Choosing a domain escrow: Beware of the extra fees, hiccups, and risks.

The $9.99 Transpact escrow fee could end up being 10x more, if you use a money transfer service, like TransferWise.

Image: A typical escrow workflow (via Confidus Solutions)

Domain transfers

Similarly, for domain transfers, a number of escrow services exist but choosing one carefully is vital, as you’ll understand after reading my story.

Typical escrow fees

Established names in the domain escrow industry like Sedo charge heavy fees, as much as 15% of the sale price. There are ways to get around this. But what we needed was a simple solution that would let us both agree to a one-page terms of sale, exchange money securely, and have me obtain the domain transfer authorization code to complete the transfer process with minimal fees.

Transpact + TransferWise = 🚨❗TROUBLE ❗🚨

Due to regulatory requirements, Transpact requires the bank account you register with their system during sign-up, is the same account from which the buyer sends the money to Transpact.

This is where things gets complicated.

As you can imagine, all my UK bank accounts only supported GBP as the currency. Instead of going through banking bureaucracy, I decided to use TransferWise. I thought their so-called ‘borderless banking’ account would send USD from my UK GBP account to Transpact easily.

The caveats?

Different accounts, intermediary banking partners, red flags

Although the money does leave your USD TransferWise account, to the recipient the amount would be paid from a different account — TransferWise banking partner’s account, located in the recipient’s country.

Regulatory Catch 22

On Transpact’s end, they would absolutely refuse to refund my money to any account (even my TransferWise USD account) other than the account the money was paid to them from — TransferWise banking partner’s, which was bouncing the refund right back to them.

Transpact’s fees and deductions

The $9.99 escrow fees ended up being more like $120+

The original transaction amount of $1,400 meant, there would be an escrow fee of $9.99 per party. I, being the buyer, offered to cover both parties’ escrow fees, bringing the amount paid via TransferWise to $1,419.98.

Bad UI and workflow

Another thing I noticed, other than Transpact’s decades-old UI was the escrow workflow. For example, after both parties have signed the agreement — which is easy, and the buyer has made the payment, and all escrow fees have been paid, both the buyer and seller are asked to deposit a $/£0.01 from their bank account, before the transaction can be finalised.

Alternative suggestions for domain escrow

My personal advice after navigating this mess is to avoid UK-based escrow services like Transpact altogether. The escrow and anti-money laundering regulations are stringent which hamper legitimate transactions. Transpact’s modes of payment are limited (bank account only, no credit cards!)

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