What is escrow and how does it work?

What Is The Escrow Meaning?

An escrow account, also called a trust or escrow account, is a mechanism used in a sale to ensure that payment reaches the seller and that the good or service reaches the buyer. This is accomplished by the fact that the amount of the transaction is first delivered to a party outside the deal, called the escrow agent, rather than paid directly to the seller.

An escrow is a financial arrangement in which a third party holds and regulates the payment of funds required for two parties involved in a transaction. It helps make transactions safer by keeping the payment in a secure escrow account that is only released when all the terms of an agreement supervised by the escrow company are met.

The purpose of an escrow account is that an in-between instance is available, especially for larger transactions. This means that in a transaction between a buyer and a seller, the relevant amount of money is managed, monitored and executed by an intermediate and independent trustee. An escrow account is therefore generally used for security purposes: the buyer receives the item he has paid for and the seller receives the amount of money, once all the formalities relating to the transaction have been clarified.


An escrow account offers several advantages . These include, for example, a high level of security for both buyers and sellers in the processing of a wide variety of transactions. In addition, large sums of money are kept safe by a third party.

The use of an escrow account protects service providers or sellers from payment default . The buyer is obliged to pay the purchase price into the escrow account before delivery. There it is administered until your customer has received the goods or service. The seller therefore no longer needs to fear a lack of payment behavior on the part of the buyer. The trustee ensures that he receives his payment for each delivery.

Furthermore, a trust account not only ensures that payments are made on time , but also that they are guaranteed , provided that all conditions are met . Because only when the seller or service provider has made payment will the money continue to be transferred. If not, the buyer receives the money back. The buyer can thus ensure that he only pays services that have actually been provided. He is also protected against financial losses in the event of the seller’s insolvency.

In addition, within the framework of sales, an early transfer of ownership is possible even if no payment has yet been made to the recipient.

For the customer

The customer is confident that his payment will not be released if the agreed contract has not been fulfilled.

The escrow service offers you maximum security for your money transfer. You take no risk by paying in advance or cash on delivery and you do not pay for the goods unseen.

For the professional

The professional is sure that the payment has been deposited in a bank account before starting work.

You have the security that the buyer has arranged the money transfer for the goods. If the buyer has convinced himself of the faultless condition of the goods, you will immediately receive your money from our escrow account. In addition, the escrow service creates more trust with your customers and thus increases your turnover and profit.

For both

No payment is released to the Seller until each phase/mit has been completed and approved by the Buyer. Buyers can be assured that project commitments will be delivered as agreed before payment is released.

Trustee and settlor conclude a contract (also called a trust or escrow agreement ). In this contract, it is regulated when the trustee receives the trust amount on the escrow account and when and for what purpose he should pay it out again. There are several possibilities for this, such as payment after delivery of goods or provision of a service . It is also possible to make partial payments according to service stages. A disbursement is only made when the conditions agreed in the trust agreement have been met.

Our escrow service ensures that both buyers and sellers who do not know each other personally can safely conduct their purchase transactions over the Internet. The transaction is carried out step by step:

  1. The buyer first pays the purchase amount plus any applicable fees into our escrow account (money transfer).
  2. After receipt of the money, the goods are dispatched by the seller.
  3. As soon as the goods have been properly delivered, the purchase price deposited in the escrow account is transferred to the seller’s bank account.

Isn’t it dangerous to transfer my account details over the Internet?

Since we work with high-security standards , there is no risk that your data could fall into the wrong hands.

With an Escrow account service, the customer money is withheld until the customer accepts that the product/service has been successfully delivered.

Buyers have some time to check that everything is as promised and during this time they can report any issues with the product/service.

If they are satisfied with the final result, the funds are paid to the seller. In this way both parties are protected, the specified payment is made and the promised product/service is delivered.

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