Popular domain escrow service takes a revenue hit but shows signs up improvement.
Freelancer Limited, the company that owns online escrow company Escrow.com, has posted its results (pdf) for the first half of 2017.
Gross payment volume (GPV) at Escrow.com in the first half of 2017 was down 24% (year-over-year) to $209 million. Net revenue was down 28% to $3.1 million.
The company cites two reasons for the fall: the burst of the Chinese domain bubble and the implementation of account verification (aka “know your customer”) controls.
China’s GPV was $25 million in the first half of 2017 compared to $52 million in the first half of 2016. It peaked in the second half of 2015 when it was $89 million. This chart shows the impact of China:
While China is down, the rest of the world is also down. Escrow.com attributes the additional decrease to account verification requirements put in place at the end of 2016. In its earnings presentation, the company said the process has resulted in churn because some users are reluctant to provide identification. I imagine that part of it is not reluctance so much as not wanting to go through the hassle depending on the size of the transaction. The process can include providing proof of identity and business documents.
Obviously, Escrow.com would prefer not to put customers through this hassle. Its presentation says the identity verification process makes it compliant with the US Patriot Act. It also plans to roll out enhancements to the process this quarter.
Despite the drop in the first half of this year, there’s some good news for the company: it appears to be rebounding. GPV in the second quarter of the year was up 16% compared to the first quarter.
David says
I have to assume that the claim of instituting the ID verification in order to comply with the patriot act is a bogus claim. I can’t see how they would have been able to operate for a decade or more without complying if their verification process was an actual requirement of the patriot act. My guess is that the real reason is that they’re trying to cut costs associated with fraudulent transactions. Also, I disagree about customer hesitation being related to the inconvenience. I think many people have concerns about trusting escrow.com with private documents that could lead to identity theft in the event that escrow.com gets hacked.
Andrew Allemann says
I think the primary reason for implementing ID verification is to comply with the law. Cutting down on fraud is a side benefit. They wouldn’t implement something that made such a revenue hit if they didn’t think it was necessary. Keep in mind that they acquired Escrow.com in 2015 and are going through a number of updates with the business.
As for customer hesitation, I think it’s both things: the nuisance and concerns about private documents.
John says
Andrew, I don’t know for sure, but my understanding based on the last information I’ve seen is that at most it is merely a requirement of the law of Australia, and NOT of the US or other jurisdictions, and at worst is merely bulls–t by Escrow.com and their own imposed requirement. Payoneer certainly requires not such thing last I checked and at most state that they *may* require certain items.
John says
*i.e., may just be an Australian requirement, not necessarily is. I don’t really know either way.
Domainer says
After what they put me thru plus what they put one of my customers (both of us had been using escrow for many years), I decided not to use them unless absolutely forced by a buyer.
I did not want to put another enduser buyer who are already suspicious of internet transactions thru the initial verification process.
Sedo (private transactions) and escrow.domains are happy for the additional business.
Dan says
Stopped using escrow by about 75 percent this year, We don’t need them anymore, good luck to them.
this thing sniffs a bit says
escrow.com is causing buyers to decide to not complete transactions with their over the top account verification requirements so any intelligent domain investor should use Payoneer escrow or escrow.domains instead of escrow.com
.
This was clearly very bad planning by escrow.com where they planned this verification without having a clue about it’s effects and when they got complaints they arrogantly thought that they are the biggest so people must jump through hoops.
.
I moved 90% of my transactions elsewhere and try to avoid escrow.com when possible.
JZ says
I’m not sure how scanned your drivers license and utility bill is over the top or hard.
John says
Gee, JZ, ya think maybe some people just find that unacceptable unless it’s a true legal requirement of their own country? Hmm…
Domainer says
They required more than that.
John says
@sniffs – I simply avoid them period ever since the new requirement and their newly horrible customer experience leading up to that.
John says
Nice to see a new thread about the evils of Escrow.com. The last ones appeared to have faded into oblivion already. As I stated elsewhere, that’s what people count on… And ditto on “sniffs” above re Payoneer. I would use them now, but I routinely tell buyers and potential buyers now that I no longer use Escrow.com and won’t.
John says
P.S. One can also try Epik escrow, and if you want to be a little adventurous, Bitcoin. I just recently had a $xx,xxx transaction with Bitcoin, first ever for domains, and I loved it.
John says
escrow.com = worst company ever since the takeover
Incompetent, slow, don’t return calls, totally clueless representatives, poor interface, expensive, and arrogant.
Maybe that’s the reason why transactions are down.
No longer a customer says
That’s not the only thing that’s down:
https://www.bloomberg.com/quote/FLN:AU
It appears they have more problems than escrow.com…