Escrow services for online business deals

Introduction

With globalization and the spread of the Internet, more and more companies have engaged in business deals involving often unfamiliar foreign partners.

More recently, the pandemic has accelerated the process of moving to the use of online work and commerce in many professional sectors pushing professionals and businesses to equip themselves with online tools and services to ensure negotiation, payment and delivery, as well as dispute resolution. 

The whole deal can be completed without a meeting, but by managing the entire process online.

The main categories that have the need to expand their businesses outside their usual perimeter through contracts with remote partners are professional services and SME.

Professional services

Professionals operating in the professional services market, of all types, from software development to the creation of digital works, including all forms of consulting and production of digital artifacts today can offer their services globally.

The professional services segment includes B2B transactions for services provided by freelancers in all professional fields: graphics and design, digital marketing, writing and translation, music and audio, software development, business and consulting, design, legal services, lifestyle, etc.

In that segment, statistics show that U.S. freelancers earned nearly $1 trillion in 2019, with 57 million Americans freelancing in that year. About one-third of the European workforce began working from home in 2020. 

Some estimates suggest that remote workers could account for 80% of the global workforce by 2030. 

Beyond freelancers, the professional services market in the U.S. alone totaled about $2T for 2018

E-lance platforms provide work for 73% of freelancers; these online marketplaces are therefore the primary source of work for freelancers. Nearly three-quarters of the global freelance community use online platforms to find clients.

SME

Also SME are more and more facing the need to carry out business deals with remote unknown organizations due to their commercial expansion. They typically need to transfer physical or digital goods and they look for mechanisms to secure such commercial transactions.

Types of market

In general, it is a B2B market for all those transactions that are provided by a freelancer to a micro-business or between SMEs, or a C2C transaction between private individuals for the purchase and sale of physical or digital goods that can be carried out at a distance.

Marketplaces

Platforms that offer marketplaces where supply and demand of professional services meet, where operators advertise their activities and clients can select, negotiate and purchase them, always using the platform itself, are an indispensable intermediary. 

Some well-known platforms are Upwork, Fiverr, Freelancer, Guru, People per Hour, Toptal, etc.

These platforms apply a transaction fee and have a considerable discretionary power and the total management of payments.

Dispute resolution

One of the most significant benefits of using a marketplace platform is presumably the idea that disputes can be resolved quickly. However, this is not exactly what happens and there is a strong asymmetry between customers and suppliers.

Platforms are designed to primarily protect the customer because customers are the source of the financial flows and the platforms themselves live on this income.

According to report by the Federation of Small Businesses (FSB), commercial disputes cost small businesses in England and Wales 11.6 billion pounds per year. In a survey of its members, the FSB found that 70 percent had faced at least one dispute between 2010 and 2015. Nearly three-quarters of these were the result of late or non-payment, the report states.

There is a strong need of being supported by a dispute resolution system that allows to solve the situations where customers, for any reason, reject or do not pay for the service or product, or cases where the supplier fails to comply with the request.

Conclusions

The increasing diffusion of business carried out between unknown and often remote people or organizations has led to the birth and success of platforms that act as marketplaces for the sale of products and services.

These platforms must also provide access to payment and dispute resolution services.

In this context, the Uniscrow service fits perfectly as it a neutral service that can be used at lower fees than traditional services and can be integrated in existing marketplaces and platforms.

Our mission at Uniscrow is creating solutions for people and companies that want to make business remotely and securely. This is why we are building a blockchain-based escrow software that will provide a new level of transparency, security and control for users without the need to have a bank or an escrow agent as intermediaries.

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