How Escrow Works for Online Digital Deals
A plain-language walkthrough of the escrow process, from creating a deal to releasing payment.
What escrow actually means
Escrow is an arrangement where a neutral party holds a payment until both sides of a deal have done what they agreed. In online trading it removes the oldest problem in commerce: who goes first.
Without escrow, either the buyer pays and hopes the seller delivers, or the seller delivers and hopes the buyer pays. Escrow replaces hope with a process.
The five stages of an escrow deal
First, the deal is created with clear terms. Second, the buyer funds it. Third, the seller delivers. Fourth, the buyer reviews during the protection period. Fifth, the buyer releases payment or opens a dispute. You can read each stage in detail on our How It Works page.
Why written terms matter
Most disputes come from vague expectations. A good deal description lists exactly what is being transferred, how it will be delivered and how the buyer will verify it.
When to use escrow
Escrow is most useful when the two parties do not know each other, the amount is significant, or the delivery takes time to verify, such as domain transfers.
Protect your next deal
Learn how Escrows Click works, check our fees or browse what we escrow.
Frequently asked questions
Who holds the money in escrow?
The escrow service holds the payment for that specific deal until it is released or refunded.