In this “online travel agency payment infrastructure” series, we previously discussed PCI DSS compliance; once you have clarity on that, the next thing OTAs often struggle with is whether to be a Merchant of Record (MOR). And unfortunately, there’s no one winner’s answer to it.

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.

TL; DR 

• There is no universally “right” choice between being a Merchant of Record (MOR) or not; each option suits different OTA business models and maturity levels. 

• Choosing not to be MOR reduces operational and technical overhead by outsourcing payments to suppliers or GDSs. 

• Even when outsourcing MOR, OTAs are not exempt from PCI DSS compliance and may still temporarily handle sensitive card data. 

• The biggest limitation of not being MOR is restricted pricing control and delayed commission payouts. 

• Being the MOR gives OTAs full control over pricing, margins, and revenue optimization strategies. 

• MOR status enables faster and more predictable commission flows without dependency on third-party settlements. 

• Direct payment ownership as MOR can significantly improve customer experience through a more seamless booking journey. 

• However, becoming MOR requires heavy investment in payment infrastructure, compliance, and operational expertise. 

• PCI DSS compliance becomes a full responsibility for MOR OTAs, increasing cost, risk, and ongoing effort. 

• The MOR decision should be guided by an OTA’s scale, resources, payment strategy, and long-term growth goals, and not industry trends alone. 

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.

Also Read – Navigating Airline Relationships as an OTA

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”.

Whether as an OTA you choose to be the Merchant of Record or not, it’s essential to weigh the trade-offs carefully. The decision will depend on your business model, resources, and your long-term strategic goals. Understanding the implications and balancing them is the real deal. As we stated earlier, there’s no definite answer; aligning with this piece’s information, you can now weigh your options more effectively.

Frequently Asked Questions (FAQs) 

Can an OTA operate with a hybrid MOR model across different markets or suppliers?
Yes, some OTAs adopt a hybrid approach, acting as MOR in select geographies or for specific suppliers while outsourcing MOR elsewhere, depending on regulatory requirements, payment maturity, and risk appetite. 

How does being MOR impact refund and chargeback handling for OTAs?
When acting as MOR, the OTA becomes the primary entity responsible for refunds, chargebacks, and disputes, which requires dedicated processes, tooling, and customer support readiness. 

Does MOR status affect an OTA’s ability to offer alternative payment methods (APMs)?
Yes. As MOR, OTAs have greater flexibility to integrate local and global APMs (UPI, wallets, BNPL, etc.), whereas non-MOR OTAs are limited to the payment methods supported by suppliers. 

What regulatory considerations beyond PCI DSS should OTAs evaluate when becoming MOR?
Depending on the market, OTAs may need to comply with tax regulations (VAT/GST), consumer protection laws, and cross-border payment regulations in addition to PCI DSS. 

At what stage of growth does it typically make sense for an OTA to become MOR?
While there’s no fixed threshold, OTAs usually consider MOR when they reach sufficient transaction volume, have predictable cash flows, and can justify investment in payments, compliance, and risk management capabilities.