Understanding escrow payment on online marketplaces
What is escrow payment?
Escrow is an agreement between two people or organizations in which money is kept by a third person or organization until a specific condition is met. On online marketplaces, the customer will pay the goods or services by transferring money to a third-party solution. The money is placed in escrow until the order is completed. Then to money is transferred to the supplier (minus the marketplace’s commission if the platform charges service fees).
How does an escrow account work?
Why do you need an escrow account on your online marketplace?
As a marketplace, you are a trusted third party and you need to be able to act in case of a risk of a delayed delivery, a dispute, or if there’s the possibility of a refund being needed. Unlike, e-commerce websites you don't want to make a direct payment to the vendor because you're not the vendor and in case of a refund being needed you won't be able to act on the money.
Escrow payments with Kreezalid
Kreezalid integrates 2 specific payment providers to allow you to have this system on your marketplace:
- Stripe with Stripe Connect. Kreezalid allows platforms to specify payouts for Custom Connect accounts via Stripe Connect
- Mangopay
With these two payment providers on Kreezalid, the payment method will be debit card payment.
Updated on: 17/03/2023
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