By The LiquidTrust team
LiquidTrust is a payments innovation company serving FIs, B2B platforms and SMBs globally.

For many B2B marketplace founders, escrow feels like a straightforward build decision. Hold funds. Release them when conditions are met. Move on. But escrow isn’t just a feature—it’s regulated financial infrastructure. And when teams underestimate that reality, escrow quietly becomes one of the most expensive and risky systems they own.

This is why the build vs. embed decision around escrow isn’t technical. It’s strategic.

Why Escrow Is More Than “Just Holding Funds”

At a glance, escrow looks simple. In practice, it touches nearly every sensitive layer of a marketplace:

• Fund custody and segregation

• State-by-state licensing requirements

• KYC, KYB, AML, and sanctions screening

• Dispute handling and evidence retention

• Audit trails and reconciliation

The moment your platform touches funds conditionally, you’re operating inside a regulatory framework—whether you planned to or not.

Glossary

Escrow: A regulated financial structure where funds are held by a licensed entity and released only when predefined conditions are met.

The True Cost of Building Escrow In-House

Most teams evaluate escrow builds by engineering hours alone. That’s where the real costs start—but not where they end.

1. Engineering & Maintenance Drag

Building escrow requires far more than a payment flow:

• Custom fund-flow logic

• Subledgering and reconciliation

• Exception handling and reversals

• Ongoing maintenance as regulations evolve

What begins as a “quick build” becomes a permanent internal system that must be maintained, audited, and defended.

2. Compliance Exposure You Can’t Patch Later

Marketplaces that hold or route funds incorrectly can unknowingly operate as unlicensed escrow agents or money transmitters. This isn’t a theoretical risk—it’s a balance-sheet one.

Compliance gaps can trigger:

• Regulatory scrutiny or enforcement

• Forced flow changes mid-growth

• Delayed launches in new regions

Retrofitting compliance after launch is significantly more expensive than embedding it correctly from day one.

3. Opportunity Cost That Slows Growth

Every sprint spent maintaining escrow infrastructure is a sprint not spent on:

• Improving marketplace liquidity

• Launching new categories

• Expanding cross-border

Escrow becomes a distraction from the core job of a marketplace: enabling more trusted transactions.

Why Leading Marketplaces Embed Escrow Instead

Embedding escrow shifts escrow from a liability into infrastructure.

With an embedded model:

• Funds are held by a licensed partner, not the platform

• Compliance, KYC/KYB, and fund segregation are handled off-balance-sheet

• Escrow logic is configurable without rebuilding core systems

This allows platforms to launch faster, scale safely, and avoid regulatory dead-ends.

Where Micro Escrow Changes the Equation

Traditional escrow was designed for large, infrequent transactions. Micro Escrow™ brings that same protection to everyday B2B payments—without the enterprise-level cost or friction.

By embedding escrow at the transaction level, marketplaces gain:

• Faster time-to-launch

• Lower operational risk

• Higher buyer and seller confidence

Escrow stops being a cost center and starts becoming a growth lever.

Build vs. Embed Is a Growth Decision

The question isn’t whether your marketplace needs escrow. It’s whether escrow should live inside your engineering backlog—or inside trusted, compliant infrastructure purpose-built for it.

Platforms that embed escrow move faster, stay compliant by default, and free their teams to focus on what actually drives GMV.

Learn more about how LiquidTrust helps B2B marketplaces build payment trust.