Best Practices for a Seamless Digital Escrow Transaction
When conducting a high-value transaction between two parties, security and a guarantee of accountability on both the seller and the client are crucial components of a successful transaction. Whether it is done physically in-person or through a digital payment platform, escrow has been the most reliable arrangement that fulfils those requirements.
This is because escrow is effectively a legal concept describing a financial instrument whereby a third party holds money or assets temporarily until a condition agreed upon by both transacting parties has been fulfilled¹. This feature of withholding payment until conditions are verified, and the requirement of an agreement between the seller and buyer are what makes escrow the main choice for any transaction of high-value and/or high-volume.
In the context of eCommerce and the digital marketplace, digital escrow services can be found either as standalone services, part of a payment platform, or a payment API that can be integrated. How digital escrow functions also varies on whether the transaction is done in a B2C or a B2B environment due to the different fundamentals between the two business approaches. Therefore, because of the inherent complexities behind escrow and conducting payments via escrow, here are some of the best practices to ensure a seamless online escrow transaction.
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Have Clear Payment Terms Outlined Before Making a Digital Escrow Agreement
More often than not, digital escrow will be offered by a digital payment platform. Regardless of whether you wish to conduct a transaction between yourself and a client or make a milestone payment via escrow, it is absolutely essential that the terms of payment are clearly outlined and agreed upon by the counterparty prior to actually creating the escrow agreement. Depending on the escrow service provider, changing or amending the terms listed in the escrow agreement may or not be a cumbersome process.
Check if the Terms are Legally Binding
As defined earlier, escrow is a legal concept that describes a financial instrument in which a third party holds onto money or assets until conditions are met as agreed by the transacting parties. What this means is that a product-based escrow may not be legally binding since a legal concept is not necessarily the same as a legal agreement. This is an important distinction to make especially when encountering fraudulent or illegitimate service providers. Stay vigilant, check if they are licensed, and determine how they work with legal entities. A legitimate escrow service provider will have their terms and conditions readily available for potential users to read through.
Check When the Digital Escrow Link Expires
Before going through with your escrow transaction, always make sure that your escrow link is still valid, or has more time left in it before expiration. This is a simple yet important step since knowing when your escrow links expire can help you avoid undue complications down the line especially when a link expires before the transaction can go through. Tazapay, for example, has their escrow payment links expire within 30 days if the counterparty does not act on the agreement with the terms outlined on the digital escrow.
Upload Documentary Proof On Time
Being timely in uploading the documentary proof needed goes a long way in making the escrow transaction process much smoother. An escrow’s terms and conditions would also specify how soon you should complete your part of the agreement, thus a faster upload of the proof of your completed obligations leads to a faster transaction.
Timeliness is also key to building and maintaining your reputation as a reliable seller or service provider, especially on B2B online marketplaces, since it will increase the likelihood of garnering positive reviews from your customers or clients.
Be Familiar with an Escrow Provider’s Dispute Resolution Process
Sometimes, disputes cannot be avoided. It is a commonly accepted fact and risk of being a merchant. That is why it is absolutely necessary for you to be intimately familiar with the dispute resolution process of your chosen escrow service provider since you will be armed with the knowledge you need to prepare for any possible disputes your counterparty may raise.
Now that you know some of the best practices that can ensure a seamless online escrow transaction, you can now be more assured in your own future high-value escrow transactions. While you are at it, why not consider Tazapay as a payment platform? With the most optimised fees for cross border B2B and high-value transactions, do your business securely in over 173 countries within a fully-digital environment with localised payment methods in 70 major markets.
Best Practices for a Seamless Digital Escrow Transaction
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When conducting a high-value transaction between two parties, security and a guarantee of accountability on both the seller and the client are crucial components of a successful transaction. Whether it is done physically in-person or through a digital payment platform, escrow has been the most reliable arrangement that fulfils those requirements. This is because escrow is effectively a legal concept describing a financial instrument whereby a third party holds money or assets temporarily until