Freelancer.com, the online job marketplace platform for freelance designers, has today announced the acquisition of payment service provider Escrow for $7.5 million in cash. Under the terms, Freelancer will continue to run Escrow.com as a stand alone business.
Escrow.com acts as third-party payment platform that collects, holds, and pays out funds according to online buyer and seller instructions. This way, both parties are assured of service and payment and the risk of fraud is reduced. It claims that in fiscal year 2014, its gross payment volume was $265 million. It also claims to have processed more than $2.2 billion in transactions to date.
The company was founded in 1999 by Fidelity National Financial. Then, it merged with iLumin in 2002. In 2014, it was purchased by an unnamed private investor. Its list of clients include eBay, GoDaddy, AutoTrader.com, Flippa.com and many others. The company is also a strategic partner of the United States’ Commercial Service.
Escrow.com President & Managing Director Brandon Abbey said,
We are excited to be joining the Freelancer.com group. Freelancer’s expertise in marketplaces, combined with our expertise in secure online payments are an excellent strategic fit.
Freelancer.com’s CEO and Chairman Matt Barrie, said,
We are pleased to acquire Escrow.com, the world’s largest online escrow company. This highly complementary acquisition will enhance the ability of our 15 million users to transact securely, and there are large opportunities for growth and synergies with core offerings. Finally, it is a strong cornerstone for entering the payments space.
Freelancer currently uses a version of escrow named Milestone Payments for all the transactions occurring on its platform. In that system, Freelancer holds funds from an employer until it is released to a freelancer following the completion of a service or a dispute resolution. However, the system has come under repeated scrutiny from both employers, as well as freelancers doing the job.
The employers claims that that payments aren’t issued in a timely manner while the freelancers complain that the system doesn’t provide adequate protection against bad jobs. By acquiring Escrow, the company is hoping to fix this issue and position itself strongly in the online payments sector.
Recently, Freelancer announced its new service of home and local job offerings and has calculated to represent at least $75 billion per annum in gross payments with the new offline service business.