Standard Bank has acquired a 35% equity stake in fintech TradeSafe Escrow – the platform underpinning its recently-launched escrow service.
Established in 2013, TradeSafe aims to safeguard the buyer’s funds in trust in a transaction involving two or more parties.
Escrow services allow for a third-party, in this case Standard Bank, to collect s buyer’s money, which is then held in a bank managed account until all specified requirements and conditions agreed to between both parties are met.
The funds are only released to the seller, and other approved beneficiaries once the buyer receives the goods or services in the agreed condition.
As part of the investment into TradeSafe, Standard Bank has appointed two non-executive directors to the TradeSafe board. Standard Bank also has management oversight of TradeSafe’s escrow account and is fully involved in the process for payment instructions that TradeSafe initiates.
The bank will also provide a second release payment function, with the platform now able to target commodity and M&A transactions greater than R25 million.
The acquisition comes just three months after Standard Bank launched its own escrow service leveraging the TradeSafe platform.
The service works with clients opening an escrow account in just a few clicks.
- The buyer in the transaction will have to be a Standard Bank client and fund the proceeds of the transaction from their transactional account using digital banking channels.
- Non-Standard Bank clients will only be able to perform the role of seller.
- The client creates a transaction and specifies the terms and conditions. After inviting the seller of the product, that individual can either accept the terms or re-negotiate.
- Once both parties are happy, the buyer can deposit the funds for the transaction into the Standard Bank Escrow account, that is independent of both parties.
- The funds are safeguarded and only released upon successful completion of the transaction, as agreed by both parties.
There is a fee for facilitating the escrow transaction and this fee can be covered by either the buyer or seller, alternatively there is an option to take on a 50/50 split between both parties. This is the type of terms negotiated ahead of accepting the transaction, Standard Bank said.