Why Do B2B Businesses Need Escrow Services

The global B2B e-commerce market was valued at US$14.9 trillion in 2020; this valuation is five times that of the B2C market and does not even take into account other aspects of the B2B trade. A huge chunk of B2B business is cross-border trade and as a whole, this sector deals in higher transaction values of goods and services. The high amount of funds involved in this area stresses the need for a payment solution that is robust, transparent, convenient, and most importantly offers security.

This is where escrow services step in. Let us first understand what escrow services are:

Escrow services are a form of payment services that are used in order to transfer funds from one party to another, securely. It is an agreement that benefits the buyer and the seller and is signed by all the three parties involved including the escrow services provider. After the terms and conditions of the trade are mutually agreed upon, the buyer transfers the funds which are held securely with a trusted, neutral third party. Once the contractual obligations have been fulfilled by the seller, the funds are released to the seller. A reliable escrow provider like Omoney removes any risk involved for both the buyer and seller. They offer buyers and sellers protection, transparency, a safe and secure payment guarantee, and most of all trust.

Why Do B2B Businesses Need Escrow Services?

1.     Buyer and Seller protection

First and foremost, B2B businesses need some form of assurance that their money is not at risk. The seller needs to be sure that they will receive the money after their services have been rendered and a buyer needs to know that if they have paid an advance, the payment won’t be in vain.

Buyer Protection:

The escrow service holds on to the buyers’ funds keeping the money secure until the seller ships the goods. Thus, there is some sort of protection if the shipment is cancelled or delayed; the timelines agreed upon have to be adhered to. They offer a full verification of the seller's identity and compliance status. Once the goods are delivered and if they are not in the condition promised or fail inspection, the buyer can be sure of getting their money back.

Seller Protection

When you are on the selling side, an escrow services company guarantees that the buyer has the intent and capacity to pay for the services and goods by taking money in advance and securing it. Omoney helps sellers in building a rapport with international buyers so they have an avenue to generate more business and have a good & reliable reputation. They ensure that sellers deal with verified buyers to avoid any hassles post-delivery.

2. More economical option as compared to credit cards and wire transfers

Escrow services are believed to be more economical than credit cards and wire transfers. When you use a credit card, you end up paying over 3% processing fee or charges which becomes a lot when the transaction value is high. When you opt for wire transfers, you end up paying $20-$100 per transaction depending on the bank and country, which is quite high. Omoney, on the other hand, only charges 1.8% for non-card payment methods and 3% for card payment methods. They offer the best foreign exchange rates and do not have any hidden charges.

3. Transparency

Transparency of funds and real-time payment status is very crucial for B2B businesses. With digital escrow services provider such as Omoney, you will have full visibility about where the money is.

4. Safety and security

Payment safety is one of the key prerequisites for success in B2B businesses. To reduce any chances of fraud while dealing with new partners, many businesses prefer using escrow services. Escrow services such as Omoney’s are fully licensed and accredited. We segregate customer funds from our own funds which are used to run the business, in an authorized bank.

5. Business authentication and screening

Businesses need escrow service providers such as Omoney for easy verification of the buyers and sellers involved in the business. A business would need to spend a lot of time and effort to verify the compliance status, identity and to gain access to detailed company reports; Omoney makes sure these are readily available. This identification and KYC process open up new opportunities for the business and they can have a little bit more trust and faith knowing that the credentials have been vetted.

6. Multiple B2B risks involved are eliminated

If your business is into international trade, there are many risks involved such as payer risk, enforcement risk, and KYC risk, trade compliance, risk of non-payment, and more. These are all taken care of for the business by trusted escrow services providers such as Omoney.

7. Ideal for a range of goods and services

Escrow services are ideal for both domestic and international trade; they can render services across industry types and geographies. Be it any fixed asset, jewellery, mortgages, vehicles, property transactions, e-commerce, or any type of goods and services; an escrow account protects all the businesses involved, regardless of the transaction value.

With a host of services that Omoney offers apart from safe handling of money, it is definitely a more convenient and reliable payments partner for any business.