Escrow service or Pay on Delivery - which would you prefer

In 2017 I came across Payscrow and Tradenaira as I navigated the online marketing landscape. I wasn't a newbie online trader. I'd just gotten locked out of clickbank as an affiliate and while I hoped and waited for the temporary lockdown to be lifted, I researched alternatives.

'Mini' importation was getting increasingly popular back then and more people where getting hooked by the allure of bringing in cheap goods, and reselling them to clients online. Those that didn't have money to import learned the basics, made ebooks and sold them online. Others with Chinese connections flew over there and opened procurement and logistics offices.

The market got saturated fast and although it didn't turn out to be the very deep gold mine the hype sold it as (those that got in early carted all the gold away and left silver and bronze for the latecomers), the amount of direct sales initiated on social media and via email marketing more than quadrupled. A lot of money exchanged hands from online ads, some satisfactorily, while some others got scammed.

At the same time, the local crypto-currency market blew up from 600$ to 20000$ (I was so scared and cautious that I got out way too early lol). Suddenly everyone was fishing for pearls in the ocean with hooks, nets, harpoons; any tools they got sold on, they bought. Remitano came to naija. Luno came. A lot of other local exchanges sprang up. We even got an exchange forum on our nairaland. A lot of money exchanged hands from sales initiated online, some satisfactorily, while some others got scammed.

Banks have always offered escrow services since the beginning of time to cover heavy transactions that ran in millions or involving foreign currency as a way to prevent fraud. However multi millions if not billions in sales are transacted online monthly and even though these can be broken down to much smaller amounts per unit transaction, collectively it could be worth quite a lot to businesses willing to offer escrow protection to sellers and assurance to buyers regardless of the amount being transacted.

Tradenaira, payscrow, vessicash to mention just a few set up shop and began aggressive marketing on the local online market landscape. However reception at the marketplace seems lukewarm at best and this isn't speculation. Due to high charge rates, an inability to be seen as a trusted authority, a false sense of freedom by a higher percentage of online traders which seem rebellious to any form of structure, escrow services are failing to gain as much acceptance proportional to the solution they claim to proffer.

Instead, online buyers who should be mitigating risks to satisfactory online purchases using escrow services seem to prefer a different kind of solution - payment-on-delivery aka POD. In a POD transaction, the seller negotiates with a delivery company to collect payment for the goods sold at the point where the buyer receives the goods they ordered for. The buyer may pay delivery charges upfront or the seller may have to pay for that in the 'hope' they'll recoup everything back with a successful POD. Emphasis on hope.

While there is a balance of power in a successful negotiation between the three parties involving an escrow service, in a POD transaction, the buyer has all the power; the delivery company involved is aloof as to the terms of the negotiation, while the seller only hopes the buyer would stick to the terms. Sometimes the buyer rejects the goods outright for reasons not stipulated in the agreement. Most times he'd changed his mind between the interval where in the deal was struck and the goods got delivered. Other times he's just playing a prank online, or looking to get something for nothing.

The over-saturation on mini-importation has brought a new set of players to the scene - the online dropshipper and this POD has little or no advantage to them.

Payment on Delivery is perfect but leaves little or no assurance to the seller that the deal agreed upon can't be reneged on even though there is no percentage of the amount transacted charged by a very involved third party. Escrow services on the other hand make sure both parties understand the terms of their sales agreement and make sure their is no loophole for any of the parties to feel cheated.

So as a buyer or seller of goods online, which of these systems would you prefer?


©KobomaxAce