Escrow (held funds)
Holding a buyer's payment until the service or goods are delivered, so the provider is paid only once the job is done and refunds stay possible.
Updated October 2026 · with examples from our own builds
What does escrow mean in practice?
Founders ask for escrow when they want the platform to keep money safe between payment and delivery. A true escrow arrangement, in the legal sense, usually involves a bank or licensed payment provider holding the funds. What most marketplace apps build instead is a settlement hold: the customer pays, the provider's share is recorded as pending, and it becomes payable after delivery and any dispute window.
The hold protects customers and the platform, because a refund inside the window reverses cleanly when nothing has been paid out. The cost falls on providers' cash flow, so the window should be as short as disputes allow.
If you need a regulated escrow account, for high-value deals for example, that is a conversation with your payment provider and a lawyer rather than a feature request.
Escrow at a glance
- What apps usually build
- A settlement hold on provider earnings
- Protects
- Refunds and disputes inside the window
- Regulated escrow
- Needs a bank or licensed payment provider
Where has escrow come up in our builds?
Trainer earnings stay pending until their settlement date after a holding period, so a refund inside that window still reverses cleanly; a daily job settles what is due, and trainers request payouts from their settled balance.
A buyer can raise a dispute from payment until 14 days after delivery, and only the disputed order's payout is held while it is resolved. Shop checkout still runs on a payment simulator.
Common questions about escrow
Does my marketplace need a licensed escrow account?
Most don't. Holding provider earnings as pending in your ledger until delivery and the dispute window have passed covers the usual need. For high-value transactions, or where regulation requires it, ask your payment provider about regulated options and take legal advice.
How long should provider earnings be held?
As long as your refund and dispute window, and no longer. Longer holds protect the platform but strain providers' cash flow and their trust.
Related terms
Planning a product and not sure where escrow fits? Ask us, or browse all 116 terms in the glossary.