Businesses often struggle to carry on a safe, secure, and seamless transaction which, traditionally, is a risky affair. What if one of the parties involved refuses to play by the contract? You could always sue them, but the process of litigation is lengthy, arduous, and expensive. This is where digital escrow comes in.
What is Escrow?
Escrow is a type of a financial arrangement between two or more parties. In it, a third independent party regulates and holds the payments for all the parties involved in a transaction. It keeps the payment from one party in a secure escrow account and only releases it to the other party after all the terms of the contract between them is met. If the terms are not met, it returns the fund to the first company. And it is this Escrow company that oversees if the terms of the agreement have been met or not. People have been using this payment system for a long time now because it is not only useful but also secure.
Advantages of Using Escrow
Escrow is enabling trust in facilitating digital payments all over the world in a secure manner. It has many benefits like:
It’s Automatic
You can hold your payments in your digital escrow accounts to make sure your EMIs, taxes, insurance payments, etc. are paid on time. Thus, you get to avoid the penalties.
It Covers the Shortfall
Things like insurance premiums and taxes often fluctuate over time. So, if at any point in time, you are short of funds in the escrow account, Escrow will cover it for the time being. And then you can pay back the difference in the form of hiked monthly mortgage payments.
No Sudden Surprises
You will be able to see the exact amount you need for escrow payments. It is reflected in your mortgage payments every month. The lender will send you a notice in writing whenever they have to hike any component of your monthly mortgage. Along with that, Escrow has to send you escrow statements every year with the amounts you have paid, your drawdowns, overages, and shortages. It adds predictability to your monthly expenses, thus, enabling trust in digital escrow users.
Potentially Low Mortgage Cost
Some lenders offer a discount on your closing cost of interest rate if you have an escrow account. It is because they find digital payments from escrow reliable and easy.
No Cheating
Sometimes a seller is not paid by the buyer after the online sale is completed. Or, a writer doesn’t get paid after completing the assignment or doesn’t deliver the content after being paid. Such kind of hazards is taken care of by Escrow. They hold the account needed to be paid with it and only release it if the said material is delivered. So, everyone gets what they want without having to fight for it.
Escrow has changed the way people do business and payments. It is reliable and people trust it implicitly. It has made payments easy and secure for everyone and that’s why most prefer digital escrow for their business.