MoR Revenue Shares: Calculate Platform and Contractor Splits

Start with the parties and their obligations#

A merchant of record sells to the customer under its agreed commercial model and handles the customer payment. That does not automatically make it the employer, contractor payer or accounting principal for every service in your platform. Before designing a split, identify the customer-facing seller, the supplier entitled to the MoR settlement, and the party that owes each contractor.

Consider a platform selling an eligible digital product through a third-party MoR while paying contributors under separate contracts. The MoR sells to the buyer and settles with the platform; the platform calculates contributor earnings and pays them. An MoR that accepts this product and platform arrangement may still support only one supplier settlement, requiring a separate contractor payout process. Confirm the actual agreement rather than assuming checkout can pay every participant.

Paddle’s agreement provides one concrete reseller example: it defines software or digital-content products agreed for resale, a Paddle discount and supplier settlement terms. This is evidence of that model, not approval for arbitrary freelance services or multi-supplier marketplaces. Obtain product and business-model acceptance before choosing an MoR architecture.

Choose the share basis separately from customer pricing#

Customer pricing answers what the buyer pays. Contractor compensation answers what the platform owes for the contributor’s service or rights. A monthly customer subscription does not require a subscription-style contractor fee; a contractor’s fixed project price need not become a percentage just because the platform sells through an MoR.

Write the formula using amounts and signs. For a net-basis rule: eligible base = sales excluding transaction tax − refunded sales excluding tax − explicitly deductible fees. Contractor earnings = eligible base × agreed share. Define a negative result, chargeback fees, discounts, currency conversion, rounding, reserve timing and the effect of later corrections. “Net revenue” without those definitions invites disagreement.

For a marginal-tier illustration, USD 12,000 of qualifying sales produces USD 7,500 on the first USD 10,000 at 75%, plus USD 1,600 on the remaining USD 2,000 at 80%: USD 9,100. Applying 80% retroactively to all USD 12,000 would produce USD 9,600. Both are possible contract designs, but they are different rules. Specify which one applies and how refunds affect attained volume.

A worked collection-to-payout waterfall#

The following is invented arithmetic for one supported sale, not a provider quote or accounting journal. Assume a USD 1,200 tax-inclusive charge contains USD 1,000 of eligible sales and USD 200 of transaction tax. The MoR fee is USD 60, deductible before a 75% contractor share. There are no refunds or FX differences yet. The platform’s agreed contractor reserve is 10% of the contractor’s earnings, temporarily retained with a specified release date.

The USD 940 supplier settlement consists of USD 235 retained share, USD 634.50 paid to the contractor and USD 70.50 still recorded for the contractor. The reserve is not additional platform income. If the MoR imposes a separate supplier reserve, track that separately from the contractor reserve: delayed MoR cash does not by itself reduce contractor earnings or extend a contractual due date.

Calculate in currency units using a stated rounding policy. Allocate any rounding remainder once and show it on the statement. If the customer charge, supplier settlement and contractor payout use different currencies, retain the original-currency calculation, each applied rate, conversion fees and the final payout amount. Do not silently move FX losses into the contractor’s share.

Keep revenue recognition separate from settlement#

The commercial split is not a conclusion about reported revenue. Under IFRS 15, principal-versus-agent assessment identifies the specified good or service and whether the entity controls it before transfer. Fulfilment responsibility, inventory risk and pricing discretion are indicators assessed in context. A reseller label or possession of customer cash is not a substitute for that analysis.

IFRS 15 distinguishes a principal’s gross consideration from an agent’s fee or commission for arranging the supply; see paragraphs B34–B38. Determine the relevant customer and contract for each entity, including supplier-to-MoR arrangements. A platform may have different roles for distinct services. Use the applicable accounting framework and a documented assessment rather than posting every payment as revenue.

Revenue is recognized when or as the relevant performance obligation is satisfied, according to IFRS 15. Invoice date, customer collection, contributor acceptance and bank settlement can be different dates. An annual prepaid service may create a contract liability before service delivery; receiving or splitting its cash does not automatically earn all twelve months of revenue.

Make refunds and disputes change the right records#

Continue the example with a USD 240 partial customer refund: USD 200 of eligible sales and USD 40 of transaction tax. Assume the MoR fee of USD 60 is not returned, the tax adjustment is validly recorded, and the contractor agreement recalculates the net basis after refunds. Remaining sales are USD 800; the new share base is USD 740. Contractor earnings become USD 555 and the platform retained share USD 185.

The contractor’s earnings therefore fall by USD 150 from USD 705. If USD 634.50 has already been paid and the USD 70.50 reserve remains, cancelling that unpaid reserve accounts for USD 70.50 of the adjustment; the remaining USD 79.50 is an overpayment to resolve under the contract and applicable law. Record it separately. Do not manufacture a negative bank transfer or automatically deduct it from unrelated earned compensation.

A chargeback is another event with its own disputed amount, fee and outcome; do not assume every fee is refundable or every dispute is lost. Paddle documents that chargebacks are raised against it as MoR and describes fees and supplier effects. Your agreement decides the economic allocation. Avoid booking both a pending dispute and its final loss as two refunds.

Customer refunds and downstream transfers also need separate execution. In Stripe Connect’s separate-charges-and-transfers model, refunding a platform charge does not automatically reverse the associated transfers. Reversal has its own constraints. This is a payment implementation example, not evidence that every Connect integration is a third-party MoR arrangement.

Implement earned, owed and paid as distinct states#

1. Record the customer sale and MoR reference, transaction tax, agreed fee components and applicable commercial-rule version.
2. Create the contractor earning when its contractual trigger occurs. Retain the qualifying deliverable or usage evidence.
3. Calculate adjustments and reserves as explicit records linked to the earning. State due date, release criteria and release date.
4. Approve the payable for cash movement without deleting the underlying obligation when a destination or compliance issue delays payment.
5. Create a transfer instruction with a stable business identifier; process provider events without duplicating payment or ledger entries.
6. Close payment only on the agreed evidence of completion, then reconcile the MoR statement, payable ledger and bank separately.

A missing webhook or provider timeout is an unknown result, not proof that nothing was sent. Retrieve authoritative status using the existing reference before a new instruction or fallback rail. Preserve a failed attempt’s lineage when a replacement is genuinely needed; link it to the same payable so two successful transfers cannot both be treated as the intended payment.

Give contractors a statement they can reproduce#

Show qualifying sales or deliverables, rule version, period, exclusions, share base, percentage, named fees, refund adjustments, earned amount, retained reserve, release date, amount paid and transfer reference. A contractor service invoice and a buyer invoice serve different relationships; use the appropriate invoice or permitted self-billing arrangement for each supply.

Document which entity handles sales tax, contractor withholding and information reporting for the actual transactions and jurisdictions. The MoR handling buyer transaction tax does not automatically handle the platform’s payroll, contractor tax or income tax. Record the obligations and evidence applicable to each relationship rather than applying a generic reporting threshold to every recipient.

Before launch, calculate one ordinary sale, partial refund, post-payout chargeback, tier boundary, reserve release, FX conversion and unknown-status transfer from retained inputs. Finance and the contractor-facing statement should reach the same commercial result. When a rule changes, keep an effective date and the old version for historical transactions; fix past errors with traceable adjustments rather than overwriting paid records.