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Innovating in Escrow for Wholesale Payments- Keeping the Benefits while Eliminating Risks.

What are the benefits of using bank escrow services?

Using bank escrow services can provide several benefits, including:

  1. Security: One of the primary benefits of using an escrow account is that it provides a secure means of completing transactions. The bank acts as a neutral third party, holding funds until all of the conditions of the transaction have been met. This helps to minimize the risk of fraud and ensures that both parties are protected.
  2. Risk management: By using an escrow account, both the buyer and seller can manage their risk more effectively. The buyer can be sure that the funds will not be released until they are satisfied that all of the conditions of the transaction have been met, while the seller can be sure that they will receive payment once they have fulfilled their obligations.
  3. Dispute resolution: If a dispute arises during the transaction, the use of an escrow account can provide a mechanism for resolving the dispute. The bank can hold the funds until the dispute has been resolved, which can help to prevent the dispute from escalating into a more serious legal or financial issue.
  4. Simplified payment process: Using an escrow account can help to simplify the payment process, particularly for large or complex transactions. The bank can handle all of the payment processing and documentation, which can help to streamline the process and reduce the administrative burden for all parties involved.

Overall, using bank escrow services can provide a level of security and peace of mind for both buyers and sellers, while helping to minimize the risks associated with completing large or complex transactions.

What are the risks of using bank escrow services?

While bank escrow services can be a useful tool for managing risk and ensuring that transactions are completed securely, there are some risks associated with their use. Here are some potential risks to consider:

  1. Cost: As I mention later, banks typically charge a fee for providing escrow services. Depending on the specific transaction, the fees may be significant and could impact the overall cost of the transaction.
  2. Delay: The use of an escrow account can add a layer of complexity to a transaction, which could result in delays. This could be particularly problematic if time is of the essence for the parties involved.
  3. Fraud: While escrow accounts are designed to provide a secure means of completing transactions, there is always a risk of fraud. For example, a fraudulent seller could provide false documentation or other misleading information to the bank or the buyer, which could result in the release of funds to the seller before the transaction is complete.
  4. Default: In some cases, one party may default on their obligations under the transaction. This could result in disputes over the release of funds from the escrow account, which could further delay the completion of the transaction.
  5. Bankruptcy: If one of the parties involved in the transaction goes bankrupt, there could be complications related to the release of funds from the escrow account.

Do wholesale payments always include bank escrow services?

No, wholesale payments do not always include bank escrow services. Wholesale payments refer to transactions between businesses or other large entities and can take many different forms depending on the specific needs and preferences of the parties involved.

While bank escrow services can be a useful tool for managing risk and ensuring that transactions are completed securely, they are not always necessary or appropriate for every wholesale payment transaction. For example, some wholesale payments may be made using wire transfers, electronic fund transfers, or other methods that do not require the use of an escrow account.

In general, whether or not bank escrow services are included in a wholesale payment transaction will depend on the specific circumstances and the preferences of the parties involved.

What is the cost of bank escrow payment services in wholesale trade?

The cost of bank escrow payment services in wholesale trade can vary depending on many factors, including the type of transaction, the amount of the transaction, the level of risk involved, and the specific bank offering the service.

Generally speaking, banks charge a fee for escrow services, which can range from a flat fee to a percentage of the transaction amount. For example, some banks may charge a flat fee of several hundred dollars for escrow services, while others may charge a percentage of the transaction amount, such as 0.25% to 1% of the total value. The fee may also include other charges such as wire transfer fees, document preparation fees, and other administrative costs.

How long will take a bank escrow payment transaction?

The length of time it takes to complete a bank escrow payment transaction can vary depending on several factors, including the complexity of the transaction, the responsiveness of the parties involved, and the policies and procedures of the bank.

In general, a bank escrow payment transaction can take anywhere from a few days to several weeks to complete, depending on the specific circumstances. For example, if the transaction is straightforward and all parties are prompt in providing necessary documentation and approvals, it may be completed in just a few days. On the other hand, if the transaction is more complex or there are delays in obtaining necessary approvals or documentation, it could take several weeks or even longer.

Who are the leaders in bank escrow services for wholesale payments?

 There are several financial institutions and service providers that offer bank escrow services for wholesale payments. Here are a few examples:

  1. JPMorgan Chase: JPMorgan Chase is one of the largest financial institutions in the world and offers a wide range of wholesale banking services, including escrow services for large-scale transactions.
  2. Bank of America: Bank of America is another major financial institution that provides escrow services for wholesale payments. The bank's Global Transaction Services division offers a variety of cash management and payment solutions, including escrow accounts.
  3. Wells Fargo: Wells Fargo is a well-known financial institution that offers a variety of wholesale banking services, including escrow accounts for large transactions.
  4. Citibank: Citibank is a global bank that provides a range of wholesale banking services, including escrow services for large-scale payments.
  5. HSBC: HSBC is a multinational bank that offers a variety of wholesale banking services, including escrow accounts for wholesale payments.

These are just a few examples, and there are many other financial institutions and service providers that offer escrow services for wholesale payments. The choice of provider will depend on factors such as the specific needs of the business, the size and complexity of the transaction, and the reputation and reliability of the service provider.

The drawbacks of current state-of-the-art.

Escrow must determine the completition of Agreement, Delivery , Buyer Payment  and Marketplace Payment. This is a complex task to orchestrate with flows based upon Fiat money.Transaction using Fiat money- may take days or weeks.
 

The Alternative Solution for the problem.

Blockchain simplifies the orchestration. TRIO enables security on Public Blockchain Network, thus ensuring future scalability. This makes it possible to keep the benefits while eliminating risks

These are the steps that Buyer and Seller will follow in alternative  wholesale payment with Bank as Crypto Asset Service Provider (CASP) providing escrow services.

1. Buyer buys  utility tokens as offered by Bank. The exchanged Fiat money is put in Bank escrow.

2. The Buyer sends these utility tokens to the Seller using the dedicated wallet.

3. The Seller sends the goods or services to the Buyer.

4. The Buyer acknowledges the receipt of the goods or services to the Bank.

5. The Seller exchanges the received utility tokens into Fiat money held in Bank escrow.

These are the crucial advantages of the proposed solution:

1. The utility token (licensed by the Bank under its brand name) cannot be transferred outside the Bank, by design, and therefore, fraud is impossible. For the same reason, utility tokens in the Buyer's dedicated wallet cannot be stolen, by design.

2. The Bank does not need to create a permissioned Enterprise Blockchain network, it may operate on a permissionless Public Blockchain, using Identity perimeterization. This has a huge scalability advantage.

3. The alternative solution proposed is much faster than existing state-of-the-art, as offered by industry leaders.

To learn more about TRIO payments- please message me privately.

 

 

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Eli Talmor

Eli Talmor

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