•With a digital escrow payment, the Seller will only access the received funds when the Buyer remotely unlocks it from his app once satisfied with the delivered product.
•Traditionally, escrow has mainly been used in real estate transactions.
Kenyan startup Empower Smart Limited has launched the region's first fully automated digital escrow app in a bid to streamline the e- commerce sector.
Empower Smart Limited Founder Peter Muraya says the app dubbed “Empower Smart App” will improve trade in the region and the world by protecting buyers and sellers from being scammed through it’s suite of payment products under Empower Wallet.
An escrow is a financial and legal agreement designed to protect buyers and sellers in a transaction. For a fee, an independent third party holds payment until everyone fulfills their responsibilities in the transaction.
With a digital escrow payment, the seller will only access the received funds when the buyer remotely unlocks it from his app once satisfied with the delivered product.
“Online purchase scams will now be a thing of the past as you can now send an advance locked payment to the seller," Muraya said adding that the app is available on Google Play Store.
"The money leaves the buyer's wallet and is temporarily held under digital escrow until the product is delivered. The buyer then unlocks the payment from his app and the seller now can access and withdraw the previously locked funds. An unhappy customer can request reversal of locked funds from the app".
The firm is targeting Kenya’s growing e-commerce sector which is adversely affected by scammers.
“Empower Smart is helping create exponential growth in the e-commerce space and creating trust in online trades and in large transactions like land and cars. This is using its innovative and truly revolutionary Digital Escrow Payment Platform available on the Empower Smart App,” he explained.
Traditionally, escrow has mainly been used in real estate transactions where documents and funds involved with a home sale are held by a neutral third party until the sale is complete.
Empower Wallet with its suite of escrow innovations has now brought digital escrow to all industries in a fully automated way.
Businesses can integrate Empower Wallet into their apps and websites allowing customers a seamless checkout experience.
Essentially, a neutral third party can be thought of as the “middleman” that ensures that trade happens seamlessly by protecting the buyer from paying for unsatisfactory services or products. He also ensures that the seller gets paid when he does the requested work.
“We are looking to cut across the entire e-commerce business, by providing a financial safe haven for both buyers and sellers, reducing the risk of carrying out transactions with scammers,” he added.
The move comes as the Kenyan government issued a warning over the skyrocketing fraud cases online, cautioning Kenyans to be extra vigilant while engaging in digital transactions.
Last year, the Director of Public Prosecutions (DCI) George Kinoti advised Kenyans to be on the lookout for well-crafted fraudulent shopping scams as the festive season approached.
Kinoti said scammers have devised new ways through social media sites such as Instagram, Facebook, and Twitter to target gullible Kenyans.
"We have received numerous reports from clients who ordered for goods advertised on social networking sites, especially on Instagram, but the goods were either not delivered or the quality not similar to what was advertised, we, therefore, advise the public to take precaution while engaging in online business dealings, to avoid falling prey to online scammers and fraudsters," the DCI cautioned.
Last year, a Mastercard study on consumer spending revealed that nearly four out of five (79 percent) surveyed consumers in Kenya are shopping more online since the onset of the COVID 19 pandemic.
According to the study, clothing, Fast Moving Consumer Goods (FMCG) and electronic gadgets have seen the highest surge of online activity.
“Social media has emerged as the main platform for finding the most attractive products and offers, with 78 percent and 56 percent of respondents saying they had discovered new sellers through Facebook and Instagram respectively. In fact, 80 percent of typical in-store bargain hunters said they spend hours searching different sites to find the best deals,” the report states.