Job marketplace Freelancer.com announced today that it has agreed to purchased Escrow.com for $7.5 million in cash. The acquisition was funded by through an placement of $10 million AUD (about $7.8 million) in ordinary shares of Freelancer.com to institutional investors.
As its name suggests, Escrow.com provides online escrow services for e-commerce sites by holding payments for goods or services until a transaction is successfully completed. Its commercial partners include eBay, GoDaddy, AutoTrader.com, and Flippa.com. Escrow.com was founded in 1999 by Fidelity National Financial, then merged with iLumin in 2002 before being purchased by an unnamed private investor in 2004. Freelancer .com said it will acquire Escrow.com from the same investor.
In a prepared statement, Freelancer.com chief executive Matt Barrie said that the acquisition will allow Freelancer.com’s 15 million users to make more secure payments. He also added that “it’s a strong cornerstone for entering the payments space.”
Freelancer.com already has a version of escrow services called Milestone Payments, which means the site holds funds from an employer until it is released to a freelancer following the completion of a service or a dispute resolution. Holding payments is designed to give employers some peace of mind, especially after the site’s rapid growth through a series of acquisitions starting in 2011 and its initial public offering on the Australian Securities Exchange in 2013.
The Milestone Payments system, however, is the frequent target of complaints from both employers and freelancers who claim that payments aren’t issued in a timely manner and that the system doesn’t provide adequate protection against bad jobs. The acquisition of Escrow.com may help Freelancer.com solve some of these issues.
Escrow.com claims that in fiscal year 2014 its gross payment volume was $265 million, and that it has processed over $2.2 billion in transactions to date.
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