Mobile payments service FreeCharge has launched an escrow service for merchants, wherein the money is held within the escrow service until the product is delivered to the user. If the product is not shipped to the user, the money is refunded into the buyers wallet. Note that the facility is available on the FreeCharge wallet, which the company offers to merchants. Shopo, which is a C2C platform like Ebay (globally, not really in India), is the first merchant to integrate the FreeCharge wallet and offer an escrow protection to buyers and sellers. It is, of course, the obvious choice, since both Shopo and FreeCharge are owned by Snapdeal. Note that this service is not new to wallets: Citrus Pay*, which recently launched a service called Sellfie, also has an escrow service for buyers. As we had mentioned earlier, wallets route payments to different merchants through escrow accounts maintained in commercial banks anyway. These escrow accounts are treated as current accounts by the banks and used mostly for clearing payments. Now FreeCharge, despite not having a wallet license, is able to hold an escrow account because its wallet is powered by Yes bank: it is, essentially, a bank wallet with FreeCharge branding. As per the RBI's guidelines for wallets, 8.3 (iv) The amount so maintained in the escrow account shall be used only for making payments to the participating merchant establishments and other permitted payments. Following debits and credits will only be permitted from the escrow account: Credits Payments received towards…
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