Escrow Questions... [Archive]

Peter

04-20-2009, 06:13 PM

Hi,

My question in terms of having the Escrow feature activated on an ilance marketplace is how do you avoid getting screwed over.

Hi there. Great question and I'm glad you're doing your research.

The only way is by accepting the funds from the person paying for the service/product by Cash or Wire Transfer. In fact, there may be numerous other methods available to you online in terms of payments but you'll need to find a provider who does not allow CHARGEBACK or REFUNDS on any money given to you in trust (as the Escrow Agent). Wire Transfer is simple (takes 3-5 days) but there is no possiblity of someone paying you and then having the bank take that money back. A bank to bank transfer is safe (as far as I'm aware). So is good old cash :)

Since when this is used payment is first sent to your account and then transfered to the seller/service provider. In the process couldn't for example a buyer not satisfied with the product after a few days of release escrow funds to the provider request a chargeback or file a complaint with paypal and have your account liable?

Exactly. Not just with Paypal but with any payment processor. This is the downfall to escrow on the web. It's not as easy as it looks or sounds but once you have a solid foundation of how your escrow process works you rinse and repeat without trial or error. I'm not sure, but I highly doubt escrow.com allows buyers to pay into the escrow account with a Credit Card. I believe they limit payments coming to them via Wire Transfer only as well. I can't remember but I'm pretty sure we did the same process when aquiring ILance.com domain (our bank to escrow.com's bank). It's safe and no funny business goes down.

The downfall to secured escrow transaction is the "delay factor". Bank to Bank transfers take anywhere from 2 days to 7 days. However, when you have large escrow transactions to perform based on services (complete end to end web design/programming, roofing, home repair) and/or products (cars, boats, rv's) you're talking about fair amounts of money. When a real buyer and seller are conducting a fairly large transaction via escrow is when nobody really minds about the delay if the outcome is 100% successful. When you get the clients looking for fly by night services telling you your site sucks because they can't fund an escrow in < 1 hour this is the type of client you want to avoid.

To rebuttle these issues you simply take matters into your policy terms of service by stating that escrow process will only be available for projects in excess of $1000 or more. Maybe even $5000. That's up to you and your business model. This directly tweens out all the kids looking for quick cash and a marketplace to scam.

How would someone avoid such a mess? Ofcourse besides only allowing a direct payment option?

Sure. Here's what other ILance admins are doing:

When a real transaction or product/service is to be sold/traded there is a feature in the admin control panel called "Transaction Manager" for every client in your system. Let's say the buyer is ready to fund his project, well he would pay you in CASH or via Wire Transfer and when the funds clear and is settled in your bank account with no recourse to be taken out, refunded or charged back you then do what's called an "Account Credit". This means you are telling the user (buyer) who has paid you that they now have an account credit on your marketplace for the amount they sent you. So if they send you $5000 and your processing escrow fee is $200 then the buyer will pay you $5200 and they will receive an account credit of $5000. Now they can use this "verified funds and account credit" to forward into the online Escrow account in ILance for the project they are securing via Escrow. (when a project is awarded the buyer is instructed to fund his/her escrow account specifically for that project) -- on a per-project basis. This is how the admin control panel interface gives you pin-point direction as to what's going on in terms of Escrow from your AdminCP Escrow Manager.

The escrow manager in ILance offers you the admin control to force the a refund (re-credits buyers account balance) or you can force a payment (credit the service providers account) if you ever needed direct escrow control once the escrow service is activated for that service (or product). Remember ILance is not just service freelance marketplace, you can also enable "product auctions" similar to eBay where sellers sell their goods and buyers bid increasing the price for that item. You can enable or disable service/product respectively if you're only looking to run a Service Freelance Marketplace and vice versa for products.

If you're looking to do it all, then you can enable Services and Products without issue. The layout provides direction in ILance (blue for services, green/yellow for products). I'm referring to the headers in the tables scattered around ILance which allows the users to engage in bidding, posting, registration, purchasing, buying, etc.

I look forward to you seeing the full potential of ILance. It's a great product and is very popular (as seen on CNN and Fox News). Additionally, ILance is priced to sell.

What you may or may not know is that ILance is a fully supported product meaning if you ever found an issue we have developers to assist you in making the issues go away and by providing software updates to our customers based on new version releases.

Some customers of ILance visit the forum everyday and provide a helping hand to other ILancers where discussions range from quick code mods/hacks for your marketplace to direct discussion regarding marketing tips, techniques and more.

Due to the nature of this business model being so competitive the ILance Forum is separated into two areas: one area for pre-sales questions and answers (the forum we're in now to learn and discuss ILance before purchase) and the other for more private discussions posted by ILance developers and licensed users where the bulk of the forum communication is active.

Hope that I have provided you useful information about ILance and Escrow built-in. If done correctly, your business model will last for years to come with only minor hiccups as you grow (which is perfectly normal for any business; ILance or not) :)

The 3 largest forms of business models on the Internet are as follows:

Search
Traffic
Auctions

Regards,
Peter