Big-name eTailers like Amazon, eBay and Walmart have made it easier than ever to buy just about anything online. When it comes to shopping for big-ticket items like pre-used or new commercial vehicles, though, the online shopping process is anything but easy.
In fact, it is frequently rife with friction. For sellers, the process might entail anxiously waiting to receive payments. Buyers, meanwhile, worry about handing over a large sum of money to a seller they’ve never met, hoping to have the vehicle safely delivered in the expected condition.
“We’re not talking about your Amazon transactions or small eBay transactions,” said Brent Abrahm, CEO of digital financial services provider Accruit.
When expensive items are sold online, both parties are looking for assurances that they will walk away from the transaction unscathed. Providing confidence to both sides is something Accruit is working to address through its PaySAFE Escrow service, which holds funds in a digital escrow account until all parties are satisfied. The funds are then disbursed to the seller.
“We’re talking about $5,000 or greater, where it means something to the two individuals,” Abrahm explained. “You have to figure out how [you can] help the transaction move forward, how [you can] keep it smooth and provide confidence.”
For the June feature story, PYMNTS spoke with Abrahm about how digital escrow tools are being used to instill confidence in big-ticket sales, notably in the used vehicle market.
Keeping Big-Ticket Sales Moving
Recent research revealed that nearly 42.7 million used cars were sold in the U.S. in 2017. While most of these sales occurred through dealerships, Abrahm said a number of them were person-to-person (P2P) transactions on digital marketplaces like Craigslist, eBay or Hemmings.
But business deals between individuals who have never met — particularly for expensive items like cars — can be fraught with concern. Sellers worry they won’t get paid the amount they were promised, if they get paid at all, and buyers want to review photos, titles and inspection reports to determine whether the vehicle is worth the purchase.
In other words, P2P car sales frequently encounter speed bumps, something Accruit aims to address with the PaySAFE Escrow solution, according to Abrahm. Accruit acquired PaySAFE Escrow earlier this year, and hopes to facilitate a smoother eCommerce transaction between two parties who want to engage in big-ticket business.
The PaySAFE Escrow service offers a platform on which transaction parties can review various stages of a used vehicle sale — such as titles, inspections and photos — and allows them to agree upon sale terms before funds are released. The money can be disbursed by direct deposit, wire transfer or to a PayPal account, and is received within one to two days.
Escrow Keeps on Trucking
The used car market is not the only sector in which trust is needed to successfully complete transactions. Confidence is also a key driver of the commercial vehicle marketplace, according to John Gillie, CEO of digital vehicle marketplace TruckTractorTrailer.com (TTT).
Very few large-scale vehicles are sold online, he explained, but digital escrow paves the road for more commercial vehicle sales to be completed through eCommerce. TTT has partnered with Accruit to enable these sales.
Just 5 percent of the commercial trucking market takes place online, Gillie noted. These vehicles are traditionally purchased at auction, where buyers can see and assess them in person. TTT aims to offer a venue through which commercial trucks can be bought and sold remotely, with digital escrow acting as a means to help reach this goal.
“[Sellers] don’t want to waste any time dealing with a buyer who may not have the right funds, is not funded or is not financed,” Gillie said. “[That’s] especially [true] when you’re talking about assets that are $20,000, $30,000, $50,000 or sometimes even $100,000.”
Word of mouth is a powerful influencer in the transportation market, too, as it can be difficult to salvage a reputation if buyers or sellers encounter friction with transactions. Digital escrow could help prevent deals from becoming mismanaged and relationships from souring.
“The challenge, from a payment perspective, is they need to trust the process immediately,” Gillie said.
Facilitating Future Online Sales
Digital marketplace tools can adopt digital escrow through an API integration, as some automotive marketplaces, like Hemmings, have already done. Escrow services have applications in a host of marketplaces beyond commercial truck sales, according to Abrahm — even those selling tractors and construction equipment. He hopes the solutions will result in greater usage for online sales, but more must be done to raise awareness of how they can quickly facilitate transactions before that can happen.
“I think this marketplace is just blossoming,” Abrahm said. “It’s kind of an ‘unsung hero’ type of concept. I don’t know if consumers know exactly what to call it.”
There will be more potential to explore digital escrow to facilitate sales as more transactions move online, and that includes going beyond conventional real estate transactions.
“When most people think about escrow, they think about a house closing,” Abrahm added. “We have a lot to do with making sure consumers understand this term called ‘escrow’ is providing confidence in the transaction between buyers and sellers.”
As escrow becomes more prevalent in online sales, big-ticket items — including used cars, commercial vehicles and luxury items like art — could soon be purchased with the same online ease as less expensive goods.