the Merchant of Record, Pocketsflow assumes full responsibility for chargebacks:

  • Chargeback Liability: We absorb the financial impact of chargebacks
  • Dispute Response: Our team handles all chargeback disputes with payment networks
  • Evidence Collection: We compile and submit compelling evidence on your behalf
  • No Seller Deductions: Chargebacks do not result in deductions from seller payouts for legitimate transactions

5.3 Chargeback Protection Scope

Our chargeback protection covers:

  • Fraudulent transactions (unauthorized card use)
  • Product not received claims
  • Product not as described disputes
  • Processing errors
  • Customer disputes

5.4 Seller Obligations

To maintain chargeback protection, sellers must:

  • Accurately describe products in listings
  • Deliver products as promised within specified timeframes
  • Respond to customer inquiries promptly
  • Cooperate with any chargeback investigations
  • Not engage in any fraudulent or deceptive practices

5.5 Exclusions from Chargeback Protection

Chargeback protection does not apply to:

  • Sellers who violate platform policies
  • Fraudulent or misleading product descriptions
  • Products not delivered through the platform
  • Prohibited items or services
  • Sellers with excessive dispute rates indicating problematic behavior

6.1 Transaction Structure

When a customer purchases a product through Pocketsflow, the transaction is legally structured as follows:

  • The customer purchases from Pocketsflow, Inc. as the legal seller
  • Pocketsflow appears on all payment receipts and credit card statements
  • The seller (you) is a third party service provider to Pocketsflow
  • Pocketsflow pays the seller their earnings minus applicable fees

6.2 Customer Relationship

From a legal perspective:

  • The commercial relationship is between the customer and Pocketsflow
  • Pocketsflow is responsible for all customer facing legal obligations
  • Sellers maintain a relationship with Pocketsflow, not directly with customers
  • Customer data is held by Pocketsflow in accordance with our Privacy Policy

6.3 Liability Allocation

As the Merchant of Record, Pocketsflow assumes liability for:

  • Payment processing errors and disputes
  • Tax calculation and remittance accuracy
  • Compliance with payment card industry regulations
  • Consumer protection law compliance
  • Data protection and privacy obligations

Sellers remain responsible for:

  • Product quality and description accuracy
  • Intellectual property rights for their products
  • Compliance with platform policies and terms
  • Their own income tax obligations

7. Invoicing and Receipts

7.1 Customer Invoices

Pocketsflow automatically generates and delivers compliant invoices for every transaction:

  • Immediate Delivery: Invoices sent automatically upon successful payment
  • Legal Compliance: Invoices meet requirements of the customer’s jurisdiction
  • Complete Information: All required tax information, transaction details, and seller information included
  • Multiple Formats: PDF invoices available for download

7.2 Invoice Contents

All customer invoices include:

  • Pocketsflow, Inc. as the seller of record
  • Unique invoice number and date
  • Product description and quantity
  • Pretax amount in applicable currency
  • Applicable tax type, rate, and amount
  • Total amount charged
  • Payment method (partial, for security)
  • Customer billing information
  • Pocketsflow tax registration numbers where required

7.3 B2B Invoice Requirements

For B2B transactions, invoices additionally include:

  • Customer’s VAT/GST registration number
  • Reverse charge notation where applicable
  • Detailed tax breakdown by jurisdiction
  • Any applicable exemption references

7.4 Receipt Management

Customers can access their receipts through:

  • Automatic email delivery at time of purchase
  • Order confirmation pages
  • Customer support requests

8. Payment Processing

8.1 Accepted Payment Methods

Pocketsflow accepts a wide range of payment methods including:

  • Major credit cards (Visa, Mastercard, American Express)
  • Debit cards
  • Digital wallets (Apple Pay, Google Pay)
  • Local payment methods in supported regions
  • PayPal (where available)

8.2 Currency Handling

Our payment processing supports:

  • Multi Currency Pricing: Sellers choose one account currency (USD, EUR, GBP, INR, and 20+ more) during onboarding or in Settings and set one price per product
  • Checkout Currency: Buyers are charged in their local currency when local presentment is enabled (default), or in the seller’s account currency when it is turned off, via cards and PayPal
  • Seller Payouts: Sellers receive payouts according to their connected payouts provider and preferred payout currency

8.3 Transaction Security

All transactions are secured through:

  • PCI DSS Level 1 compliant infrastructure
  • 256 bit SSL/TLS encryption
  • Tokenized card storage (we never store raw card numbers)
  • Strong Customer Authentication (SCA) compliance
  • Real time fraud monitoring and prevention

9. Seller Payouts

9.1 Payout Structure

Sellers receive payouts representing their earnings minus Pocketsflow fees:

  • Transaction Fee: Platform fee as specified in your pricing plan
  • Payment Processing: Payment processor fees (typically 2.9% + $0.30 per transaction)
  • No Tax Deductions: Taxes collected are not deducted from seller payouts (paid by customers)

9.2 Payout Schedule

  • Daily Payouts: Available for eligible sellers
  • Weekly Payouts: Default option for most sellers
  • Minimum Threshold: Payouts processed once minimum balance is reached
  • Hold Periods: New sellers may have temporary holds for risk management

9.3 Payout Methods

Sellers can receive payouts via:

  • Direct bank transfer (ACH in US)
  • International wire transfer
  • PayPal (where available)

10. Customer Refunds

10.1 Refund Authority

As the Merchant of Record, Pocketsflow has full authority over refund decisions:

  • We may issue refunds at our discretion to protect customer experience
  • Refund decisions are final and binding
  • Sellers are expected to cooperate with refund investigations

10.2 Refund Process

When a refund is processed:

  • Customer receives funds back to original payment method
  • Refund typically processes within 5 to 10 business days
  • Full refund includes any taxes collected
  • Seller payout adjusted accordingly (for approved seller related issues)

10.3 Refund Reporting

Sellers have visibility into refunds through:

  • Real time dashboard notifications
  • Detailed transaction history
  • Monthly payout reports

11. Data Handling and Privacy

11.1 Customer Data

As the Merchant of Record, Pocketsflow is the data controller for customer transaction data:

  • We collect and process customer data in accordance with our Privacy Policy
  • Customer payment information is handled under PCI DSS compliance
  • Personal data is protected under applicable data protection laws (GDPR, CCPA, etc.)

11.2 Seller Access to Customer Data

Sellers receive limited customer information necessary for order fulfillment:

  • Customer name (for digital product delivery)
  • Email address (for product delivery and support)
  • Order details and purchase history

Sellers do NOT receive:

  • Payment card details
  • Full billing addresses (unless required for delivery)
  • Customer financial information

11.3 Seller Data Obligations

Sellers who receive customer data must:

  • Use data only for fulfilling orders and customer support
  • Not use data for unauthorized marketing
  • Not share data with third parties
  • Maintain appropriate data security measures
  • Comply with all applicable data protection laws

12. Regulatory Compliance

12.1 Consumer Protection

Pocketsflow complies with consumer protection regulations including:

  • Distance selling regulations (e.g. EU Consumer Rights Directive)
  • Right of withdrawal requirements where applicable
  • Clear pricing and product information requirements
  • Anti fraud and unfair trading regulations

12.2 Digital Services Regulations

We maintain compliance with evolving digital services requirements:

  • Digital Services Act (EU)
  • Platform transparency requirements
  • Digital content delivery regulations
  • Electronic commerce directives

12.3 Financial Regulations

Our payment operations comply with:

  • PCI DSS requirements for payment card handling
  • Anti money laundering (AML) regulations
  • Know Your Customer (KYC) requirements
  • Payment services regulations in applicable jurisdictions

13. Audit and Record Keeping

13.1 Transaction Records

Pocketsflow maintains comprehensive records of all transactions:

  • Complete transaction history with timestamps and details
  • Tax calculation and collection records
  • Customer invoices and receipts
  • Refund and dispute documentation
  • Records retained for applicable statutory periods (typically 7+ years)

13.2 Seller Reports

Sellers have access to:

  • Real time sales dashboard
  • Detailed transaction reports
  • Payout history and summaries
  • Tax reports for their own records

13.3 Tax Authority Cooperation

Pocketsflow cooperates fully with tax authorities and provides required reporting:

  • VAT/GST returns filed and remitted on schedule
  • US sales tax returns filed in applicable states
  • Information reported to authorities as required by law
  • Audit support and documentation provided when requested by authorities

14. Limitations and Disclaimers

14.1 MoR Services Scope

Our Merchant of Record services cover transactions processed through the Pocketsflow platform. They do not extend to:

  • Transactions conducted outside the Pocketsflow platform
  • Products or services not sold through Pocketsflow checkout
  • Seller’s own business operations, income taxes, or corporate compliance
  • Products delivered through channels not authorized by Pocketsflow

14.2 Tax Advice Disclaimer

While Pocketsflow handles transaction tax compliance as MoR, we do not provide tax advice to sellers. Sellers should:

  • Consult qualified tax professionals regarding their income tax obligations
  • Understand their responsibilities for business registration in their jurisdiction
  • Maintain their own records for income reporting purposes

14.3 Service Modifications

Pocketsflow reserves the right to:

  • Modify the scope of MoR services with reasonable notice
  • Adjust to changes in tax law and regulatory requirements
  • Update compliance procedures as regulations evolve
  • Change supported payment methods or currencies

15. Changes to This Policy

Pocketsflow may update this Merchant of Record Policy from time to time. Material changes will be communicated through:

  • Email notification to registered sellers
  • Platform dashboard announcements
  • Update to the “Last Updated” date on this page

Continued use of the platform after changes constitutes acceptance of the updated policy.

16. Contact Information

For questions about this Merchant of Record Policy or our MoR services:

  • MoR Inquiries: chain@pocketsflow.com
  • Customer Support: support@pocketsflow.com
  • Business Entity: Pocketsflow, Inc.
  • Registration: Delaware, USA
  • Jurisdiction: Delaware, USA
  • Response Time: MoR inquiries processed within 24 to 48 hours

This policy should be read in conjunction with: