What Is Escrow?

Escrow is a legal term used to describe a financial instrument in which a third party holds an asset or escrow money on behalf of two other parties who are in the process of completing a transaction. Often, escrow accounts include escrow fees managed by agents who hold the funds until they receive approval or until predetermined contractual obligations have been met. Escrow can be used to hold money, securities, funds, and other assets.

In other words, it's a process that two parties use when they're completing a transaction, and there's some uncertainty over whether one party can fulfill their obligations. The use of escrow differs, depending on its context, including online transactions, banking, intellectual property, real estate, mergers and acquisitions, and law. There are a variety of third parties responsible for managing escrow accounts, including escrow companies, escrow agents, and mortgage servicers.

Types of Escrow -

1). Escrow and Real Estate - Escrow accounts are often used in real estate transactions. The buyer may be allowed to perform due diligence on a potential acquisition by placing funds in escrow. Also, escrow accounts guarantee a buyer's ability to close a deal. For eg.- you can use an escrow account when selling a house. There may be conditions attached to the sale, such as passing an inspection, which would require escrow. In this scenario, the buyer deposits the payment for the house into escrow with a third party. In this way, the seller can get the house inspected with confidence that funds will be available and the buyer can pay. Once all conditions for the sale are met, the money in escrow is transferred to the seller.

2) Escrow and Online Sales - Online escrow protects buyers and sellers from fraud or nonpayment, like escrow in real estate and escrow in the stock market. An online platform serves as a middleman for online sales. A buyer sends the money to a third party, and the money is held until the product is delivered. Once the seller receives the product and verifies it, the escrow service provider releases the seller's funds. Most often, escrow services are not employed; however, when they are, they're best suited for high-ticket items, such as jewelry or art. There is a fee associated with the online escrow service. A high-ticket transaction can benefit from escrow security, but the service will generally incur a fee.

3) Escrow and the Stock Market - Escrow is often used to buy and sell stocks. A stock transaction is handled through an escrow account, which holds stocks in escrow until a specific transaction or other requirement is met. Often, escrow-issued stock belongs to the shareholder. It is possible for shareholders to be unable to sell their shares right away or they may have limited access to sell the stock. 

In summary

There are many things that can be done with Escrow, including real estate, stock issues, and online sales. The buyer's money is held in an escrow account until the deal is complete, or until the buyer receives or verifies that the product has been received in good condition. A seller receives the money from an escrow account once the buyer approves the transaction. As part of the third-party service, the company managing the escrow account generally charges a fee.

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. Buyers 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. 

Vouch Digital Escrow uses a non-interest-bearing escrow account for all transactions in India and 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. 

Also Check: 5 Ways to win with clients and build strong relationships

 Check back here for more fraud stories and scams that you can protect yourself from.

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.