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How Escrowffrr is Putting Trust Back into Contingency Payments

This digital and fully secure escrow payments platform can be easily set up online.

When Ashwin Chawwla founded Escrowffrr in 2015, he had sown seeds for a revolution in the complex contingent-based payments systems, commonly known as escrow. With his new technology platform, which became operational in 2018, he aimed to do within a few minutes what traditional banks did in 30 days. Chawwla was democratising the ages-old and staid escrow payment system by making it a near DIY process.

An acute trust deficit plagues contingent-based money transactions. Such transactions are usually not worry-free, rather they are riddled with fear and anxiety. The key concerns of the parties are – protection of the payment, risk of non-fulfilment of commitment, and painful and expensive litigation in case of a breach.

For ages, escrow has been the method of protecting payment, wherein the money is placed with a trusted third party, and released when the parties to the transaction are satisfied that all obligations have been met in toto.

Even though the escrow is a secure and safe bet to mitigate risks, the process of setting it up and transacting it is cumbersome. The conventional method requires customers to visit the bank, complete KYC formalities, get the contract vetted by the bank’s legal cell, open an account, and pay a high fee. All of this could well take 30 days to complete, and this is the pain point that Escrowffrr is addressing.

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“We saw a big need gap which could be plugged using a digital escrow-focused payments platform that was convenient and easy to set up. Broadly, this is how we were inspired to start sketching the product offering. This journey, of leveraging smart tech to democratise escrow payments, continues to be a fascinating and exciting one,” says Chawwla.

Initially started as a bootstrapped venture, the most challenging task for Chawwla was to get the first few believers on board. And being a novel concept, it needed to be evangelised continuously across the board. “Having been through some near-death experiences as an organisation, we believe today we are wiser, stronger and more robust as a platform. We are driven by our mission to make a difference in the payments ecosystem, taking the fear out of transactions.”

Escrowffrr is backed by seasoned marquee individuals and institutions including Inflection Point Ventures, the family office of Sarda Group Chhattisgarh, Blue Bolt Start-up Factory, and 50K Ventures. Validation has also come its way in the form of notable awards – Digital Escrow Payments Platform’ at Technoviti Awards 2020, selection at HDFC Bank Digital Innovation Summit 2019, finalist at NASSCOM CBRE DISRUPTECH 2019, nomination for India 500 Startup Awards 2019, award as finalist for CII Innovation Awards and Tech30 at TechSparks.

Chawwla informs that Escrowffrr platform is being partnered by ICICI Bank and Axis Bank on the back end. “Onboarding these banks and deeply integrating with their systems, coupled with studying the regulatory environment, have been truly challenging experiences. However, it is immensely satisfying and humbling when all of this translates into a unique platform, solving genuine customer pain areas.”

Taking the asset-light approach, the start-up has stitched together impressive partnerships and alliances for outreach at the front end. For its first ‘live use case’ of real estate, it has strategically partnered with search and discovery portal Magicbricks and entered an alliance with Square Yards. Another alliance is with new-age channel partner platform Prop i, for connecting with 30,000 brokers across Mumbai and west India and effectively embedding into the customer decision journey.

“For all the categories and use cases that we intend going live with in future, we would be open to like-minded strategic ecosystem partnerships.”

According to Chawwla, the platform is a holistic digital ecosystem of escrow focused payments, backed by watertight agreements/contracts, KYC verification of parties, e-signatures etc., all of which make the user journey seamless and virtually contactless. What used to be a cumbersome and tedious process is now being done online.

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Explaining the motivation for developing the digital platform, Chawwla says, “Real estate per se, as you know, is a large and vibrant sector and the second-largest contributor to GDP of the country. However, given the inherent opacity of the category and rising number of court cases on account of transactions gone awry, escrows are the perfect solution to mitigate transaction risk. While regulatory frameworks have made escrows mandatory in the primary segment, there is no such solution for the secondary/resale category, which is almost 60-70% of the total market. And given my background of more than two decades in real estate advisory, this use case became the most natural starting point for me as an entrepreneur.”

The resale market comprises of the buyer, seller and the broker, where the broker is the backbone of any transaction and needs to be fully empowered to influence the buyer and seller.

“We are seeing that traction coming through. Our escrow focused platform aligns with and empowers the brokers by fundamentally addressing two of their biggest concerns – success of their client’s transaction, and protection of their brokerage fee.”

Escrowffrr can facilitate transactions of any value. Since the backbone is its banking partners, the platform can execute even small transactions of a few thousand. The offering being completely digital, the overall costs are incredibly low and offer immense savings to the users. For resale deals, it charges the buyer a flat platform fee of Rs 5,000 irrespective of the size of the deal. For its rental suite, the platform fee is Rs 4,000. For other use cases and bespoke solutions, the pricing is available on request.

Besides real estate resale Escrowffrr is already securing property rental transactions, and will soon go live with a solution for angel investment and trading of unlisted shares. Solutions are in the pipeline for other use cases including sale of used automobiles, procurement of goods, e-auction of properties by banks, payments in the gig economy, and government transactions. “We have built out a category agnostic, open-architecture platform with multiple use cases. Alibaba and PayPal are validated and trusted models. Alibaba’s Alipay started as a digital escrow between traders and SMEs.”

The government, acknowledges Chawwla, has provided the fintech sector with a much-needed impetus. Forward-looking steps such as simplifying KYC processes, encouraging digital payments, removing MDR charges, 24-hour NEFT payments, TDS tracking on payments, Digilocker, e-signature etc. all enabled the escrow platform to deliver. Moreover, while escrows have been made mandatory in the primary real estate category, Chawwla and others in the industry are working closely with stakeholders to push for making this the new normal of doing business in resale as well.

Interestingly, some banks who are keen to launch their own digital escrow platform have been in touch with Escrowfffrr’s management to license out its technology for powering their efforts. “It is indeed heartening to see the forward-looking collaborative mindset of the banking sector, of working with fintech players, to foster inclusive and seamless customer-focused models. This is the much-needed tailwind for young players like us,” avers Chawwla.

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