Now more than ever, e-commerce has dominated the way we shop. The pandemic shifted us all to relying more on our digital devices to get work done and purchase products we want or need. Sometimes, especially with highly valuable transactions, holding funds in escrow is the best way to ensure the process goes smoothly.
At the start of the pandemic, many businesses were forced to shut their brick-and-mortar operations and focus primarily on their e-commerce sales channels. This, in turn, led many consumers to shift their shopping to the online realm.
With a heightened reliance on online transactions in a more remote world comes an increase in fraudulent cases taking advantage of the situation. ACI recently reported that the average transaction value of attempted fraud has increased by 4.7%.
If you’re planning to buy or sell something of high value, going online may be the best option. Still, it is recommended that you hire an experienced escrow company with knowledge of holding funds in escrow. An escrow company acts as a neutral third party in the transaction.
There are many benefits associated with holding money in escrow, including:
- Applies to different types of transactions
- Virtual and easy
We’re delving into the when, what and how of everything you need to know about holding funds in escrow for online purchases, so you can go into the deal feeling confident that you are putting your money somewhere you can trust.
When to Use an Escrow Company
Buying or selling online is a great way to find fair prices or competitive buyers. But in what instances should you bring an escrow company into the deal?
People use escrow services for online high-value transactions when they don’t know each other. An escrow company protects buyers, sellers, and brokers equally, thereby eliminating any risk of conducting transactions with unknown parties.
No matter where you’re selling or buying goods and services online, whether an auction site, an online marketplace, or a B2B e-commerce site, an escrow service will assure your safety.
What Can You Buy or Sell?
An escrow company can help you safely buy or sell a variety of goods and services online.
From digital products to a variety of high-value merchandise, holding funds in escrow offers priceless peace of mind when you’re transacting with unknown parties. Here are a few examples of common types of online sales and purchases that involve holding escrow.
- Vehicles: Buying or selling vehicles can be risky under the best of circumstances, but this shouldn’t stop you from finding or selling your car online.
- Domains: Whether you’re selling or buying domains, these high-value transactions can be problematic when dealing with unknown entities.
- Jewelry: Escrow helps you buy or sell high-value luxury items such as watches and other goods online in a safe environment.
- Art: Your favorite statement piece has a high price tag and high risk of being unoriginal or fake. Get escrow involved to protect your liability.
How Holding Funds in Escrow Works
Wondering how the holding funds in escrow process works for online purchases? Here’s a step-by-step so you’re well aware of what you’re getting into.
An escrow company reduces the risk of fraud by acting as a trusted third-party that collects, holds, and only disburses funds when both the buyer and seller are satisfied.
- Buyer and seller agree to terms. Either the buyer or seller initiates a transaction. Once the buyer or seller hires an escrow company, all parties agree to the terms of the transaction.
- Buyer pays the escrow company. The buyer submits a payment by an approved payment method to a secure escrow account and the company then verifies the payment. The seller is notified that the earnest money has been secured in escrow.
- Seller ships merchandise to buyer. Upon payment verification, the seller is authorized to send the merchandise and submit tracking information. The escrow company verifies that the buyer receives the merchandise.
- Buyer accepts merchandise. The buyer has a set number of days to inspect the merchandise with the option to accept or reject it. If not approved, the buyer will raise a dispute and enter the dispute resolution process.
- The escrow company releases its funds and pays the seller. If the merchandise is accepted, the escrow company pays the seller from the escrow account.
Use New Venture Escrow For Your Next Online Transaction
Whether you’re buying or selling online, make sure you’re keeping the transaction secure with New Venture Escrow. We’ll guide you through every step of the holding funds in escrow process so both parties can walk away with what they bargained for.
Our experienced team of Escrow Officers carries years of experience with escrow transactions, including real estate, and can help answer any questions you may have. Contact us today to get started!