Payment Gateway Features: How Does Escrow-backed Checkout Differ for International Platforms Selling Goods vs Services?

Amirul Imtiaz bin Shah Rizal
Jul 12, 2022
4 minutes of read


Payment Gateway Features: How Does Escrow-backed Checkout Differ for International Platforms Selling Goods vs Services?

Whenever something of high-value, high-volume and/or sensitive is being traded, it is only rational to consider that the parties involved in the transaction– the buyers and the sellers– will want to prioritise the security of their own interests and business. Such transactions would typically warrant the services of a neutral third party to act as a mediator between the transacting parties and hold each other accountable.

Escrow service providers happen to be one of these neutral third parties and, as a product, has often been used by both B2B and B2C platforms in order to protect the payments of the transacting parties. How escrow is implemented for B2B and B2C differs significantly from one another due to the clear fundamental differences between their respective aims and approaches towards conducting themselves as businesses. Similarly, the implementation of escrow also differs between goods sellers and service providers, and understanding those differences can help enhance one’s ability to navigate through the intricacies of eCommerce.

However, before getting into the differences, one must first understand the similarities. The commonality that is shared between not just escrow for B2B and B2C, but also goods sellers and service providers, is that they all utilise an escrow-backed checkout.

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What Happens in an Escrow-backed Checkout?

The inner workings of an escrow-backed checkout is a simple and straightforward affair, which is illustrated in this list below:

  • Buyer and seller agree to proceed with transaction after successful negotiations (if B2B)
  • Buyer makes payment into escrow payment gateway
  • Escrow payment gateway holds the transactions until necessary documents are verified
  • Payment is released to seller
what happens in an escrow-backed checkout

With the sole exception of B2B, the transactional flow of an escrow-based checkout is fundamentally the same regardless of business type. B2B requires an additional step where negotiations are needed since the nature of B2B business necessitates clear agreement between the transacting parties. Vagueness cannot be brokered since B2B entities usually deal in high-volume, high-value transactions, therefore any decisions made must be well-informed and deliberate.

However, this usually leads to a trading off brevity for certainty, making B2B checkouts a time-consuming affair though there are some payment gateways that are looking to bring the B2B checkout experience to be closer to that of B2C.

Core Differences in Goods vs Services Escrow Payments: Verification Documents

The checkout processes for the sales of goods and the provision of services remains largely the same, even if they happen to be B2B. This is because any escrow transaction requires some means of confirmation and verification that the other party has fulfilled their part of the agreement. It might come in the form of confirmation that a product has been received, or the common agreement of the definition of a digital asset. For goods sellers and services providers, what sets them apart are the documents needed to verify those goods or services.


The documents needed for the international sales and trade of goods are the commercial invoice and either a bill of lading or an airway bill. While there are other documents that are needed for international goods trade, typically the commercial invoice and the bill of lading/airway bill is required for escrow.  A commercial invoice refers to the legal document issued by the exporter (seller) to the importer (buyer) that serves as both a contract and a proof of sale between them in an international transaction¹. As for the shipping documents, a bill of lading is a legal document that serves as a shipment receipt and is issued by a carrier to a shipper, detailing the type, quantity, and destination of the goods carried². As of the definition of an airway bill, it can be considered a type of bill of lading except it usually only pertains to goods shipped via international air courier and is non-negotiable³.


An invoice acting as the proof of delivery or a form of buyer verification are the documents needed for escrow checkouts concerning cross-border service provision. Proof of Delivery (PoD) documentation is often referring to any document that can be deemed to be proof of a service’s provision. Given that services are intangible, there needs to be a form of documentation that serves as a proof of verification from the buyer that the services have actually been delivered. These documents of buyer verification can be anything from signed receipts to contracts depending on the service. Verification from the buyer is typically preferred since services rendered may be long-term as opposed to a one-off basis, in which case payments would most likely be made in milestones.

An API call to create an escrow should also allow for the disbursement of payments via milestones with the necessary bells and whistles needed to conduct milestone payments. How this will be done varies from payment gateway to payment gateway so be sure to thoroughly read their API documentation.

Now that you are better acquainted with the differences between escrow-backed checkouts for international platforms selling goods and those selling services, you can be assured that the next time you choose an escrow-backed checkout solution, it will be an informed decision. Choosing one that can be flexible would be highly recommended. Not sure what to choose? Try Tazapay. Not only is it a payment gateway that localises to over 70+ markets, it also has easy and accessible API integrations of all platform types.


  1. What is a Commercial Invoice - Example | iContainers
  2. Bill of Lading Definition (
  3. Air Waybill (AWB) Definition (
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Payment Gateway Features: How Does Escrow-backed Checkout Differ for International Platforms Selling Goods vs Services?
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Payment Gateway Features: How Does Escrow-backed Checkout Differ for International Platforms Selling Goods vs Services?

Jul 12, 2022
4 min of read

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