Escrow venture to serve European B2B sector
Online financial services company i-Escrow will unveil a deal next week with a unit of Bertelsmann to help expand Internet business exchanges in Europe.
Bertelsmann Financial Services will team with the financial services company to form i-Escrow Europe, a venture that the companies believe will help fill the growing need among business-to-business exchanges for services that help iron out the difficulties of cross-border business transactions.
Online escrow services provide a third-party intermediary to ensure buyers and sellers fulfill business agreements. Instead of paying a seller directly, buyers pay an escrow company, which then shuttles the payment to the seller--only after the buyer receives and approves the goods.
The new venture is a centerpiece of i-Escrow's push to expand internationally. Although several escrow services companies such as Escrow.com, i-Escrow and Tradesafe.com popped up to meet demand from online auctions, they haven't received as much business as expected. These companies are trying to find new life in the growing business-to-business sector.
One of the biggest challenges for online marketplaces is how to streamline the process of transactions. While orders can be placed online, payments often are processed through tedious offline paperwork.
Earlier this year, big financial players including American Express, Visa, and MasterCard formed alliances with U.S.-based Internet companies in a move to ease payment online. Several start-ups, including i-Escrow, InPurchase and eCash, also are trying to find ways to fill holes in the payment process.
i-Escrow's deal could help the Silicon Valley company consolidate its leadership position in the online escrow market. Bertelsmann Financial Services handles more than 45 million transactions annually, including financial and settlement services.
i-Escrow Europe will be based in Dublin, Ireland. Bertelsmann will own 51 percent of the venture, with i-Escrow holding the remaining 49 percent.