In payments, regardless of the industry, the Merchant of Record (MOR) determines how transactions are processed, who takes responsibility for accepting payments, managing chargebacks, and handling compliance.
In credit risk terms, the Merchant of Record (MOR) is the entity legally responsible for processing transactions and ensuring compliance with payment regulations. This means the MOR takes the financial liability for the transaction and directly interacts with the stakeholders in the payment ecosystem (i.e gateways, PSP, banks etc).
Traditionally, travel agencies operated under the agency model, whereby they facilitated payments on behalf of the actual suppliers rather than processing them themselves. Under this model, these travel businesses act as intermediaries rather than direct sellers. This model reduces financial risk for agencies, as they don’t handle payments or chargebacks.
However, more travel intermediaries are shifting to the merchant model, taking direct ownership of payments. Why this shift? What are the benefits and challenges of this model?
Last year, I had the privilege of contributing to AltexSoft Travel video series alongside one of the best strategist in travel payments— Paul van Alfen from Up in the Air | Consultancy💥.
🎥 Check out the video to learn more: https://lnkd.in/dYyD7Jaj
The video addresses:
⚪ How the agency model work
⚪ How the merchant model work
⚪ Merchant of Record: Critical Decisions
⚪ Payment Providers for Smaller Travel Businesses
⚪ Mixed Processing Setups
To complement this great video, our team created a simplified visual to illustrate the key differences between the Merchant of Record (MOR) and the Agency models based on the input and contribution from the video.
Thanks again #AltexSoft for inviting my contributions and Paul for your added input on the visual too 😊 !
#paymentexperts, any perspectives to share on the the agency vs merchant processing models?
#Agency_vs_Merchant_Model #Merchant_of_Record #Payment #Agency_model #OTA #payprwork #upintheair
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