Are there escrow services for personal transactions?

Routes to finance

Ready to export your goods? Don't want the hassle of a letter of credit but want your money up front? Perhaps an escrow service is the answer. In this article, I explore what an escrow service is, how it is used in international trade, and where to get help using an escrow service.

What is an escrow service?

Escrow services enable both exporters and importers to protect a transaction by placing funds in the hands of a trusted third party who will collect, hold, and pay out funds until a certain set of conditions are met by the exporter's or importer's instructions.

Shipments are tracked to make sure the seller is shipping and the buyer has received the goods.

This can be a mutually beneficial method of payment in international trade. Some people use escrow services to reduce the potential risk of fraud.

When it comes to smaller transactions (less than $ 5,000), wire transfers, credit cards, and PayPal are typically the most common prepayment devices used by exporters, but an escrow service can be an alternative option.

Why it is required and how it works

You have a new customer with no payment history. Therefore, to minimize your risk, ask for prepayment, but it is the least attractive option for the buyer. Why? Because it tends to create cash flow problems for him / her and it fuels concerns that the goods cannot be sent if payment is made in advance. In addition, the requirement for prepayment is a disadvantage if the customer has to compete with other providers worldwide, unless he also requires prepayment.

The truth is that you can limit your export potential if you insist on cash upfront as your only payment method for doing global business. more attractive payment terms.

How the escrow works. The importer (buyer) sends the agreed purchase amount to the escrow service.

After confirming the payment, the exporter will be instructed to ship the goods. Upon delivery, the importer (buyer) has a predetermined period of time to inspect and accept the goods. After acceptance, the funds are released to the exporter by the trustee service. The escrow fee can either be paid in full by one party or shared equally between the exporter and importer.

According to Jacob A. Manning of Dinsmore & Shohl LLP are two Key points to consider when it comes to escrow services: (// www. Lexology. Com / Library / Detail. Aspx? G = e66b89d9-4b4a-448e-8001-60ad7b8e4ba4).

1. "Fiduciary services are third-party providers whose trustworthiness must be assessed in the same way as a bank. In a letter of credit business, the parties agree that a letter of credit issued by an international bank is acceptable, presumably because they both know the trustworthiness and assets of that bank and can judge.

2. A letter of credit can be used to finance the production or sale of goods. Since the bank owes the seller an independent obligation, it can use this obligation to finance the production of the goods. In certain circumstances, they can also deduct the proceeds from the letter of credit to get money faster.

Since payment usually has to be made within days of documents being presented to the bank, a letter of credit can result in quick payment after the goods have been dispatched. These options are at least more difficult with an escrow service, if they are available at all. "

Who should I turn to?

Here are a few escrow services available. Be sure to check testimonials from customers who have used these services before proceeding. Warning: if your buyer insists that you use a certain escrow service and not accept www. Crooked. com (or any other international escrow service that you are comfortable with as an alternative for international transactions), you may want to decline the transaction to allow fraudulent activity.

1. Wrong. com (// www. escrow. com / why-escrowcom / security. aspx)

2. PaySAFE (// / international-trading-trustee)

3. 1. PMF Bancorp (// www. / Escrow-Services /)

4. JP Morgan (// www. Jpmorgan. Com / tss / General / Escrow_Services_ / 1114735358724)

Escrow services can be used for importers and exporters looking for a cash-in-advance payment method for smaller large transactions.

Disclaimer: I have no personal knowledge of these companies, but research on the Internet has identified these four as some of the best options.

Additional resources

The following resources are helpful in understanding the capabilities of an escrow service:

• Securing the Transaction: The advantages of using online escrow services over letters of credit in international trade < www.="" schief.="" com="" news="" articles="" the_advantages_of_using_online_escrow_services_versus_letters_of_credit_in_international_trade="" 14="">