By Ashwin Chawwla, founder and CEO, Escrowffrr
Business transactions have always been a risky game and one filled with inhibitions. Parties involved in business deals often struggle to transact in a safe, secure, and seamless method. The journey of business transaction seems to be more perilous in an e-commerce setup. With the advent of new technologies- ecommerce and online retail transactions have skyrocketed, creating an opportunity for cybercriminals to defraud digital businesses. To rescue these business transactions from scammers and hackers, the new member who joins the block is known as Escrow.
What is Escrow?
Escrow is a financial arrangement where a third party holds and regulates the payment and money transfer for the primary two parties. Although escrow-based payment is an age-old concept globally, it was mostly restricted to large transactions such as mergers and acquisitions. With times changing and most of the businesses going digital, this payment mechanism is now being adopted by stakeholders from various sectors, as it ensures safe and secure transaction with transparency.
A concern that strikes here is why to involve a third-party, ‘Escrow’ in a transaction? Escrow-based transaction maintains a timeline, which allows transparency to prevail in the transactions by facilitating the parties involved a view into the movement of the fund, and development of the contractual commitment. Since the transactions take place under the direction of experts, the chances of fraud are minimised.
In business transactions, it might also happen that under certain circumstances if one of the parties fails to abide by the contract, it leads to a lengthy litigation process. Escrow eliminates all legal jargon and ensures secure transaction, creating a fearless business environment. A step by step timeline is followed by the escrow system, that makes transactions speculation free.
Agreeing to Terms: Usually, it’s either the buyer or the seller who initiates a transaction. When registering at Escrow.com both the seller and the buyer agree to the transaction terms.
Buyer Pays Escrow: The buyer uses an approved payment method to deposit the payment to the registered escrow account. Escrow, then verifies the payment, following which it notifies the seller that the vendor payment is secure in the escrow account.
Seller Delivers: Once the payment has been verified, the seller sanctions the sale of merchandise. The seller submits the tracking information, following which Escrow verifies that the buyer receives the merchandise.
Buyer Accepts: After the merchandise is delivered, the buyer has a fixed number of days for inspecting the merchandise and the option to either accept or rejecting it. In case the buyer rejects the merchandise, the buyer is notified to return it. Once the seller receives the sent merchandise back, the transaction amount is refunded to the buyer. In case of acceptance of merchandise, Escrow completes the final step of the payment process.
Release of Payment: After the buyer accepts the merchandise, Escrow releases the funds to the seller and makes safe payments to the vendors.
This is how all vendor payments are carried out by the digital escrow. One can keep an eye on the status of every step of the payment method by logging onto the registered escrow account. So, if the process requires some action, one is aware of the same, and can take the action accordingly.
Indeed the older payment options such as cheque, draft, and money orders, etc. are tried and tested; online payment offers a certain level of exclusivity. For example, one can easily use credit card to process a transaction much faster. Online payments are documented and there is no need to fill details on paper, having the fear of misplacing it. It makes it feasible for one to keep a track of the transaction process. Indian business, especially ecommerce may consider switching to an ‘escrow’ based payments mechanism to experience a safe and secured business transaction journey.
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