How does an escrow account work?

[Horton55]

Can someone explain how escrow accounts actually function for international deals? Planning a larger B2B transaction and the other party insists on escrow. Is it safe, how much does it usually cost, and are there any hidden risks I should know about?

[Gerber]

Escrow is quite straightforward and one of the safest ways for big cross-border payments. Basically, buyer sends money to a neutral third party, seller delivers goods/services, then escrow releases funds after confirmation (or returns if something goes wrong). Fees are usually 0.5–2% depending on amount and provider. Main risks are choosing a shady escrow company or poorly written agreement. Good ones are regulated and insured. This post explains the mechanics, types (manual vs automated), and what to check before signing Escrow account: what it is and how it works in the EU cleared up a few things for me.