Online shopping in India may be growing at an exponential rate but it still constitutes only a small portion as compared to offline shopping. One of the factors which influence buyers is lack of trust in online medium, often marked by complaints against inefficient merchants. And in order to protect buyers from failed product deliveries after payment, Freecharge has now launched Escrow service for merchants.
This service basically holds the amount paid by a customer in Freecharge wallet until the merchant delivers the final product(pretty much what an escrow account does for you). Merchants can opt to use the company’s digital wallet for their payments to attract customers due to buyer protection.
Once a customer orders and pays for a product, Freecharge notifies the merchant about the same while holding the amount. After the merchant delivers the product, the company will release the payment to the merchant. In the case of failed delivery, the company refunds the amount automatically to customer’s wallet.
Commenting on the escrow service, Freecharge CEO Govind Rajan said,
Setting-up an escrow service is a fast, secure and efficient way to safeguard customers’ money and mitigate the risk of critical transactions and failed shopping experience. We have seen globally such services have proven to dramatically expand the ecosystem for both digital payments and e-commerce market place.
The amount held in escrow services comes under current banking accounts which are commonly used for clearing payments. Technically, it does not have a wallet license as its wallet is essentially a bank wallet(Yes Bank) with Freecharge branding.
This allows Freecharge to operate an escrow service under current bank account. It has partnered with C2C marketplace Shopo which has become the first merchant to avail this service.
Under the partnership, Shopo will integrate Freecharge wallet with its platform to offer buyer protection to its customers. Commenting on this partnership, Sandeep Komaravelly, Senior Vice President of Shopo, said,
Enabling Buyer protection through Escrow services enabled by Freecharge, will immensely help in building the trust and convenience between the Buyers and sellers. We are also making it very convenient for sellers to accept online payments through this integration.
Notably, Freecharge is not the first Indian company to come up with an escrow service. Recently, Citrus Pay also launched a payments service called Sellfie which also offers buyer protection under an escrow service.