Merchant of Record for Vacation Rentals: What It Means and How to Become Your Own

Nobody becomes a vacation rental manager because they love reconciling payouts. But who actually holds your guests’ money, you or the platform, quietly decides how much control you have over cash flow, refunds, deposits, and owner payouts. That question has a name: merchant of record. And for most managers it is not hypothetical, because you are already the merchant of record on a large share of your bookings, whether you have framed it that way or not. This guide explains what a merchant of record is, who plays that role on Airbnb, Vrbo, Booking.com, and direct bookings, and what changes when you decide to become your own.

What is a merchant of record?

A merchant of record is the legal entity that sells a service, collects payment for it, and takes responsibility for the financial and compliance obligations that come with the sale.

In a vacation rental context, the merchant of record is whoever the guest is really paying. That entity’s name shows up on the guest’s card statement. It processes the charge, holds the funds until payout, issues refunds, absorbs chargebacks, keeps the transaction records, and answers for tax and legal compliance on the payment. It is a bigger role than simply “getting paid.”

People often confuse three different things: the merchant of record, the seller of record, and the payment processor. They sit at different layers of a single transaction, and knowing which is which makes the rest of this guide easier to follow.

The short version: the payment processor is the plumbing, the seller of record earns the income, and the merchant of record carries the responsibility. When you run your own payments, you are usually all three at once.

What’s the difference between a merchant of record and a seller of record?

The two terms are close cousins and often used interchangeably, but the merchant of record handles the payment and its liabilities, while the seller of record owns the sale and its income.

Here is the practical distinction. The merchant of record is the entity identified on the transaction that takes the guest’s money, moves it to the seller, processes it under the laws where the guest is located, and keeps the records. The seller of record is the business actually providing the stay, receiving the net proceeds, and paying income tax on them.

For most property managers, the split only matters in one situation. When you handle payments through your own processor account, you are both the merchant of record and the seller of record. When you rent exclusively through Airbnb, Airbnb acts as merchant of record while you remain the seller of record, still responsible for your own income taxes and local licensing.

Who is the merchant of record on Airbnb, Vrbo, and Booking.com?

It depends entirely on whether the channel runs payments through its own system, and the three big platforms do not work the same way.

Airbnb operates its own payment system, so it is the merchant of record for every stay booked on Airbnb. It collects the guest’s money, decides when to release your payout, keeps the records, and shows up on the guest’s statement. Vrbo and Booking.com do not process payments themselves for most professional listings. They require you to connect a payment processor and handle the transaction, which makes you the merchant of record. Any direct booking makes you the merchant of record too, even when you use PayPal or Stripe to take the card.

In Hostfully’s most recent industry survey, the average operator books roughly 45% of stays through Airbnb and about half through Vrbo, Booking.com, and direct combined. That means for most managers, close to half of every dollar already flows through channels where they are the merchant of record, whether they have thought about it in those terms or not.

This is how connected channels are designed to work: they pass the transaction to you rather than owning it. Kara Thibodeau, US Sales Manager at HomeToGo, described the mechanic: “We capture the guest credit card details, and that information gets passed along to you through Hostfully, so you can take payment upon booking and remain the merchant of record.” She added that the same setup leaves your terms in your hands: “You get to use your own unique cancellation policy, and you can remain in control of the booking.”

How does being your own merchant of record change how you handle guest and owner money?

It moves you from receiving a scheduled payout to controlling the entire flow of funds, from the guest’s card to your owners and vendors.

When Airbnb is the merchant of record, money arrives on its timeline: it collects from the guest, holds the funds, and releases your payout after check-in. You wait. When you are the merchant of record, you decide when the guest pays, when the deposit is collected and released, and when owners and cleaners get paid. You can take a payment in full, split it into a deposit plus a balance, or bill extras mid-stay.

The table below shows who touches the money at each step under each model.

Controlling this flow is a real advantage for anyone paying owners and staff. Instead of waiting on a trickle of platform payouts whose timing is out of your hands, you can plan disbursements around your own calendar and show clean, complete financial records to owners and tax authorities.

There is a catch worth naming. More control means more to reconcile, and reconciliation is where operators feel the pain. The share of managers who name accounting as their single biggest technology headache has climbed from 5% in 2021 to 21% in 2025, driven by inconsistent platform payouts, owner statements, and data scattered across systems. Running your own payments through a single system, rather than juggling separate processor logins and spreadsheets, is what keeps that control from turning into chaos. A property management system that connects your processor, your channels, and your reporting in one place is what makes owner payouts and reconciliation manageable at scale.

Who handles cancellations and refunds when you’re the merchant of record?

You do, and that is both the burden and the point.

On Airbnb, the platform enforces the cancellation policy and pushes the refund automatically, which is convenient but leaves you watching from the sidelines. When you are the merchant of record, you own the cancellation terms in your rental agreement and you process the refund yourself. That means faster, more flexible resolutions for good guests, and it also means the chargeback lands on you if a guest disputes a charge. You set the policy, and you enforce it.

The practical upside is speed and judgment. If a strong repeat guest needs to move dates, you can make that call in minutes instead of waiting on a support queue. The tradeoff is that a clear, enforceable cancellation policy in your rental agreement stops being optional. It is your first line of defense against disputes.

How you display that policy matters as much as having one. Kyan McCormick, Senior Operations Manager at Vacation Rent Payment, advises putting the terms in plain sight at checkout rather than behind a link: “A link to another page is not always acceptable in terms of displaying your cancellation policy, especially for online transactions. If you have a no refund policy within 30 days, stipulate that. Don’t ask them to click a link to go to a different page.” When you are the merchant of record, that clarity is what wins you the dispute later.

And disputes are where being the merchant of record bites. Because the card networks put the responsibility on whoever took the payment, a chargeback is yours to fight, with the funds pulled from your account until you win it back.

Plan for the timeline, too. Doreen Kiza, Global Enterprise Partnerships at Vacation Rent Payment, notes that a dispute “typically takes about 60 days to go through the process and win that case on your behalf and receive the money if successful.” That is two months with the money out of your account, which is why documenting every booking and keeping your policies airtight is part of the job once you are the merchant of record.

How do security deposits work when you’re your own merchant of record?

You collect and hold the deposit directly, rather than relying on a platform’s damage program, which gives you a faster and more predictable claims process.

Airbnb manages damage through its own coverage program, so you never truly hold a deposit. When you are the merchant of record, you have two common options: place a temporary hold (a pre-authorization) on the guest’s card, or collect a refundable charge before check-in and return it after. A pre-authorization is lighter on the guest because no money actually moves unless you claim it, while a collected deposit guarantees the funds are there. You choose which fits each property and stay.

Holding the deposit yourself changes the claims experience. You are not filing a request and waiting on a third party to adjudicate it; you assess the damage, apply the deposit, and refund the balance on your own timeline. Hostfully supports both approaches through your connected processor, and with Stripe you can automate returning the deposit to the guest so it never gets forgotten after a clean checkout.

Holding funds also means owning the fraud risk, which makes guest screening part of the deposit conversation. Doreen Kiza, Global Enterprise Partnerships at Vacation Rent Payment, flags one window in particular: “Last-minute bookings tend to attract fraudsters, so just stay vigilant on these last-minute bookings, especially those three days before or on the same day. Really pay attention to those payment details, make sure they match the guest information, and verify the guest identity.” A deposit protects you against damage; screening protects you against the booking itself.

What are the pros and cons of being your own merchant of record?

The upside is control across cash flow, guests, brand, and distribution; the downside is that the financial responsibility stops with you.

None of these tradeoffs are hidden or unusual. They are the same tradeoffs any business makes when it decides to run its own checkout instead of renting someone else’s. The question is whether the control is worth the added work for the business you are actually running.

The cons are real, but most are one-time setup or repeatable process, not daily firefighting. Notably, payment technology itself is rarely the complaint. In our survey, only 5% of operators named payment solutions as their top technology challenge. The friction lives in accounting and reconciliation, which is a systems problem you can solve, not a reason to hand your payments to a platform forever.

Should you become your own merchant of record?

If you only list on Airbnb and want the least possible admin, staying with the platform as merchant of record is a reasonable choice. If you want to grow beyond one channel, the answer is almost certainly yes.

The decision comes down to your channel mix and your appetite for control. An operator running everything through Airbnb can let the platform carry payments and accept the tradeoff of less control and slower payouts. An operator listing on Vrbo or Booking.com is already the merchant of record and simply needs the right setup. An operator building direct bookings has to be their own merchant of record to get there at all.

Use this quick read to place yourself.

A simple readiness check: you are ready to become your own merchant of record when you have a payment processor you can connect, a system to reconcile payments and produce owner statements, a written cancellation and deposit policy, and a plan for handling the occasional dispute. If those four are in place, the control is worth having.

How do you become your own merchant of record?

You become the merchant of record the moment you take responsibility for collecting the guest’s payment and redistributing it, and connecting a processor to your property management system is what makes that manageable.

The path has three steps. First, choose a payment processor that integrates with your systems. Second, connect it to your PMS so bookings, payments, deposits, and reporting live in one place instead of scattered across logins. Third, set your rules for payment timing, deposits, refunds, and owner payouts, then let the system enforce them. Hostfully integrates directly with three processors so you are not building this from scratch:

• Stripe for card payments, split and balance payments, and automated security deposit refunds
• PayPal for card and PayPal-account payments
• Vacation Rent Payment (powered by YapStone), built specifically for vacation rentals

Once a processor is connected to your PMS, you can take payments for Vrbo and Booking.com stays, collect deposits and upsells mid-stay, and take direct bookings under your own brand. You can even route funds through more than one Stripe account to customize how money reaches different owners.

This is where a merchant-of-record setup connects to the rest of your stack. The processor takes the money, the channel manager lets you list on the OTAs where you must be the merchant of record, and a direct booking site lets you cut out OTA commissions entirely. A note before you flip the switch: being the merchant of record makes you responsible for collecting and remitting lodging taxes and for the income reporting your processor files, so loop in your accountant. This guide is not tax or legal advice.

Frequently asked questions about merchant of record

Is Stripe a merchant of record?

No. Stripe is a payment processor. It provides the technology to charge a guest’s card and move the funds, but it does not own the sale, set your refund policy, or carry your tax liability. When you use Stripe to take vacation rental payments, you are the merchant of record and Stripe is your processor.

Is PayPal a merchant of record?

No. PayPal is a payment processor and intermediary that lets you send and receive money. It moves funds between the guest and you, but it is not the seller of the stay and does not assume responsibility for delivering it or for the taxes on it. Using PayPal still makes you the merchant of record.

Is Airbnb a merchant of record?

Yes. Airbnb is the merchant of record for stays booked on its platform. It runs its own payment system, collects the guest’s money, controls when it releases your payout, and keeps the transaction records. You remain the seller of record, responsible for income taxes and local compliance on your earnings.

Is Vrbo a merchant of record?

No, not for most professional listings. Vrbo does not process payments through its own system the way Airbnb does. It requires you to connect a payment processor and handle the transaction yourself, which makes you the merchant of record on every Vrbo stay you take.

Do I need to be a merchant of record to take direct bookings?

Yes, effectively. A direct booking means the guest pays you rather than a platform, so you collect the payment through your own processor and carry the responsibility for it. That is the definition of being the merchant of record. It is also why direct booking gives you more control over margins and guest relationships.

What’s the difference between a merchant of record and a seller of record?

The merchant of record handles the payment and its liabilities: collecting funds, issuing refunds, absorbing chargebacks, and keeping records. The seller of record owns the sale, provides the stay, and pays income tax on the proceeds. When you run your own payments, you are usually both at the same time.

Does being my own merchant of record affect my taxes?

It can. As the merchant of record you are typically responsible for collecting and remitting local lodging taxes, and your payment processor will report your transaction volume to tax authorities. This does not change your underlying income tax obligation, but it does put more of the compliance in your hands. Confirm the specifics with your accountant.

Who holds the security deposit when I’m the merchant of record?

You do, through your payment processor, rather than a platform holding it for you. You can place a temporary hold on the guest’s card or collect a refundable deposit before check-in, then release or claim it after inspection on your own timeline. This gives you a faster, more predictable claims process than waiting on a platform damage program.

Key takeaways

• A merchant of record sells the stay, collects the payment, and owns refunds, chargebacks, records, and tax compliance on it.
• Airbnb is the merchant of record for its own bookings; on Vrbo, Booking.com, and direct bookings, you are.
• Being your own merchant of record gives you control over cash flow, cancellations, security deposits, and owner payouts.
• The main tradeoff is added accounting and reconciliation, which a connected processor and PMS turn into a manageable process.
• If you list beyond Airbnb or want direct bookings, being your own merchant of record is not optional; it is the foundation.