I just used "escrow" to make the process relatable, but we are not technically escrowing it under Stoa. We use Stripe's services to control payment releases upon shipment / inspection. Hopefully didn't cause confusion
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So who actually holds the funds while the shipment and inspection occur? Does Stripe receive the funds from the buyer and maintain custody until they're released, or is Stripe Connect just your disbursement rail?
Also, in another comment, you indicated you could "intervene" in a transaction if needed.
If you are the party holding the funds and have the authority to decide whether and when to release them, you're almost certainly legally acting as an escrow agent even if you don't want to call it that.
Your business looks interesting but you should definitely talk to counsel about this because of the amounts involved. If you're taking custody of the funds but aren't licensed and bonded, it's not just a legal problem: basically becoming an unsecured creditor of a startup holding 6-7 figures of cash for however long it takes for a hardware shipment to be inspected is not a good position to be in as a buyer.
Stripe processes the payment as a direct charge on the seller's connected Stripe account. Seller proceeds stay in that Stripe balance with payouts set to manual. They never pass through Stoa's bank account or operating balance sheet.
After the buyer accepts/inspects the hardware, we then trigger a payout from the seller's Stripe balance to their bank.
I used the term "escrow" too loosely above to make an analogy. Hope this clarifies the confusion. There is also Stripe documentation about the feature we are using here: https://docs.stripe.com/connect/manual-payouts.
Gotcha. Thanks for clarifying!
Stripe puts it nicely here!
"Escrow has a precise legal definition, and Stripe doesn’t provide escrow services or support escrow accounts. However, you can control payout timing through manual payouts, which allow you to delay payouts to certain accounts. When using manual payouts, you must pay out funds within the time frame for the business’s country.
Use delayed payouts when a delivery is delayed or when you think you have a possibility of a refund."