The merchant of record model is a way of structuring sales in which one company acts as the legal seller to the customer on behalf of other businesses, and the role at its centre is explained in full under merchant of record (MOR). "Model" is added when people are describing the overall business arrangement, for example when a software maker chooses to sell through a reseller platform instead of setting up its own payment acceptance in every country.
Under the model, the merchant of record holds the merchant account, appears on the cardholder's statement, collects and remits sales taxes such as VAT, handles refunds and chargebacks, and takes on the legal and compliance duties of the seller. It then pays the underlying businesses their share, minus a fee that is usually higher than a plain processing fee because it covers these extra services.
The model differs from merchant aggregation and the payment facilitator approach. In those, each sub-merchant remains the seller and appears on the transaction, while the facilitator only provides payment acceptance. Online marketplaces, app stores and digital goods resellers are common examples of the merchant of record model in practice, and marketplace payments often combine elements of both.