Let’s begin with a question: What would you rather do?
A. Pay 150€ more.
B. Lose 5000€ forever.
Regardless of your choice, you should read this article until the end.
An introduction of escrow as an option of making transactions on our marketplaces was by now warmly welcomed by many of you, but since we also receive numerous messages about it, how can it help you and how much does it cost, we decided to explain it a bit further on practical examples.
First of all, let’s see what the definition of an escrow is (as described by Investopedia):
Escrow is a legal concept describing a financial agreement whereby an asset or money is held by a third party on behalf of two other parties that are in the process of completing a transaction.
Legal concept, financial agreement, third party. Still complicated? We feel you.
So let’s focus on the third party first:
We have partnered with trustshare, the FCA regulated company registered in England and Wales, offering global cross-border payments in USD, EUR or GBP in 186 countries. They will held your money in a protected, safe-guarded bank account. This will be either with Barclays in the UK or Crédit Mutuel Arkéa in Europe.
To put this on a practical example:
You want to buy a sequential gearbox for 5000€.
Smaller parts like gearboxes, suspension, engines are the most common to be used by scammers, as their price is too low to be worth your time and money to fly there and inspect it in person. At the same time, their value is also too low for international police associations to open a case against the scammer.
Just a quick note here: always request a video call with the seller, showing you that the item actually exists, which will already reveal if the seller is genuine or not.
But let’s assume everything seems great and seller gives you the bank account data to transfer the payment.
You deposit the amount and then …
.. all quiet. No response from the seller, no gearbox, no money and no one to turn to to help you out in getting it back.
This is what usually happens, you learn your lesson the hard way. You’re just one of probably many, who bought that same “gearbox”.
But what will happen if you use escrow in the first place?
Well for once, you will immediately learn if the seller is not genuine, since no scammer will agree to use the escrow, as they know they won’t be getting anything out of it. But let’s assume they do agree. Once a transaction is initiated, trustshare will perform a robust KYC and AML checks on seller’s identity to check if he’s really who is claiming to be.
Then you’ll deposit the amount on a protected bank account, managed by trustshare. After the deposit, the seller will be notified and he can start to prepare the gearbox for shipping.
Once delivered and in state as agreed, you release the amount to the seller and the transaction is completed. Simply said, if the package does not contain a gearbox you’ve bought or isn’t delivered at all, you still have the money securely with you and you can withdraw it back to your bank account.
Simple, secure and without any risks to be taken.
And you may be wondering.. all of this must be expensive, right?
Not at all. Fees are charged only to the buyer and in the small amount of only 3% for transactions in the amount of less than 10.000€ and 2% for those above that amount.
So taking back to our example, for a 5000€ gearbox, you would have to add just 150€ to ensure complete peace of mind. Nothing, compared to what you risk to lose without it.
Let’s go back to that question: What would you rather do?
A. Pay 150€ more.
B. Lose 5000€ forever.
Always choose option A. We’re not saying every seller is trying to deceive you, but there will be occasions when some of them do and why should you be that someone who gets punished when a situation is so easy to prevent?
We at racemarket, are sadly not in a position to verify all the sellers and if they are the rightful owners of the cars and parts they are offering, that’s why we highly recommend using escrow for every acquisition anywhere on the internet to avoid all the risk and potential other issues.
How to initiate a secure escrow transaction on racemarket?
Check detailed instructions and other information here.
If you need any further explanation or help while using it, contact us at firstname.lastname@example.org and we’ll be happy to help.