Escrow for freelancers: how held payments protect buyers and sellers
By SendPay Business · · 2 min read
When a buyer hires a freelancer they have never met, both sides take a risk: the buyer may pay and get nothing, and the freelancer may work and not get paid. Escrow-style payments solve this by holding the money until the job is done.
How it usually works
- The buyer pays for the job upfront, and the money is held rather than sent straight to the freelancer.
- The freelancer can see the job is paid for, and starts work.
- When the work is delivered and accepted, the money is released to the freelancer.
- If there is a disagreement, the platform looks at what was agreed and decides where the money goes.
Why marketplaces use it
Holding payments lets strangers trade with confidence, which is a big part of what a marketplace offers. It also keeps payments on the platform, so the marketplace can take its fee on each order.
Things to set out clearly
Buyers and sellers should know when money is released, how long a buyer has to raise a problem, and how disputes are settled. Clear rules up front prevent most arguments later. Holding other people's money is regulated in many countries, so it is normally done through licensed payment partners.
Where SendPay fits
With a SendPay Services Marketplace, buyers hire sellers, you take a fee on every order, and sellers are paid out automatically, powered by licensed partners.
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This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.