What Is the Net (Merchant of Record) Model?
In a net booking model, your agency pays suppliers a net rate — the cost of the travel service after your markup — and collects the full gross amount from travelers. You are the Merchant of Record for the transaction: travelers pay your agency, and your agency pays the supplier. This model gives you the ability to build custom packages, bundle services, and control the traveler’s payment experience. It also means your agency is directly responsible for the funds you collect and the services you have committed to deliver.
Because your agency is handling traveler funds, your group travel terms and conditions must be significantly more detailed about payment terms, cancellation policies, refund timelines, and chargeback management than a gross booking arrangement requires.
What This Agreement Covers
Agency as Merchant of Record — Payment Authority and Responsibilities
This agreement establishes your agency’s right to collect payments from travelers, defines the scope of that authority, and outlines your obligations regarding how those funds are managed. It makes clear that travelers are paying your agency — not a supplier — and that your agency is responsible for applying those funds to the appropriate supplier bookings.
Deposit Schedules, Final Payment Deadlines, and Late Fees
Cancellation Policy and Non-Refundable Fee Language
Chargeback Dispute Protection
Group Minimums, Attrition, and Cancellation by the Agency
Most group travel arrangements have minimum participant requirements. If the group does not reach the minimum — or if participants drop out after commitments have been made to suppliers — your agency may face attrition penalties. This agreement addresses those scenarios directly, including what happens if the group falls below minimum thresholds and whether the trip will proceed, be repriced, or be cancelled.
The agreement also addresses the scenario where your agency must cancel the trip — for operational reasons, because the group minimum was not met, or because of supplier failures. It defines your refund obligations to travelers in each of those scenarios.
Force Majeure and Supplier Default Protections
Even in a net model where your agency is the Merchant of Record, you are not a guarantor of supplier performance. This agreement includes a force majeure clause and supplier default disclaimer that protect your agency if a supplier fails to deliver services due to events outside your control — natural disasters, pandemics, government travel bans, supplier insolvency, and similar circumstances.
These provisions are not a free pass from responsibility — but they do establish a defensible legal position in circumstances where no reasonable agency could have prevented the disruption.
Travel Insurance for Net Model Group Travel
For travelers booking through a Merchant of Record agency, travel insurance is especially important. Because travelers are paying your agency — not a supplier directly — the insurance coverage they need may be different from what a traveler booking direct would require. This agreement recommends comprehensive travel insurance and documents the recommendation, protecting your agency if a traveler suffers a loss after declining coverage.
