How Smart Contracts Will Improve Escrows

The global e-commerce market is estimated at $3.53 trillion. Statistics show that merchants use up to 23% of their operational budgets in combating fraud. There is need for parties in the e-commerce to step-up the fight for a secure trading platform; smart contracts are the go to place in empowering escrow processes for a secure platform.

With globalization and e-commerce, the inherent fundamental problem has been the exchange of digital goods/services for pay. Since there cannot be a simultaneous exchange of goods/services and payments, there often arises tension between the buyer and seller which literally calls for trust in the trade; every trade party wants to be sure they are protected from fraud. Unfortunately, many merchants still lag behind when it comes to strategies for combating fraud. The buyer must trust that the seller will deliver the said goods/services while the seller must trust that the buyer will pay-up upon receipt of goods/services. Unfortunately, so many have had to painfully tell of scams and reap-offs because of abused trust in trade relations; retail fraud.

Traditionally, trade partners have used third parties like escrow services among others. While escrow services have cushioned many, they have some limitations that majorly anchor on their being a centralized system. They include lack of transparency, high costs and traceability in the system among others. Smart contracts bring to the table transparency, faster transactions, no human error, immutability, decentralization of systems and lower costs among others.