The success of any company not only depends on a single entity but also involves the efforts of all the employees working in the company. Thus, ESOPs can act as a tool for wealth creation for employees whose efforts have acted as a building block in the respective company’s growth.

What is an ESOP?

Well, ESOP is abbreviated as ‘Employment Stock Ownership Plan’. Herein, the employer hands over some of the company’s stocks to their employees at a minimal cost. These stocks can be kept in a trust fund or maybe a vault. Employers can have access to those ESOPs only when the employer provides the options for the same or in cases where the employee is leaving or retiring from the institution.

What are the benefits of ESOPs?

It provides a two-way benefit to both the employee and the employer.

1. Firstly, it helps build trust between the two.
2. Secondly, it helps enhance the performance of the company.
3. Thirdly, it increases the value of the company’s shares once the stockholders (employees) are involved.
4. Lastly, it helps in solving the hubbub of providing incentives.

How can Digital Escrow build strong trust between the employee and the employer in terms of ESOPs?

In this 21st century, wherein wealth has become the need and greed of every individual, the best way to grow your wealth can be none other than the stocks of the company where you are working. But the problem arises when the ESOPs of the company are handed over to the employee by the employer; chances are there that the employee might flee from the company and sell those ESOPs, or they might withdraw or sell the ESOP.

Thus, to avoid all these scenarios, digital escrow services act as a safety in disguise. Digital escrow services act as a third-party agent, which is like a safety vault wherein both the employer and the employee can agree on a set of agreements. These agreements, once met, will then allow the employee to sell the stocks, and while the agreement’s period is being fulfilled, the value of those stocks will shoot up, leading to twin profits for both the employee and the employer. This would henceforth lead to the cooperation and perseverance of the entire company, which would act as a catalyst for the company’s success.

A step-by-step guide to availing the benefits of digital escrow services: 

The following flow chart might help with an easy understanding of how a digital escrow service works:

Step 1

The company gets e-KYC done by the digital escrow company, and a quick e-Agreement is formed, which includes terms of use for the escrow account.

Step 2

The company’s digital escrow account is opened, and the representatives of the company are given custom access to the digital escrow portal.

Step 3

The online escrow account is linked with the company’s stock fund, through which they send ESOPs.

Step 4

The employee entitled to an ESOP has to get their e-KYC for identification.

Step 5

The employer and the employee arrive at a common set of terms and conditions. It leads to the creation of an e-agreement.

Step 6

Once the terms of the agreement are fulfilled and the time is served, the employee is entitled to claim those stocks.

After the following steps, the employee can sell their stocks and earn profits, and the employer, on the other hand, gets an appreciation for the value of the stocks.

Benefits of a Digital Escrow Account

Turn-around period.

Digital escrow services are proving to be a boon across the national and international markets, owing to their quick turnaround periods. Traditionally, all banks offer escrow services as a part of their solution suite, with the catch being increased setup and processing time. Now, digital escrow has arrived, where an account can be set up for transacting parties (“P2P”) and streamlined conventional processes through online KYCs enable smooth commercial flows, especially for online marketplaces.

The “win-win” scenario

Escrow, in its digitized form, harbors a high level of flexibility and plug-and-play functionality at the point of need. This ‘trust infrastructure’ also includes data services such as business verification, sanctions, credit history, digital sign-up, and exchange of documents, along with on-demand visibility of transaction status. The idea is primarily to hold funds and release them at the closure of agreed-upon deliverables, aiding a transparent process, thereby protecting the transactions between buyers and sellers, and offering a “win-win” scenario.

Escrow-as-a-Service (“EaaS”) 

The future of modern payments is here. Individual companies adopting this innovative solution have seen a visible change in the existing transactional processes. Today, EaaS is paving the way for faster transaction cycle times, reduced deal back-outs, and added convenience for every party involved in the transaction process. However, the subsequent development of the sharing service is set to be an open-source escrow-as-a-service solution with seamless integration at a global level, entailing cross-border transactions.