A secure transacting ecosystem is crucial today more than ever before. Due to the growing digital payment environment, monetary crimes and online fraud such as phishing account hacking and transaction discrepancy continue to increase.
Despite this, Escrow-as-a-Service (EaaS), which had remained passive in India, has now started gaining traction among businesses, particularly in the startup ecosystem, as they seek safe and secure transactions.
The risk associated with business transactions is well known. It is often difficult for parties to complete business deals safely, securely, and seamlessly. In the event that one of the involved parties fails to follow through with the contract, the following litigation process could be long and arduous.
Escrow system - how is it affecting payments?
Escrow-based payments are nothing new and have existed for over 150 years. In most cases, these are reserved for large transactions like mergers & acquisitions or cross-border transactions. It is a complicated process to establish an escrow account, but smart escrow service providers have come up with innovative solutions that democratize the escrow service as a safe and secure payment mechanism.
Escrow accounts are a unique and novel mechanism that adds an extra layer of transparency in an ecosystem, which contributes to a stronger sense of trust.
Why include a third party in a business transaction?
When a financial transaction occurs, the seller's primary concern is to make sure they will receive the payment, while the buyer is concerned with their investment and the quality of the goods. Using a digital payments process known as escrow can easily take care of this requirement. An escrow account provides a means for buyers to deposit funds into a third-party-supervised bank-based account.
It is only after the financial agreement between two parties has been fully fulfilled, the third party releases the funds from the escrow account to the seller.
In sectors such as real estate, restricting withdrawals from an escrow account until the set obligations are fulfilled is a powerful financial tool that averts trust-based problems. Throughout the years, real estate developers, sellers, and buyers have continually experienced a distrustful market. Almost everyone who has ever rented a property through a property dealer knows the pain of getting into a deal that is difficult to cancel without losing the upfront payment. A similar issue also exists for most dealers when it comes to getting their full compensation from the parties who take their services after the deal is closed. An escrow system can prevent such undesirable circumstances from occurring.
With an escrow system, you can track funds movement as well as the progress of your contractual commitment step by step; therefore, transactions become speculation-free. The fact that the transaction is supervised by diligent professionals ensures security for buyer funds and sellers' offerings throughout the process. In addition to reducing fraud, escrow platforms are also beneficial in areas such as intellectual property, law, and the automotive industry.
What are the benefits of Escrow accounts for startups?
Startups can greatly benefit from escrow accounts by safeguarding their contingent-based transactions. Startups and emerging businesses can use escrow payment methods to minimize risk in specific transaction cases, such as procurement, supply chain, professional services, etc. An escrow mechanism facilitates efficient, safe, and hassle-free business transactions for startups, which helps in the early stages of their growth.
The government agencies performing regular audits of the escrow services determine the safety of operation. The regulatory push around escrow is headed in the desired direction where a more transparent online payments ecosystem needs to be created. More people need to be aware of the escrow facility, about how a temporary, tripartite financial agreement is helping two parties transact worry-free in a secure way.
Also Check: Escrow Accounts: What Home Buyers Need to Know
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. Vouch Digital Escrow keeps you updated and informed at every step of the transaction process till the end. Vouch’s professionals are always available to assist you with all queries that you may have during the entire transaction process.
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.
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Safety is not just about protecting your credit, debit card number, and UPI accounts. It's about having control of your money till you've received the product or service you bought online!
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.
