How does
escrow work?

Escrow works by placing a neutral third party — the escrow service — between a buyer and a seller. The buyer deposits the agreed funds into a regulated escrow account. The seller then delivers the goods or service. Once the buyer confirms delivery, the escrow service releases the funds to the seller. If either side disputes, the funds stay locked until the dispute is resolved with evidence from both parties.

An escrow service is a licensed third party that holds money on behalf of a buyer and seller until agreed conditions are met. It removes the need for the buyer to trust the seller upfront, and the seller to trust that the buyer will actually pay. In fintech, escrow services are used for high-value online transactions, marketplaces, brokered deals (property, vehicles, equipment), and B2B invoices.

It's a locked box for money. The buyer puts money in, the seller can see it's there but can't touch it. Once the buyer confirms they received what they paid for, the box opens and the money moves to the seller. If something goes wrong, a neutral referee reviews evidence before releasing the funds.

Some banks offer escrow services, but usually only for large, one-off transactions like real estate closings. Setup is manual, expensive, and slow. KashePay partners with a licensed bank (OmniBSIC Bank in Ghana) to give you the same regulatory protection as a bank escrow, but with modern API-driven onboarding and near-instant transaction creation.

PayPal is not an escrow service. It's a payment processor. Funds move directly from the buyer to the seller; PayPal doesn't hold them neutrally. Its buyer-protection program can reverse payments, but that creates chargebacks for the seller — a very different model from true escrow. See our detailed PayPal vs Stripe vs escrow comparison for the full breakdown.

Stripe is a card processor, not an escrow service. Stripe Connect can delay payouts to platform sellers, but the funds are still ultimately subject to card-network chargebacks and Stripe's payout rules. For true neutral fund custody with dispute resolution, you need a dedicated escrow service.

When the escrow provider is licensed and holds funds in a regulated banking partner account (as KashePay does with OmniBSIC Bank), escrow is one of the safest ways to transact online. Funds are ring-fenced, auditable, and only move on confirmed conditions.

KashePay charges a transparent flat escrow fee per transaction — no card-network spreads and no hidden FX markups. See our transparent fees page for the exact numbers based on transaction size.

Use escrow whenever the transaction is high-value, the parties don't know each other, delivery takes time, or a chargeback would ruin the deal. Typical use cases: vehicle and property sales, marketplace orders over a few hundred dollars, B2B invoices, freelance milestones, and crypto OTC deals.

If the buyer refuses to confirm delivery, either party can open a dispute. Funds stay locked in the escrow account while our team reviews evidence — shipping records, delivery confirmations, communication logs — and issues a neutral ruling. This is very different from a card chargeback, where the network decides unilaterally.