Digital River Business Models1 Digital River Business Models • Reseller (Standard) • Submitter Plus
SOR - Definition2 • Seller of record (SOR) • The “seller” (i.e., the party who transfers title of the product to the purchaser) • The SOR sets the retail sales price (in most circumstances) • The SOR is responsible for establishing the returns policy • The SOR is responsible for setting the terms and conditions of sale
MOR - Definition3 • Merchant of Record (MOR) • The party through whose merchant account a transaction is processed • The MOR is responsible for all processing fees incurred in connection with the transaction • The MOR is responsible for charge backs/fraud (may pass this risk to the client contractually) • The MOR is also the SOR in the Reseller model (not in Submitter Plus)
Reseller Model4 Digital River • Merchant of Record (MOR) • Seller of Record (SOR) Characteristics • Standard (90% of DR sites are Reseller Model) • Site time to market is faster (no bespoke agreement required) • Standard financial set-up processes • Legally, the seller of record sets the end consumer price • Top-line revenue is booked
Submitter Plus Model5 Client • Seller of Record (SOR) Digital River • Merchant of Record (MOR) Characteristics • Less than 10% of clients use this model • Extended time to market (Tri-party agreements are required for Credit Card Handling), VAT tax issues, WEEE fees, etc. • The submitter plus model requires a DR Executive sign-off • Top line revenue is with the client (vs. net revenue) • Seller maintains consumer price setting control
Ownership and Risk Matrix6 Ownership and Risk Matrix Who owns the risk? Reseller Submitter Plus Areas to Focus Price Control DR Client x Tax Nexus DR Client x Top line Rev DR Client x Settlement/Funding DR DR Reconciliation Services DR DR Charge back Liability DR* DR* Customer Service DR/Client DR/Client Card Association Rules and Compliance DR DR KYC/AML/DPL DR DR Alternative Payment Methods Yes Yes Product Liability Client Client * Charge Back Liability is with Digital River, however the liability may be transferred to the Client based on contractual agreement.
Legal flow for Reseller7 Reseller
Legal flow for the Submitter Plus8 Model • Submitter Plus Model