Trust and security are the cornerstones of online marketplaces. After all, it’s tricky to expect any party to trust another with their hard-earned money. And yet, marketplace businesses, like eCommerces, are growing in India. The writing is clear on the wall – the market is ripe for the picking. 

However, there’s a major challenge – creating trust between the parties involved in the transaction is quite a head-scratcher. One of the biggest mistakes marketplace businesses make is to assume that trust deficit is not such an urgent problem to deal with. According to a PwC study, 87% of businesses believe their customers trust them. Interestingly, however, only about 30% of customers actually do! 

In this blog, let’s understand how marketplace businesses are impacted by trust deficit and how they can solve this challenge. 

Buyers and Sellers: A Battlefield of Trust Deficits

The fundamental hurdle of trust deficit impacts buyers and sellers, both. Have a look:

The Problems Buyers Face:

  • Fraud concerns: Fear of receiving fake or damaged products, falling victim to scams, or losing money without recourse.
  • Payment security: Worries about online payment methods and the safety of their financial information.
  • Product quality issues: Uncertainty about the authenticity, condition, and quality of products purchased online.
  • Delayed or non-delivery: Frustration with unreliable shipping and delivery services, and the possibility of never receiving their orders.

Business Impact of Trust Deficit on Sellers:

  • Payment disputes: Risk of buyers claiming chargebacks or refusing to pay for delivered goods. Studies indicate that merchants globally spent 10% of their revenue in 2022 just on managing payment frauds.
  • Loss of revenue:  A 2023 report showed that eCommerce spent 11% of their revenue on managing fraudulent payments – up by 1% from 2022 as mentioned earlier. 23% of the surveyed merchants didn’t even know how to track such frauds!
  • Struggle to improve brand name: Most consumers are unlikely to buy from a business they don’t trust.
  • Inability to add more payment options: Studies show that 36% of merchants are offering BNPL (buy-now-pay-later) options. Naturally, an escrow guarantee becomes all the more useful.

Naturally, solving for trust deficit becomes the foundation for building a successful marketplace business – both from a buyer’s and seller’s perspective.

How are Marketplaces Solving for Trust?

Commonly, marketplaces address the challenges of trust deficit with reputation systems: online reviews and ratings, for instance. Secure payment processing platforms that offer some protection against fraud and chargebacks are another powerful tool that can assure consumers that their payments are safe.

The third and most robust way to manage trust deficit successfully are escrows.  In an escrow agreement, a reliable third-party holds the buyers’ funds, and releases it to the seller only upon fulfillment of the conditions of the transaction. Escrow agreements also ensure the seller receives their due payments in case the buyer defaults.

How technology has revolutionized escrows

Traditionally, escrows involve a three-party intermediary holding funds in trust until both parties fulfill their obligations.

Tech-driven escrow solutions, such as RazorpayX Escrow+ are now transforming the escrow landscape through:

Top-tier success rates

  • Automatic retries for failed payments: Payouts are only marked as failed after repeated unsuccessful attempts, maximizing success rates.
  • Smart bank outage detection: Systems automatically retries failed transfers and adapts to bank outages for seamless payout delivery.

Complete compliance

Adherence to RBI guidelines at all times, monitored by a SEBI – authorized trustee.

Higher payment efficiency

  • Real time payment statuses, instant money transfers and automated bulk payouts
  • Accurate reconciliation of statements recording millions of transactions!

Instant disbursals

Payouts, loans, cashbacks, etc., can be disbursed instantly in part or full with no need for manual intervention!

RazorpayX Escrow+ is a prime example of industry-best tech-powered escrows. Opening an escrow account is extremely fast and simple. Our escrow experts will onboard you in just about 48 hours, with focused guidance at each step.

                   Explore RazorpayX Escrow+

Escrows are the Future of Marketplace Businesses

  • Improved security: Reduced risk of fraud and manipulation, fostering trust and confidence among users.
  • Enhanced efficiency: Streamlined workflows and automated tasks lead to faster transaction processing and reduced costs.
  • Increased transparency: All stakeholders have access to a single source of truth, ensuring accountability and fair resolution of disputes.
  • Increase in business: Stakeholders have a solid reason to trust each other – both interests are safeguarded. A win-win for all parties.
  • Reduced operational costs: Automation eliminates the need for manual intervention, resulting in significant cost savings.

How Escrows Work in Practice:

The escrow process is pretty simple:

Step 1:  Buyer and seller choose a secure escrow service to solidify trust.

Step 2: The buyer places the payment in a neutral vault guarded by the escrow service. The transaction details and pre-defined conditions are programmed into a contract.

Step 3: The seller fulfills the terms of the transaction (delivery of goods or services)

Step 4: The buyer inspects the delivery or work. If satisfied, they give the green light.

Step 5: Upon approval, the escrow service releases the funds to the seller, completing the deal.


Today, all marketplace businesses are trying to unlock a world of new opportunities, empowering buyers and sellers, fostering global trade. With RazorpayX Escrow+ companies can look forward to a more secure, efficient, and thriving marketplace landscape.


What is an escrow?

An escrow is a secure service that holds funds until conditions are met. It’s like a trusted third party, ensuring sellers receive payment after buyers get their goods or services. Escrows foster trust and transparency by eliminating frauds.

What are the advantages of an escrow?

Escrows have benefits for buyers and sellers, both. Buyers are assured that their goods/services will be delivered to them because the third-party holding their funds will forward their payments to the sellers only upon delivery. Sellers are safeguarded in case the buyer refuses to pay. This reduces risks due to delays, frauds, etc. Escrows act as a guarantee, and promote trust between all parties.

Are escrows legal in India?

Yes, escrows are legal in India. Courts uphold the validity of escrows. In fact, escrows may even be mandatory in some scenarios – real estate for instance.


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