3 Great Reasons To Be Merchant of Record

By Michelle Marquis, Chief Revenue Officer at Lexicon Travel Technologies

How to navigate today is different than yesterday or tomorrow. Property Managers are forecasting revenue, expenses and then reforecasting them. Cash is king. 
 
What is a Merchant of Record? 

Simply put, the merchant of record in an online transaction is the party that processes and distributes the actual payment for a product or service. For example, large e-commerce companies usually are their own MORs, while smaller ones (or those who don’t want to deal with the hassle) rely on third parties such as PayPal or Venmo to handle it. 

Being MOR can narrow the gap between you and your customers and give you more control over your fate than you ever thought possible. Any channel manager that requires all payments to be processed through them merits scrutiny and due diligence. Point being, don’t be too quick to surrender the control and flexibility that being MOR offers you. 

So, without further ado, we present three good reasons to be merchant of record.  

Reason One: Control 
Not only do you have homeowners to pay — you also have your own costs. Employees, supplies, office lease, etc. But when the money handling is outsourced, that puts your primary revenue source (and cash flow) in someone else’s hands. In other words, you wind up on someone else’s schedule. That’s the difference between riding the bus or taking your own vehicle. One isn’t necessarily better than the other, but there’s no question which is more convenient. 

If you’re not MOR, what happens if your homeowners don’t happen to like the payment schedule forced on you by whatever party IS your MOR? Unless you want to get off-cycle and put yourself in a precarious cash-flow position, your hands are tied. But if you’re MOR, you can set the terms yourself to suit your own accounting preferences and those of your homeowners. That could not be more important right now.  

Another aspect of lost control is related to inventory. Some OTAs don’t actually process credit card transactions at the time of booking, but the unit disappears from your inventory just the same. If that transaction later goes bad — then you might lose that booking without ever getting the chance to fill it. By the same token, you can’t see which bookings get flagged for an error like a transposed credit card number, and therefore can’t reach out to the guest to get it straightened out. The MOR has to do that.  

Bottom line: If you want to be in control of your cash, being MOR is the key. 

Reason Two: Guest and Homeowner Service 
Taking care of guests and homeowners is pretty much why you get up every morning, right? So why would you accept any compromise that imperils those relationships? 

If a future booking calls to make a change, ask about their charges, or cancel – you do not know 1) what they paid to the OTA and in most cases it is more than what it would be on the website and 2) in some situations, their name is not even in the PMS so you literally cannot help them.

Homeowners will see their rates much higher on the OTAs and want to know why they are seeing so much less on those bookings.  

Reason Three: Branding 
Brand and reputation play a big role in property management. If you spend decades building a customer base that knows and trusts you, then what happens if third-party MORs are responsible for processing transactions and distributing the very funds you use to keep your business alive? 

Imagine you take all your vehicles to the Al’s Auto, and have for years. But now, instead of paying Al, you pay someone called RepairBank LLC because they’re MOR and they had cheaper fees. Suddenly, RepairBank LLC is part of your brand chain. If they screw up, it reflects badly on you but it doesn’t really work the other way around. You’re at their mercy. 

Being MOR keeps it all “in the family,” so to speak. If integrity and stellar service are a big part of your brand reputation, do you want to mortgage any of that to a third-party MOR that may not share those values? If you’re a buck-stops-here kind of person, being MOR might be just the ticket. 

When a channel manager is Merchant of Record, they brand themselves as the owner of that listing.  With data showing only 6% of searchers actually book on an OTA once visiting, branding YOUR company is the key to seeing any direct bookings as a results of your advertising on any OTA.

Summary 

Being merchant of record for your company across the board far out-weighs any additional effort. Control is reason enough, but guest service and branding are pretty compelling reasons, too.
 
When you really think about it, many of the solutions out there today sell convenience and efficiency at the expense of control and agency. And, indeed, sometimes that’s a fair trade to make. But MOR isn’t something you should give up lightly. Ideally, the choice should be yours. 

But what’s convenient for you isn’t necessarily convenient for your customers, and vice-versa. Only you can know what payment-processing model fits your business.