How Escrow Works?
An Escrow payment is a financial transaction in which a neutral third party holds the payment until all of the terms of the contract between the buyer and seller have been met
Seller Creates the Escrow Contract Online
Buyer and Seller negotiate the contract offline. Seller initiates the Escrow contract online
Buyer Pays into Trustshare Escrow
Buyer reviews the contract and transfer the funds to Trustshare Escrow
Seller Delivers and Requests Payment
As funds are deposited in Escrow, Seller can ship and request release of funds
Buyer Releases Funds or Disputes Delivery
Buyer releases the funds from Escrow to Seller or disputes the delivery
Escrow Steps Details
Step 1
Seller starts the Escrow contract
- Buyer and Seller agree on contract offline
- Seller creates the contract online
- We send a registration link to the Buyer
- Buyer accepts contract or requests amendments
Step 2
Buyer transfers funds to Escrow
- We show the Buyer the bank coordinates
- Buyer transfers funds into safe Escrow
- Upon receipt of funds we notify the parties
Step 3
Seller delivers the contract
- Seller prepares delivery with peace of mind
- Seller delivers the contract
- Seller requests the payment to Buyer
Step 4
Buyer releases funds or disputes delivery
- Buyer receives payment request
- Buyer releases funds or raises a dispute
- Any disputes is solved between 5 to 30 days
Escrow's Use Cases
Seller requests Buyers to pay the goods in advance (or at shipping), in an attempt to shift all the risk to the Buyer. In such cases, endless negotiations or back-and-forth discussions occur and the contract comes to a stand still. Escrow comes to the rescue, establishing a fair distribution of risks between Buyer and Seller
Buyer requests Sellers to ship the goods before receiving a payment, trying to shift all risks to the Seller. In such cases, endless discussions or back-and-forth discussions may occur and the contract comes to a stand still. Our Escrow payment process is the perfect solution in such cases, as it enables a fair distribution of the transactional risks between the contracting parties.
The contract involves custom-made goods that the Seller could not resell in case of Buyer’s default. With Escrow, Seller knows that the non-standard products are covered by Buyer’s funds in Escrow, and Buyer knows that a payment will occur only in case of delivery of complaint goods.
Buyer may perceive risks when sourcing materials from new markets, as India, China, and other developing countries. Escrow payment allows Buyers to explore new supply sources with peace of mind and unlock their potential without running into financial risks.
Seller may be afraid to entering new markets due to perceived payment risks. Escrow helps Sellers tap into new markets and unlock their potential by reducing the payment risk to zero in case of compliant deliveries.
Buyer struggles to have access to Letters of Credit or lacks the know-how to operate documentary credits. The simplicity of our online Escrow process comes to the rescue in such cases.
The cost of a Letter of Credit may reach 6 to 10% of the contract value for transactions below 30k$. In trading business, such costs would erode the contract profitability dramatically. With a flat fee of 1%, our Escrow service delivers tremendous value in case of small/medium sized transactions.
Escrow's Advantages
Escrow Protects Buyer and Seller
Escrow payment provides protection for both the buyer and the seller. The Buyer is assured that the Seller will not receive payment until the goods or services have been delivered in compliance with the Contract, whereas the Seller is assured that payment will be made once the goods or services have been delivered in strict accordance with the contract
Payment Security
Escrow payments are made via a secure online platform (Projectmaterials in cooperation with Trustshare) that ensures that the funds are transferred safely and securely from Buyer to Seller, if, and when, the parties meet their reciprocal obligations in full. This helps to reduce the risk of frauds or other types of financial crimes, which are not uncommon in global trade
Neutrality
An Escrow Agent as Projectmaterials is a neutral third party in the underlying transaction between the Buyer and Seller that it facilitates online. This ensures that the escrow agent is unbiased and can intervene fairly in case of disputes between the parties after the delivery of the contract (as long as they have elected Projectmaterials as Arbitrator in case of disputes).
Alignement Buyer / Seller Incentives
Escrow payments distribute equal incentives to both Buyer and Seller to finalize a successful transaction. Buyer has to pay upfront, showing their solvency and keen interest to receiving the delivery. Seller has to deliver according to the contractual agreements to prevent disputes. Incentives are aligned. Responsibilities and risks are equally allocated.
Works for any type of Contract
Our online Escrow payment can support any type of B2B transaction, from the sale of loose products, to equipment, to complete turnkey plants, and even services. Escrow can be utilized whenever the scope fo the contract between a Buyer and a Seller can be translated into an online contract.
Fast Disputes Resolution
Our Escrow service allows a fast and fair resolution of potential disputes between Buyer and Seller. First, the parties agree on who is the Arbitrator in case of disputes when accepting the contract. Second, we intervene with the maximum speed to ensure disputes are solved within 15 days.
Pricing?
1% Flat Fee !
Paid by Seller at Payout · No other fees apply
Frequently Asked Questions
Seller
We charge a 1% flat fee on Seller. The fee is calculated on the total contract value (example: if the contract is worth 10.000 EUR, the total Projectmaterials’ s fee is 100 EUR). Fees are deducted at payout.
No other costs are charged to Sellers, and Buyers.
As a Seller delivers the contract, the Buyer has 15 days to decide whether to release the funds in Escrow or to dispute the delivery.
If Buyer decides to release the funds, Seller receives the payment within 24 hours. We do not hold payments after releases by Buyers.
Yes, Buyer can dispute the delivery if they believe the Seller has not fulfilled their obligations stated in the contract. Disputes are raised online and shall be documented with evidences and proofs.
The dispute is solved by the Arbitrator agreed between the parties in the contract, which can be one of these 3 entities:
- Projectmaterials (marketplace)
- A Third Party inspector (like SGS, Lloyds’, Cotecna) to be nominated by Projectmaterials
- A trusted third party nominated by the parties in the contract
The Arbitrator decides on the dispute quickly, fairly, and in a binding manner. The decision can be:
- Funds paid back to Buyer
- Funds transferred to Seller (in case the Arbitrator decides that the Seller has delivered the contract according to the terms)
- Funds partly refunded to Buyer and partly paid to Seller
Disputes are cleared within 30 days with a binding decision. If a party is not satisfied with the resolution, they can always initiate an independent legal action.
When a Seller creates an Escrow contract online, the exact scope of delivery and all the ancillary terms shall be specified. We have implemented a detailed contract form to help Buyers and Sellers specify all terms and agreements and minimize “grey areas”.
Buyers can dispute a delivery if any of the terms stated in the contract has not been respected by the Seller (example quantity, quality of the goods, insufficient documentation, improper certification, etc).
It is therefore critical that contracts are clearly written and complete with all relevant information. The contract is the only basis for the Arbitrator to decide upon possible disputes.
Disputes are solved within 30 days. Longer times may occur in case a TPI Inspector has to intervene to ascertain the evidences. In any case, it is our goal to help parties come to a fair, quick and proper resolution of any dispute that may arise.
The latest shipment date in the contract is critical. If a Seller fails to respect the latest shipping date, Buyer is entitled to open a dispute and be eligible for a refund. In any case, Buyer and Seller can agree about a postponement of the latest delivery date offline. As a Seller, make sure that any agreement with the Buyer that amends the contract is well documented.
When a contract states that disputes will be solved by a Third Party Inspector, Projectmaterials will hire an available agency (SGS, Lloyd’s, Cotecna, and similar) on behalf of the parties. Projectmaterials will charge the cost of the TPI to the party that looses the dispute.
Sellers must undergo Trustshare’s KYB (Know your Businesses) and AML (anti-money laundering) checks before receiving any payment. KYC and AML checks are mandatory to ensure the service is not misused for illicit activities. Such checks are executed online and take less than 10 minutes.
As a general rule, all contracts on Projectmaterials are subject to the Terms and Conditions of the International Chamber of Commerce – latest edition. Buyer and Sellers can agree on other terms, and shall make explicit reference to the applicable terms in such a case.
Yes, of course! You can contact us at any time using the online chat you see at the bottom right of your screen. Otherwise you can always send an email to [email protected] or call us directly.
Buyer
Our service is totally free for Buyers.
To start a new contract, the Buyer has to make a transfer to a bank account held at one of Trustshare’s Partner Banks.
The specific Beneficiary Bank depends on the currency of the contract:
- EUR: The Central Bank of Lithuania (a state owned bank)
- GBP: Barclays Bank (a private international bank)
- USD: Community Federal Savings Bank (a private US Bank)
The beneficiary of the accounts is always Trustshare Limited (not Projectmaterials, not the Seller or any other third party).
We can provide lawful Escrow service via our Partner Trustshare Limited. Trustshare is authorized to execute Escrow transactions and payment services in 184 countries.
Trustshare Limited is a company registered in England and Wales (No. 12650826) at 71-75 Shelton Street, London, United Kingdom, WC2H 9JQ. Trustshare Limited (Firm reference number 902866) is an agent of PayrNet Ltd which is an Electronic Money Institution authorised by the FCA under the Electronic Money Regulations 2011 (EMR’s) with Firm Reference Number 900594. Trustshare is a registered eMoney provider as an EMD agent of Payrnet LTD, their FCA register number is 902866.
Trustshare UAB is our subsidiary registered in Lithuania (No. 305668309) at Zalgirio g. 90-100, Vilnius, Lithuania, LT-09303 and registered as an agent with the Central Bank of Lithuania with authorisation code LB001994
Buyer’s funds are deposited in ring-fenced and insolvency-proof bank accounts managed by the Trustshare’s Partner Banks.
Projectmaterials never receives Buyer’s funds on its own accounts, nor can dispose of Buyer’s funds (except when solving disputes as Arbitrator named by the parties).
Funds in Escrow accounts can be either transferred to the Seller (when Buyers “Release Funds” for completed/accepted deliveries) or refunded back to Buyers (in case of disputes ruled in favor of Buyers).
Funds for contracts in EUR are deposited at the Central Bank of Lithuania, which is backed by the Lithuanian State and the European Union.
Funds for contracts in GBP and USD are deposited at Barclays and CFSB USA respectively, which are private banks subject to regulation and control in their jurisdictions but not-risk free as any bank in the world. In any case, deposits at private banks are covered by state-managed insurance programs.
No, Buyers do not receive interests on the funds deposited in Escrow. At the same time, Buyers are not charged any cost for opening or closing accounts.
Buyers that receive non-compliant deliveries can raise a dispute on Projectmaterials. The dispute is solved by the Arbitrator agreed between the parties in the contract, which can be one of these 3 entities:
- Projectmaterials (marketplace)
- A Third Party inspector (like SGS, Lloyds’, Cotecna) to be nominated by Projectmaterials
- A trusted third party nominated by the parties in the contract
The Arbitrator decides on the dispute quickly, fairly, and in a binding manner. The decision can be:
- Funds paid back to Buyer
- Funds transferred to Seller (in case the Arbitrator decides that the Seller has delivered the contract according to the terms)
- Funds partly refunded to Buyer and partly paid to Seller
Disputes are cleared within 30 days with a binding decision. If a party is not satisfied with the resolution, they can always initiate an independent legal action.
A Buyer can open a dispute if the Seller has not fulfilled the contract terms in total or partly. Disputes are raised online on Projectmaterials; Buyer has to provide evidences that will be examined by the Arbitrator to settle the issue.
Disputes are solved within 30 days. Longer times may occur in case a TPI Inspector has to intervene to ascertain the evidences. In any case, it is our goal to help parties come to a fair, quick and proper resolution of any dispute that may arise.
When a contract states that disputes will be solved by a Third Party Inspector, Projectmaterials will hire an available agency (SGS, Lloyd’s, Cotecna, and similar) on behalf of the parties. Projectmaterials will charge the cost of the TPI to the party that looses the dispute.
