Escrow Services

Value Online Trading


With so much trade being conducted over the internet today, escrows being used more commonly to hold funds.

Escrows on the internet have existed since the start of popular internet auctions but many of us are only just seeing relevance and use.

Escrow for on-line transactions


With any number of transactions online taking place between anonymous persons, where it may be hard to tell which country the various parties are based – it is hardly surprising that the issue of security of funds is questioned.

In today’s world almost anything can be traded online, such as:

  • General merchandise
  • General online auctions
  • Commodities
  • Vehicles
  • Services
  • Intellectual property
  • Milestone transactions – such as services provided whereby payments are disbursed at agreed milestone intervals

With the increase in internet fraud, the European Union introduced the Payment Services Directive in November 2009. This allowed low-cost government-regulated escrow services to operate on the internet, and thereby to enhance security for online commercial transactions.



A number of bogus methods of escrow have been employed online, the main one being that in auctions the seller proposes a specific third-party escrow service which is actually a bogus service probably set up by the seller. Remember that the escrow service should be neutral and should not be “linked” to the seller.

Good faith or goodwill deposits

In some countries it is common practice for good faith deposits to be placed in escrow accounts in order to seal the sale, with specific conditions for withdrawing from the sale complete with financial penalties if either party withdraws from the sale outside the agreed terms.

Even in specific states in the United States, such as Florida, it is normal for a purchaser to pay a goodwill deposit prior to making a formal offer in the form of a purchase contract.