Escrow accounts are needed by almost everyone at some point in their financial lives. In the end, most people are going to do at least one big transaction, so escrow accounts make sense. In the process of transacting between two parties, a third party is required to hold a temporary pass-through account. Escrow bank accounts are fundamentally about efficient risk management, simplifying complex transactions, and facilitating the custody of cash, securities, and other collateral based on the specific type of transaction. Here's what you need to know about escrow accounts and this unique product.

escrow in india

It is not new to use escrow for payments. Nevertheless, they have largely been used for large transactions, such as mergers and acquisitions and cross-border deals. With the advent of technology and an increase in Internet-based commerce, experts say, stakeholders from a variety of sectors are using this instrument to conduct safe, secure transactions.

Advantages of an escrow account

In comparison with other types of accounts in the banking structure, escrow accounts offer some advantages. A major advantage of escrows is that they allow all parties to route cash flows in a secure and safe manner. In addition, escrow accounts allow all parties to customize transactions to meet their requirements. Third, banks with waterfall mechanisms allow the opening of multiple accounts for deals. Escrow banking also supports the use of channeling. Expert escrow teams make sure that operations run smoothly. As the internet has become such an integral part of our lives, an escrow bank account simplifies the documentation process and allows for online tracking.

For usual transactions

Some transactions are best handled through an escrow account. It is fundamental to these transactions that the money is deposited at defined intervals, rather than in one big chunk. Revenue-sharing escrows for joint ventures, milestone escrows associated with performance and or obligations, escrows for franchisor-franchisee and anchor-dealer models, and transactions involving a secure mode of settlement through escrows are typical transactions. In the end, these are standard business transactions.


Combinations are always happening in wholesale banking. Mergers and acquisitions or M&A are common examples of these transactions. Escrow bank accounts are more essential since large sums of money are involved at different stages of the transaction. It does not matter whether it is escrowed for share-purchase transactions, FDI-linked escrows, open offers escrows, or indemnity escrows. Banks are ready to meet any or all of these requirements. Increasingly, brokers and promoters are offering buybacks and delistings of shares in exchange for escrows, to which willing shareholders are accepting offers.

Use in E-commerce 

We have come a long way with e-commerce. We have become accustomed to it. As the business expands exponentially, these requirements have grown to attain global status. Escrow accounts serve as payment facilitation and e-commerce solution in India today. Escrow accounts are especially useful in situations where payments are held over for a certain period. Payment aggregators and marketplace aggregators often have nodal accounts. In addition, prepaid instruments are denominated in escrow accounts. 

What is the best time to use an escrow account?

A seller typically concerns itself with the receipt of payment, while the buyer is concerned with their investment and receipt of goods in good condition when a financial transaction is concluded. Escrow, a digital payment process, is an easy solution to this problem.

Escrow accounts are not accessible until the obligations set forth in the agreement are met by the party receiving the money. The power of this financial instrument allows trust-based issues in sectors like real estate, eCommerce, and freelancing to be resolved.

Digital Escrow Service In India.

Digital escrow services are offered by many companies in India. Among the most trusted is Vouch.

Vouch’s Digital Escrow service is a transparent way for buyers and sellers to build trust and secure a clean transfer of product and payment. Sellers can feel assured that they will be fairly compensated promptly, and buyers will feel confident that their order will be delivered as expected and on schedule. If you ever come across a fraudster asking for OTP, asking you to scan a QR code, or asking you to click on phishing links, you can simply say no and ask him/her to proceed with the transaction through Vouch.

There is no scope for deceit or fraud since the payments, shipping, delivery, and execution are carried out under the honest and watchful eyes of the Vouch’s professionals. With Vouch, any business transaction becomes transparent, uncomplicated, and hassle-free. If you ever come across a fraudster asking for OTP, asking you to scan a QR code, or asking you to click on phishing links, you can simply refuse and ask him/her to proceed with the transaction through Vouch.

Check back here to learn more about Escrow and how to protect yourself from fraud.

Now that we have you up to date on online safety, let's get your transactions secure on Vouch. It's just a click away.