Escrow (trusteeship)
Escrow is a payment model in which a neutral third party holds the buyer's payment until a defined condition is met — e.g. delivery of the goods or acceptance of the service.
Escrow (trusteeship)
Escrow (trustee account) is a security mechanism in payment transactions: a neutral third party — the escrow agent — holds the buyer's payment until an agreed condition is met. Only then is the amount released to the seller. This protects both parties: the buyer does not pay without receiving the service, and the seller has the guarantee that the money is ready.
On marketplaces, escrow is particularly used for services and high-priced goods: trade jobs, freelance projects, used car sales or real estate transactions. Release takes place after delivery, acceptance or expiry of a return period.
In Switzerland, escrow is regulatory sensitive: anyone who holds funds on a trustee account on a commercial basis can fall under banking regulation (60-day rule according to the BankO). For SME marketplaces, the combination of Delayed Payout and Split Payment via a regulated PSP is the practical alternative to a classic escrow.
Escrow examples
A buyer commissions a tradesperson via a marketplace. The amount is held in escrow until the buyer has approved the work.
A freelancer marketplace holds the client's payment until the project has been delivered and approved by the client.
A PSP offers delayed payout: the payment is processed immediately, but the payout to the seller is only triggered after shipping confirmation — an escrow-like function without regulatory overhead.
Escrow FAQ
What is escrow?
Escrow is a fiduciary model in which a neutral third party holds the payment until a condition is met — e.g. delivery or acceptance. This protects buyer and seller alike.
Is escrow regulated in Switzerland?
Yes, anyone who holds funds in escrow accounts on a commercial basis may fall under banking regulation. The 60-day rule of the BankO is relevant here. SME marketplaces are better off using delayed payout via a regulated PSP.
What is the difference between Escrow and Split Payment?
Split Payment splits the amount immediately. Escrow holds the entire amount back until a condition is met. Escrow provides stronger protection for services and high-priced goods, but is regulatorily more complex.
When is Escrow worthwhile?
For services (acceptance required), high-value goods (risk minimisation), second-hand goods (condition check), and project work (milestone payments). For standard goods with shipping tracking, Delayed Payout is usually sufficient.
