What Is: Escrow

Imagine you're buying something online, like a rare video game console, from a person you don't know personally. You might be worried about sending them your money and not receiving the console in return, right? That's where escrow comes in.

Escrow is like a middleman or a safety net for both the buyer and the seller. When you agree to buy the video game console, you don't send your money directly to the seller. Instead, you send it to a neutral third party – the escrow service. The seller also sends the console to the same escrow service.

Now, here's the clever part: The escrow service will hold onto both the money and the console until both sides fulfill their obligations. It's like putting both the money and the item in a secure locker until everything is settled.

Once you, the buyer, receive the console and check that it's in good condition, you tell the escrow service that you're happy with the purchase. At this point, the escrow service releases the money to the seller, and the transaction is complete.

On the other hand, if there's a problem with the console or the seller doesn't deliver as promised, you can contact the escrow service and explain the issue. They'll investigate and decide whether to return your money to you or help sort things out with the seller.

So, in a nutshell, escrow acts as a trustworthy intermediary in transactions, making sure that both parties fulfill their parts of the deal before the exchange is finalized. It's a way to protect both the buyer and the seller and make online transactions safer and more secure.