Escrow starting to take form in South Africa

by Jethro O'Brien: CEO & Co-Founder at TradeSafe.
Just to clarify... escrow is not a type of bird.

Rather, it is a holding account that safely guards the money in a transaction. The funds are then released to the seller once delivery has taken place or once the terms of the transaction have been fulfilled.

The primary objective of escrow is to provide comfort to the buyer that if they do not receive what they ordered, then their money will be returned to them. Escrow is becoming necessary in the South African commerce landscape as the occurrence of transaction fraud and scams continue to grow.

Escrow also provides a retail shop significant credibility. Customers today are fearful when shopping online. There is a degree of mistrust when purchasing a high-value item from an unfamiliar shop for the first time. A credible escrow gateway bridges this trust gap... it eliminates the fear when customers want to make payment upfront in full, online.

Recent retail trends suggest that escrow is required when values start to exceed the R7 500 price level. Transactions processed with escrow are increasing rapidly in high-end sectors such as luxurious watches, vehicles, machinery, musical equipment, electronics etc.

The average abandoned cart rate in South Africa hovers around 65-70%. Although trust is a factor, other reasons for abandonment include the speed of the payment process as well as the different type of payment options that are provided to the customer. This means that escrow service providers find themselves competing with the leading payment service providers. The escrow solution must be quick, seamless and sexy, whilst also providing transaction security to the parties.

As the account is essentially a holding account, the escrow manager can split the payment to pay multiple transaction parties. This is beneficial for multi-vendor or agent and intermediary setups.

There is no doubt that escrow is starting to make its mark in South Africa. Soon the word escrow will be associated with transaction security... and not with a sophisticated flying creature.

Useful resources:
TradeSafe is South Africa's trusted digital escrow services provider. We ensure your transactions are safe, secure and successful by safeguarding the buyer's funds in trust until the seller delivers what was promised.
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