Escrow
Category: payment
A payment arrangement where a neutral third party holds funds until transaction conditions are met.
Escrow is a financial arrangement where a neutral third party holds and regulates payment between a buyer and seller until agreed-upon conditions are met. In cross-border trade, escrow services protect both parties: the buyer's funds are held until goods are received and inspected, while the seller is assured payment upon delivery. Escrow is commonly used for high-value B2B transactions and platforms like Alibaba.
Examples
- • Alibaba's Trade Assurance uses an escrow-like model where payment is held by Alibaba until the buyer confirms receipt of goods.
- • Escrow.com charges 0.89-3.25% of the transaction value for holding funds during international trade transactions.
- • For high-value B2B purchases ($50,000+), escrow provides security against fraud, non-delivery, and quality issues.