Escrow: holding money until both sides are safe
2 min readLast updated 16 September 2026 Read as plain text
The buyer pays, the money is held rather than forwarded, and it releases when delivery is confirmed. What that solves, and the decision you have to make before you switch it on.
Every marketplace starts with the same standoff. The buyer will not pay before they receive the thing, because they do not know the seller. The seller will not ship before they are paid, for exactly the same reason. Somebody has to go first, and whoever does is exposed.
Escrow removes the question. The buyer pays at checkout and the money is held rather than passed on. The seller can see that it is there, and cannot touch it. When delivery is confirmed, it releases.
The decision you cannot avoid
Escrow is only as good as the event that releases it. Three options, all defensible, all different products:
- The buyer confirms. Safest for the buyer, and it strands sellers whose buyers simply never press the button.
- A courier or delivery webhook confirms. Objective, and only as reliable as the logistics partner reporting it.
- A timer after dispatch. Predictable for sellers, and it pays out on a disputed order unless somebody intervenes first.
Pick one, write it into your terms, and apply it to every order. Marketplaces get into trouble when release is decided case by case by whoever happens to be on support that day.
What happens on a dispute
The money is still in escrow, which is the entire advantage. A dispute is resolved before funds move rather than clawed back afterwards, and clawing back is the part that is genuinely hard on mobile money, where there is no chargeback mechanism to lean on.
When not to use it
Escrow costs you time-to-cash for the seller, and sellers feel that. If you sell digital goods delivered instantly, or you are the seller yourself, escrow adds a delay and protects nobody. Use it where two parties who do not know each other have to trust one another, and not as a default on everything.