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Cash & Liquidity Management
Published  3 MIN READ

Digital Escrow: New Ways of Facilitating Commerce

The surge in ecommerce sales shows little signs of slowing and is expected to hit $4.2 tn this year. Commercial relationships however can be constrained by risk and complexity. The good news is that there is now a solution that will help businesses keep up with this trend and the new opportunities it brings. Philip Panaino, Global Head of Cash Management, Standard Chartered Bank, explains.

Risk, complexity, cost, process inefficiencies and the resulting delays can all impose constraints on the free flow of trade. But the world is speeding up with the unstoppable roll-out of digital commerce, and buyer and seller expectations of a friction-free experience are rising with the growth of online marketplaces.

While the promise of these digital marketplaces is significant, the reality can be challenging. Many large corporates are setting up marketplaces but are not prepared to handle the funds exchanged on the platform, due to complexities around accounting, taxation and in some cases the requirement for a payment services license.

Meanwhile, small and medium-sized enterprises (SMEs) using B2B marketplaces face confidence issues from their trading partners: Will the business deliver? Will they remain credible? Will they pay? Partner due diligence currently relies on scant digital cues, says Panaino, meaning that SMEs have limited access to credit and require advance payments, especially in a cross-border trade context.