The Benefits of Using Escrow Services in Domain Sales: How to Protect Your Transactions

Escrow agreement concept. Business escrow agreement management.

Buying and selling digital assets, including domain names, are usually done online. With the growing number of illegal, deceptive, and malicious deals in the virtual world, how can domain investors go through the whole process without the risk of getting scammed?

How do they protect their privacy, particularly, their financial information while dealing with the other party? How can sellers secure the domain name, and the buyer their money, while the transaction is ongoing? What if the buyer and the seller are located in different countries and are not acquainted with each other? Considering all these factors, is it still safe to say that the deal will be successful?

Taking advantage of an escrow service will help ease the mind of both buyer and seller in proceeding with domain name transactions. The risk of fraud in this high-value transaction is prevented by using escrow services. It is also a guarantee that the buyer and the seller, both get what they agreed upon in their deal.

What is an escrow service?

An escrow service is a reputable, independent, and trusted third-party agent, holding and securing the money during the domain name purchase transaction. They hold the money until the transfer of the domain name is deemed successful.

This service is licensed to handle the selling and buying process on behalf of the two parties in such transactions. This is usually used for high-valued transactions and/or if both parties are located in different locations. Escrow services may also be used for other intellectual property business deals.

However, escrow companies are not liable in case of any loss incurred by the buyer or the seller, in case they employ other external parties (e.g. marketplaces, brokers, etc.). They are not also held accountable for failure of payment, or if the domain sold is damaged or altered. To put it simply, an escrow service is a secured and guaranteed parking space for the money paid until the transfer has been completed, regardless of its quality.

How does an escrow service work?

1. Setting up the transaction

The two parties involved in the transaction, the buyer and the seller, set up the process by registering with an escrow service. This includes the signed agreement that indicates the price the domain name is being sold, the date of payment, and the method in which the payment will be received.

This mode of payment may be through wire transfer, credit card, check, PayPal, money order, or whatever method they have agreed upon.

2. Payment transfer

After registering and setting up the deal with an escrow service, the buyer transfers the payment to the escrow company. Buyer and seller now wait for the confirmation of the payment from the escrow company.

 3. Domain name transfer

Upon receiving the payment from the buyer, through the agreed method of payment, the escrow company now directs the seller to transfer the domain name to the seller. This is when the buyer proceeds with the process of changing the domain ownership with the registrar.

Based on ICANN (Internet Corporation for Assigned Name and Numbers) regulations, the maximum lead time for a domain name transfer to a buyer is seven days. But it also depends on how quickly the registrar transfers the domain from the seller to the buyer.

 4. Confirmation of domain transfer

When the seller advises that the domain name transfer is complete, then the buyer confirms if the ownership was successfully transferred. However, the escrow company does not rely on these confirmations. It verifies the transfer by using the WHOIS tool to check if the domain profile now displays the buyer information.

 5. Disbursement of payment to the seller

The payment of the buyer for the domain name will be disbursed to the seller after the escrow company verifies and confirms the transfer of the domain. The money that the seller will receive will also be based on the agreement of both parties on who will shoulder the escrow fees.

The escrow charge usually depends on the value of the deal. The range is often a small percentage of how much the domain name is being sold and may also depend on the method of payment used for the transaction. Usually, the buyer and the seller split the expense of using the escrow service. After validation from the seller that payment was already received, the transaction is now complete.

What are domain escrow service benefits?

It is advantageous for both buyers and sellers to use escrow services in their deals. It is a secure and dependable way of domain sale transactions. It is a guaranteed way that the buyer receives the domain name, and that the seller receives the payment.

More so, if the two parties are in different locations and are not acquainted with each other, having an escrow service will give them the assurance that their investment is protected. The benefits of having an escrow service include security, privacy, guarantee, and convenience.


In this digital time and age, fraudulent and illegal activities are rampant. In transactions where parties don’t really know who they are dealing with, it is best to acquire the services of an escrow company. Since domain name sales, or any other sale transaction for that matter, involves money and asset, buyers and sellers need to know that what they are giving away are protected.

The benefit of using an escrow service gives the buyer peace of mind in knowing that the payment is being held by a trusted company. At the same time, the seller is secure that the money is already ready to be disbursed to them once the domain transfer is complete. For sellers, it removes the risk of obtaining a sale from falsified credit card information or lack of funding from the side of the buyer.


Making a sale online involves the risk of having the buyer’s credit card details and other financial data disclosed. Escrow services keep all financial information safe and protected. Given that the seller does not receive the payment directly, there is no need for such details to be disclosed to them by the escrow service.

The payment of the buyer, which will only be handed over to the seller once the transfer is complete, will be handled by this third-party company, without divulging any of the buyer’s financial details.


By using an escrow service in the buying and selling of domain names, both partakers of the sale are assured of a successful deal. Buyers authorize the disbursement of the payment, once they confirm that the domain ownership has been transferred.

On the other hand, sellers will be notified of the payment verification before starting the domain name transfer process. The escrow company also inspects and authenticates the transfer of the domain ownership and does not solely rely on the confirmation of the buyer. They also have a copy of the signed agreement of both parties, that if one side of the sale does not meet the requisites of the deal or does not fulfill their obligations, this signed copy could be used as evidence if litigation arises.


In terms of payments, it is convenient for both buyer and seller, to use escrow services. Buyers have different options to choose from on how to pay for the domain. Sellers can also select the mode how to receive the payment.

Escrow services also offer customer support for both parties. If they have questions or if they need clarifications while the whole process of the buying-selling of the domain is ongoing, escrow services provide guidance to buyer and seller all throughout the transaction.

What is a good escrow service?

A credible and trustworthy escrow company is licensed. It must also have a well-defined payment and fee structure. A clear process in fund disbursement should also be looked into as some payments are done in intervals.

Since a number of domain sales are done between two parties in different countries, it is also worth knowing if the company handles different types of currencies and handles payment methods that both buyer and seller prefer.

A good escrow service usually sets a transaction timeline which also presents its step-by-step confirmation process. It also offers 24/7 customer support for both parties, in case the buyer or the seller has inquiries and is located in different time zones.


It is clear that both buyer and seller benefit from using escrow services. They just have to choose the right escrow agent for their transaction. It gets rid of the risks involved in dealing with online transactions, such as monetary fraud and security breaches.

For the reason that the escrow verifies the authenticity of the domain transfer before disbursing the payment, not only will it secure the whole process of selling and buying, but also guarantees the transfer of the domain ownership to the buyer. And because the escrow company stands as a neutral third party, it shows no bias and protects the interests of both the buyer and the seller.

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