The fee for an escrow service is generally a small percentage of a domain name sale. On lower value deals though, the escrow fee is a fixed minimum price. In the case of Escrow.com, the minimum fee has been $25. On particularly small deals, this minimum fee might be a substantial percentage of the deal.
Because of the minimum fee, domain name buyers and sellers have been forced to choose between doing a deal at Escrow.com and losing a large % of their deal or using a less secure method such as PayPal, Western Union, or check. With these less secure payment methods, the buyer could do a chargeback or bounce a check after receiving the domain name, and in the case of Western Union or similar service, the seller might not follow through with the deal after receiving funds.
Last night, Escrow.com General Manager Jackson Elsegood emailed me to let me know about a fee reduction at Escrow.com. The new minimum fee has been reduced from $25 to $10. This might not sound like a huge amount of money, but it will make more sense for people to proceed with Escrow.com on very small deals rather than use a more risky service that doesn’t protect the domain owner or the domain buyer in the event the other party doesn’t follow through with the deal.
Commenting on the fee reduction, Jackson told me that “this change will also allow us to offer our services for the huge number of lower end transactions that currently go through PayPal or other unprotected payment methods.”
This change will likely benefit the company as well as people buying and selling domain names. Not using an escrow service is unwise, and this lower fee should help facilitate deals at the lower end.