What is an Escrow Payment Method?

3 min readAug 24, 2021

Many people still struggle to understand what an escrow payment method is and how it works. Furthermore, people are also wondering how escrow payments work with blockchain technology.

An escrow payment is a mode of paying for goods or services online. The system aims to secure online transactions through holding funds until a buyer confirms receipt of the service or goods bought.

The details of an escrow transaction are typically handled by a third-party, neutral organization, known as an “escrow agent” or “escrow company.”

In an escrow transaction, the buyer places a deposit into an account controlled by the escrow agent who then keeps control of that money until it can be confirmed that the goods have been delivered to the satisfaction of the buyer.

What happens if either party is unsatisfied with an item after delivery? What if something happens during shipment or there are other complications that make it impossible to deliver as promised?

What happens if one side decides not to go through with their agreement at all? A well-crafted escrow contract should address what happens in each and every possible situation so that both parties know where they stand when things blow up.

Escrow payments work in several ways:

1) The supplier receives his or her funds upfront and then sends them into an account controlled by an escrow agent (the agent acts as mediator).

2) The buyer receives his or her funds upfront and then sends them into an account controlled by a third party (not involved in the transaction).

3) A portion of the supplier’s funds are held back at his/her request while the money goes to another intermediary (the agent again) — once both parties confirm successful delivery, the remaining sum gets transferred.

How blockchain is influencing escrow payment methods

Blockchain technology and escrow payment methods are slowly gaining a foothold in the finance world. What is an escrow payment method? What is blockchain technology? What can we expect from this partnership in the future? Let’s find out.

How does escrow work with cryptocurrencies and blockchain? An escrow service is vital because it can protect both buyers and sellers against scammers, hackers, cybercriminals, counterfeiters, expensive lawyers, and courts. It also helps protect customers from fraud as well as provide an impartial third party in case of disputes.

Escrow services are usually escrowing the funds only until the buyer has received and verified any products or services purchased, but escrows can be escrowing a transaction at any stage.

Although escrow payments don’t happen every day, escrows still have to retain all records of these transactions because they can become very complex.

For example, when people buy real estate across country lines or internationally, escrow payment is a normal part of the process in order to protect both parties from frauds and other complications that might arise for various reasons.

But it’s not always easy getting hold of escrow payments if you’re outside your local area. This is where an escrow service using cryptocurrency such as bitcoin comes into play.

They allow any customers on their escrow service to escrow payments in cryptocurrency. You escrow your money, you send them the correct amount of cryptocurrency and they escrow it for you without a problem.

Conclusion

The escrow payment method will always be popular and blockchain technology is giving it more applications in the financial world to thrive. If you haven’t tried this payment method before now is the best to do so.