All About Escrow

In my previous article, I highlighted the issue of electronic fraud and how much of a menace it is in the economic sector, the society and also cutting across to the entire country in the different sectors. Today, and in this article I’ll introduce escrows, what they are and how they help curb this problem. Probably you have heard of this word, but for most people I have interacted with, they are quite green on this area.

I’ll start with a bit of history of the term escrow. The word has it’s source from the Old French word “Escroue” , which technically means a scrap of paper or a scroll of parchment; this indicated the deed that a third party held funds or resources until a transaction was completed satisfactorily. An escrow is a financial arrangement where a third party holds and regulates payment of the funds required for two parties involved in a given transaction. It helps make transactions more secure and open by keeping the payment in a secure “standby” account which is only released when all of the terms of an agreement are met as overseen by the third party company.

Application areas for escrows include:

1.Transacting larger amounts of money.

2.When either party(Buyer or Seller) have trust issues.

3.Where there are obligations to be fulfilled in the transaction process e.g verification of the goods or services before payment.

4. In cases where the quality of goods or services in question is in doubt or is an issue to contend with.

There are various types of escrows e.g Banking, Real Estate, Law, Intellectual Property, Internet Escrow etc. Let’s narrow down to Internet Escrows. This is an online platform that allows buyers and sellers to get escrow services over the internet. The traditional approach to escrows could be a bit cumbersome and thus the need to have an online platform which is more appropriate for our current generation.

There are various online escrows available in our Kenyan market, some of them include Mlinzi, LipaSafe, blackpay etc. I am part of the development team at Mlinzi and we are working tirelessly to ensure that we solve this menace facing our trade sector. In the next article, I will introduce Mlinzi to you; who we are and what we are doing behind the scenes to ensure we deliver to our customers.

To know more on how we do it, visit www.mlinzi.co.ke

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**Article by Maureen