Why more OTAs are becoming merchants of record in 2025

Not all friction in travel is visible to customers. Behind every well-thought-out itinerary and glowing review lies a set of operational decisions that can either speed things up or drag them down. One of the biggest drivers of friction? Payments.

How a travel company handles funds directly shapes profitability, scalability, and trust. And yet, many online travel agencies (OTAs) still rely on legacy pass-through payment models that limit their flexibility and fragment the customer experience.

That’s changing. More OTAs are stepping into the flow of funds and taking on the role of merchant of record (MoR) as a strategic response to various pressures, including evolving traveler behavior, tighter margins, increased regulatory complexity, and the need for greater control over revenue and reconciliation.

And the shift is backed by data. A recent survey conducted by Skift and Airwallex found that 66% of global travel companies say inefficient payment systems are directly eroding margins. What may seem like a “safer” setup on the surface is quietly costing OTAs revenue, time, and customer trust.

More OTAs are realizing that if they want to keep up with rising traveler expectations and protect their bottom line, they need to rethink how payments flow through their platforms. 

What is a merchant of record?

A merchant of record (MoR) is the entity legally responsible for processing payments from customers in a transaction. This includes collecting the fee, handling refunds, managing chargebacks, and ensuring compliance with local regulations. For OTAs, becoming the MoR means taking on this role to streamline operations and enhance the end-to-end booking experience.

And the timing couldn’t be more relevant. According to Sabre’s 2025 travel trends, most travelers are planning at least two trips this year, with 90% maintaining or increasing their travel budgets. Demand is rising, but so are expectations. Travelers want flawless experiences, flexible payment options, and fast resolutions when plans change.

For OTAs, taking control of the payment experience is a way to build trust, meet customer expectations, and stay competitive in a market where the experience is everything.

Let’s look at how the traditional model is holding OTAs back and why the MoR model is emerging as a smarter path forward.

The pass-through model: simple, but limiting 

In a pass-through model, the OTA acts more like a facilitator than a stakeholder in the financial flow. When a customer books a trip, the OTA routes the payment information to the supplier, such as a hotel or airline, which processes the payment directly and later sends a commission back to the OTA.

However, this model introduces delay and uncertainty. OTAs often have to wait days or even weeks to receive commissions from suppliers, with limited visibility into when or how those funds will arrive. If a customer requests a refund or disputes a charge, the OTA is usually caught in the middle, responsible for resolving the issue, but without control over the transaction itself. 

For example, a traveler might cancel a hotel reservation through an OTA’s platform, but the refund must be processed directly by the hotel. This leads to delays and confused, frustrated customers.

On top of that, OTAs can’t easily offer region-specific payment methods or currencies, making the checkout experience clunky for international travelers. A traveler in Brazil might not see familiar local options like Pix or Boleto, while a customer in Europe may be forced to pay in USD instead of euros. This creates friction at checkout and increases the likelihood of cart abandonment.

Why the merchant of record model is gaining momentum

Becoming the merchant of record flips the model and brings financial ownership back in-house. 

The OTA accepts the customer’s payment directly, then pays out to the supplier. Instead of playing middleperson, the OTA takes control, and in return, gains a set of powerful advantages:

1. End-to-end ownership of the customer experience.

Refunds, cancellations, and itinerary changes can be managed directly by the OTA, eliminating the need for messy back-and-forth between suppliers and customers. OTAs can also support local payment methods and currencies, offering a smoother checkout experience that drives conversions.

2. Faster and more predictable cash flow.

Rather than waiting days or weeks for commissions, MoR OTAs receive payment at the time of booking. That means better forecasting, reduced reliance on supplier schedules, and the ability to reinvest more quickly.

3. Stronger financial insight and control.

Managing payments internally gives OTAs complete visibility into transaction data, leading to sharper margin tracking, better forecasting, and more informed decision-making.

It also allows OTAs to aggregate customer bookings under one roof, which increases leverage with suppliers. That means better wholesale rates and access to exclusive content, like private hotel deals, premium airline seats, and limited-run travel experiences that aren’t available on public platforms. 

In some cases, OTAs can also negotiate improved terms with card networks like Visa and Mastercard, further increasing financial control and reducing costs.

4. Flexibility to innovate.

MoR OTAs can bundle services, adjust pricing dynamically, and launch new business models that aren’t possible when payments flow through suppliers.

5. New revenue opportunities through smarter supplier payouts. 

By using virtual cards to pay suppliers, OTAs can generate additional revenue through card rebates or optimize FX costs, turning a cost center into a margin lever.

It’s a significant shift. But it’s also becoming a competitive necessity. 88% of travel executives say customer payment preferences have changed since the pandemic, and today’s travelers expect checkout to be fast, flexible, and familiar.

Managing funds comes with responsibility

Of course, being in the flow of funds isn’t without trade-offs. It comes with regulatory obligations, fraud risks, and operational overhead. From dealing with chargebacks and holding multi-currency balances, there’s complexity that can slow you down, unless you have the proper infrastructure.

That’s where Airwallex comes in.

How Airwallex supports OTAs as the merchant of record

Whether you’re already managing customer payments or considering the switch, Airwallex offers a modern financial infrastructure designed for travel businesses:

• Global payment acceptance. Let customers pay in their preferred currency using local payment methods across more than 180 markets. Boost conversions at checkout while cutting costs with smart routing and interbank FX rates.

• Multi-currency settlement. Collect and hold funds in 14+ currencies. Settle like-for-like to avoid forced conversion and preserve your margins.

• Fast, efficient supplier payouts. Pay global partners using virtual cards or bank transfers, with automatic reconciliation and detailed tracking. Earn industry-leading cashback and auth rates via our exclusive partnership with Visa for travel merchants while accelerating supplier payouts and reducing overhead.

• Built-in compliance. Tap into 60+ licenses and global KYC/AML workflows to reduce the overhead of managing regulatory complexity in-house.

• Real-time financial visibility. Track the full flow of funds – from customer payment to supplier payout – all in one place. 

• Modular APIs and no-code options. Whether you want complete control or a plug-and-play experience, Airwallex adapts to your stack and scales with your growth.

Control the transaction, control the experience

From checkout to settlement, becoming a MoR puts you in control of what matters most. For OTAs, stepping into the flow of funds unlocks faster growth, stronger margins, and a more consistent booking journey. And with the right infrastructure, it doesn’t have to mean more complexity.

Airwallex gives you everything you need to operate as the MoR: global licenses, multi-currency infrastructure, automated reconciliation, and modern APIs that scale with you.

You bring the bookings. We’ll handle the rest.