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  • Writer's pictureMaria Herrera Mellado

Why use Escrow Services for International Trade Transactions

Updated: May 25, 2020

Escrow services are offered by trusted third party companies that collect, hold and disburse funds according to the terms agreed by exporters and importers and specific instructions given by those.

Escrow services help protect both parties by reducing the potential risk of fraud and offer a mutually beneficial method of payment on international trade transactions.

Certainly, asking for cash in advance is a disadvantage when competing against other vendors the buyer has to choose from worldwide.

Here it is how it works: the importer (buyer) sends the agreed purchase amount to the escrow service. After payment is verified, the exporter is instructed to ship the goods. Upon delivery, the importer (buyer) has a predetermined amount of time to inspect and accept the goods. Once accepted, the funds are released by the escrow service to the exporter. The escrow fee can either be paid in full by one party or split evenly between the exporter and the importer.

In any event, if you are considering the use of escrow services, do your due diligence and make sure the you choose a company that is licensed, accredited, or a company you know and trust:

And keep these resources in order to prevent fraud or to file a complaint:

· The Internet Crime Complaint Center – a partnership between the FBI and the NWC3 (National White Collar Crime Center)

· The Better Business Bureau:


Published by our Partner Dr. Maria Herrera Mellado Esq.

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