What Is Escrow?
Escrow is a financial arrangement where a trusted third party holds the buyer's payment while the domain is being transferred. Once the buyer confirms receipt of the domain and the transfer is verified, the escrow service releases payment to the seller. If the transfer fails, the buyer gets their money back.
Escrow eliminates the trust problem in domain transactions: the buyer doesn't want to pay before receiving the domain, and the seller doesn't want to transfer before receiving payment. The escrow service bridges this gap by holding both sides accountable.
Escrow.com is the industry standard for domain transactions, having facilitated transfers of domains like uber.com and instagram.com. Most major marketplace platforms (Sedo, Afternic, Atom) have built-in escrow or escrow-like buyer protection.
Buyer sends payment to Escrow.com → Seller transfers domain → Buyer verifies receipt → Escrow releases payment to seller.
Why This Matters for Startups
Always use escrow for domain purchases above a few hundred dollars. Never wire money directly to a domain seller, no matter how legitimate they seem. If buying through a major marketplace, their built-in escrow handles this automatically. For private purchases, use Escrow.com. The fee (typically 3–4% up to $5,000) is a small price for guaranteed transaction security. Sellers who refuse to use escrow are a red flag — walk away.
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