World’s premium job marketplace, Freelancer.com has announced that it has agreed to purchase Escrow.com for a cash value of $7.5 million. The acquisition was funded through a placement of $7.8 million, in ordinary shares of Freelancer.com to institutional investors.
Escrow.com is an online payment service provider. They provide online escrow services for e-commerce sites by holding payments for goods or services until a transaction is successfully completed. Some of its commercial partners are eBay, GoDaddy, AutoTrader.com and Flippa.com.
In 1999 Escrow started its journey with the help of the funding received from Fidelity National Financial. After that they received a second round of investment from iLumin in 2002. In 2004 the company was purchased by an unknown private investor. Now, Freelancer.com is buying Escrow.com from the same investor.
In an announcement, Freelancer.com’s Chief Executive Matt Barrie said that the acquisition will allow Freelancer.com’s 15 million users to make more secure payments. He also said that this acquisition is a strong cornerstone for for entering into the online payment space.
Freelancer.com already has a version of escrow services called Milestone Payments. This indicates that the site holds funds from an employer until it is released to a freelancer following the completion of a service or dispute resolution. Holding payments that are to be made to freelancers provides the employers with some peace of mind, especially after the site’s rapid growth through a series of acquisitions starting in 2011 and its initial public offering in 2013.
However, the current payment service provider of Freelancer.com, Milestone Payment, is the target of frequent complaints from both employers and freelancers. The parties claim that payments aren’t issued in a timely manner and that the system doesn’t provide sufficient protection against bad jobs. In order to solve these issues, Freelancer.com has acquired Escrow.com, as the payment service provider is well known and trustworthy.
Escrow.com claims that in the fiscal year 2014, the platforms gross payment volume was $265 million, and as of date, it has processed over $2.2 billion in online payment transactions.