Both have a fair share of upsides and downsides. What is suitable for you will depend on where you stand as OTA and how much control you need over payments. Here, in this piece, we present a non-opinionated comparison so you can assess both options neutrally.
Merchant of Record vs Non-Merchant of Record: Implications for OTAs
To reiterate, whether you choose to be MOR or Not, it does not excuse you from PCI compliance. Let’s look at how one weighs versus another.Outsourcing Merchant of Record
As an OTA, your responsibilities come down significantly if you choose not to be a MOR and outsourcing it. You don’t need a payment gateway, set up a merchant account, or build cumbersome logic per se. You can automatically process customers’ payment data through GDS or other suppliers. Credit card details will route directly from your website to your providers.That said, there are still scenarios despite outsourcing MoR when you have to store customer data for a while, like during the flight booking process when there is a time lag, you have to keep card data till you get PNR from ARS.
The major downside of not being MOR is that you have very little control over prices. You might have to wait for weeks for your commissions. Sometimes, the duration might stretch even more. Read More – How to optimize an OTA website for search engines
Being the Merchant of Record
As the MOR, you can set and adjust prices based on your business strategy, market trends, and customer demand. This flexibility can be a significant advantage in a dynamic and competitive travel industry. Direct Management of Commissions: Being the MOR allows you to streamline commission payouts, ensuring you receive your earnings more quickly and consistently. You’re not reliant on third-party suppliers, which can sometimes lead to delays in receiving commissions. Enhanced CX: Customers dealing directly with your OTA throughout the booking process can benefit from a more seamless and personalized experience. This direct interaction can improve customer satisfaction and foster long-term loyalty.Downsides of Being the Merchant of Record
Investment in Payment Infrastructure: Assuming the MOR role requires significant investment in payment infrastructure, including payment gateways, merchant accounts, and secure data storage. This investment can be costly and time-consuming. PCI Compliance Burden: When you are the MOR, you take full responsibility for PCI DSS compliance. Meeting these rigorous security standards can be a complex and ongoing process, demanding resources and expertise in data security. Operational Complexity: Managing payment processing and compliance adds another layer of operational complexity to your OTA business. This complexity can result in higher administrative costs and increased risk if not managed effectively. If being MOR is something that’s a requirement of your online travel agency, you will also have to make a call on PSPs; we have done a separate piece on it. Follow “How OTAs should assess payment service providers”.
About Vervotech:
Vervotech is a leading Hotel Mapping and Room Mapping API that leverages the power of AI and ML to quickly and accurately identify each property listing through the verification of multiple parameters. With One of the industry’s best coverage of 98% and an accuracy of 99.999%, Vervotech is quickly becoming the mapping software of choice for all leading global companies operating in the travel and hospitality industry. To learn more about Vervotech and the ways it can enhance your business in the long run contact us: sales@vervotech.comAuthor
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Sanjay brings over 16+ years of entrepreneurial, general management, and senior executive experience with proven expertise in business development, corporate strategy, and product & program management. Sanjay, being an Industry veteran, and an influencer, leads and drives Vervotech’s vision of “Organizing World’s Accommodation Data.” Before he founded Vervotech, he was a VP of Tavisca Solutions, where he took the started SaaS division and grown with customers in more than 15 countries.
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