What is an escrow service?

What is an escrow service?

An ESCROW service is an arrangement made under contractual provisions between transacting parties, whereby an independent trusted third party receives and disburses money and/or documents for the transacting parties, with the timing of such disbursement by the third party dependent on the fulfilment of contractually-agreed conditions by the transacting parties.

As with traditional escrow, Internet escrow works by placing money in the control of an independent and licensed third party in order to protect both buyer and seller in a transaction. When both parties verify the transaction has been completed per terms set, the money is released. If at any point there is a dispute between the parties in the transaction, the process moves along to dispute resolution.

Hence, an escrow service is a licensed and regulated company that collects, holds, and sends a buyer's money to a seller according to instructions agreed upon by both the buyer and seller. Typically, once the buyer receives and approves the item from the seller within an agreed time frame, the escrow service then sends the payment to the seller.

Here's how the escrow process works:

Ø  Both parties (buyer and seller), by implication, agree to use/transact payment through www.escrow.com – either with or without the knowledge of the buyer at the point of purchase.

Ø  The money paid by the buyer for the items purchased is sent to www.escrow.com rather than directly to the seller when the buyer makes a purchase, in line with the contractual agreement reached between the seller and www.escrow.com.

Ø  www.escrow.com tracks the delivery of the item.

Ø  Once the buyer confirms receipt of the item, or at the expiration of a reasonable time usually not exceeding 27 days without receiving a dispute from the buyer, www.escrow.com will send payment to the seller to complete the transaction.

Consequently, the escrow service serves the purpose of protecting both buyer and seller as they engage in mutually beneficial online transactions. The buyer is protected from being ripped off or given substandard products, while the seller is guaranteed of payment for goods supplied at the completion of a sale.