Escrow is a service through which a third party acts as an economic intermediary between a seller and a buyer.
In other words, when the buyer purchases a product or service, he deposits the amount of the payment with an impartial third party, who guarantees payment to the supplier, but only until the latter has fulfilled his part of the contract.
When you hire a freelancer, you make the payment for the service, but the system does not release it until you have received all the stipulated work. Thus, both parties have a guarantee: the freelancer will receive his payment, and you will get the agreed-upon work.
What is Escrow for?
One of the main difficulties of e-commerce was precisely ensuring colombia phone number list and compliance with deals. Escrow is a very effective way to increase the level of trust between both parties and to ensure payments and deliveries in a transparent manner and without risk of fraud.
Platforms such as Workana carry out Escrow between clients and freelancers, but there are many e-commerce sites that also use this system. In other words, they only release payment to the supplier until the client notifies that they have received the product and are satisfied with it.
In fact, Escrow as a form of trust that guarantees compliance by both parties has existed for quite some time, long before the rise of digital commerce, but it was normally used for sales or contracts that involved a very considerable sum of money, mainly in real estate.
How does an escrow service work?
To ensure security and trust in the parties involved in an agreement, the escrow service must be provided by an independent, neutral and certified third party. This is in order to protect both the seller and the buyer.
One of the most common ways in which escrow services are used is to make the purchase of a product. Thus, the buyer deposits the money in an account of the escrow service provider. And once he receives the product and verifies that it is in good condition, he informs the escrow to make the transfer to the seller. Therefore, it helps to avoid typical scams where one person deposits for a product, and then the other disappears with the money. But another very common point in which this escrow contract methodology is used is in the provision of services.