[SDPay | EN] Understand Escrow Transaction on Steem

in Steem Dev11 days ago

Escrow Payment Tutorial

Currently, SDPay allows you to purchase or test products using escrow payments.
However, due to a current bug in the latest Steem Keychain, only active keys work at the moment.
(An improved version of Keychain will be released soon.)

https://sdpay.app

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What is Escrow Payment?

Escrow payment is a payment method where a trusted intermediary (agent) helps ensure safe transactions.

Regular Payment vs Steem Escrow Payment

Regular Payment:

Buyer 💰 ──────────→ Seller
  • Money sent directly
  • Hard to get refund if problems occur
  • Must 100% trust the seller

Steem Escrow Payment:

Buyer 💰 ──→ [Smart Contract Holds] ──→ Seller
                    ↓
          Automatically released after transaction approval/completion
  • Steem blockchain's smart contract safely holds the money
  • Funds released only when both parties agree
  • Agent resolves disputes if problems occur

Meet the Players

1. Buyer (Sender)

  • Person sending money
  • Person who will receive goods/services

2. Seller (Receiver)

  • Person receiving money
  • Person who will provide goods/services

3. Agent (Mediator)

  • Person supervising the transaction
  • Person resolving disputes if they occur
  • Works for a fee

Complete Transaction Process (5 Stages)

Stage 1: Start Transaction

What the Buyer Does:

  1. Purchase Product

    • Product purchase site (currently only SDPay is supported: https://sdpay.app)
    • Specify seller / product amount / quantity and purchase
    • Select whether to use escrow payment
    • Select escrow agent (currently only etainclub is available, operated by registration)
    • Agent fee is paid by the buyer, and both product amount and fee are stored in the escrow smart contract
  2. Deadlines are Set Automatically

    • Approval Deadline: Time for seller and agent to agree (SDPay: 7 days)
    • Escrow Expiration: Total period agent can intervene (SDPay: 30 days)
  3. Execute Payment

    • Money moves to smart contract (temporary holding)
    • Not sent to seller yet!

Stage 2: Approval Confirmation ✅

What the Seller Does:

  • Click "Approve" button if you agree with the buyer's payment details
  • Click "Reject" button if you don't agree → Money automatically returns to buyer

What the Agent Does:

  • Review transaction details
  • Click "Approve" button if no issues
  • Click "Reject" button if issues found → Money automatically returns to buyer

Important!

  • Both parties must approve within the approval deadline
  • If either party doesn't approve → Automatic cancellation + refund

Stage 3: Transaction Progress 🤝

Once both parties approve, the actual transaction stage begins.

Buyer Options

  1. Normal Transaction Completion

    • If there are no problems with the transaction, click "Release" button
    • Money transferred to seller
    • Agent receives fee
    • Transaction complete! 🎉
  2. ⚠️ There's a Problem

    • Click "Start Dispute" button
    • Move to Stage 4 dispute resolution

Seller Options

  1. Cancel Transaction

    • Can cancel transaction if seller has a problem (e.g., out of stock)
    • If seller cancels transaction, amount is returned to buyer and transaction ends
  2. ⚠️ There's a Problem

    • If you think there's a problem with the purchase, click "Start Dispute" button
    • Move to Stage 4 dispute resolution

Stage 4: Dispute Resolution

When someone clicks "Start Dispute", the agent intervenes.

Agent's Judgment:

  1. Review Evidence

    • Buyer's claims
    • Seller's claims
    • Transaction evidence (all payment transfers, approval records, etc. can be verified)
  2. Decision

    • Buyer is right → Click "Return to Buyer"
    • Seller is right → Click "Send to Seller"
  3. Result

    • Money goes to chosen party
    • Agent receives fee (buyer's fee is not returned)
    • Transaction complete

💡 Agent Fee:

  • Normal transaction: Fee received
  • Cancelled transaction: No fee
  • Dispute resolution: Fee received

Stage 5: Deadline Expiration ⏱️

What happens when escrow expiration passes?

Automatic Refund:

  • Steem blockchain automatically returns full amount to buyer (sender)
  • No manual action required
  • No agent fee

⚠️ Important:

  • Seller and agent must approve before approval deadline (SDPay: 7 days)
  • Transaction must be completed before escrow expiration (SDPay: 30 days)
  • Transaction automatically cancelled when expired
  • Seller cannot receive funds
  • Buyer automatically receives refund

📱 Real-World Examples

Example 1: Normal Transaction (Digital Product Purchase)

Scenario: steemit purchases NFT from sdpay for 10 STEEM

  1. Start Transaction (steemit)

    • Transfer 10 STEEM as purchase price (transferred to escrow smart contract)
    • Choose agent "etainclub"
    • Approval deadline: 7 days
    • Escrow expiration: 30 days
  2. Approval (sdpay, etainclub)

    • sdpay: Check conditions → "Approve" ✅
    • etainclub: Check content → "Approve" ✅
  3. Transaction Progress

    • sdpay transfers NFT to steemit (manual)
  4. Complete (steemit)

    • Confirm NFT received
    • Click "Release"
    • sdpay +10 STEEM, etainclub +0.1 STEEM (fee)
    • Transaction complete! 🎉

Example 2: Dispute Occurs (from Example 1 situation)

  1. Start Transaction (steemit)

    • Transfer 10 STEEM as purchase price (transferred to escrow smart contract)
    • Choose agent "etainclub"
    • Approval deadline: 7 days
    • Escrow expiration: 30 days
  2. Approval (sdpay, etainclub)

    • sdpay: Check conditions → "Approve" ✅
    • etainclub: Check content → "Approve" ✅
  3. Problem Occurs

    • sdpay transfers NFT
    • steemit receives it but it's different from product description (e.g., different rarity)
  4. Start Dispute (steemit)

    • Click "Start Dispute"
    • Submit evidence as comment on product post
  5. Mediation (etainclub)

    • Review evidence
    • Determine steemit is right
    • Click "Return to Buyer"
    • steemit +10 STEEM, etainclub +0.1 STEEM (fee)

Frequently Asked Questions (FAQ)

Q1: How do I choose an agent?

A:

  • Choose trusted users with high reputation
  • Check agent recommendations in the app
  • Review agent's past transaction history

Q2: How much are the fees?

A:

  • Fees vary by agent (usually 1-5% of transaction amount)
  • Fees displayed before starting transaction
  • Fee only charged for normal transactions or dispute resolution
  • No fee for cancelled transactions

Q3: What happens if I miss the approval deadline?

A:

  • Transaction automatically cancelled
  • Full refund to buyer
  • No fees charged

Q4: What happens to money after escrow expiration?

A:

  • Steem blockchain automatically returns full amount to buyer (sender)
  • No manual action required
  • Transaction automatically cancelled

Q5: What if dispute isn't resolved?

A:

  • Agent makes final judgment
  • Important to resolve within escrow period

Q6: What if agent isn't fair?

A:

  • Agent selection is crucial!
  • Choose high-reputation agents
  • Check past transaction records
  • Refer to community reviews

Q7: I want to cancel the transaction

A:

  • Before approval: Seller or agent clicks "Reject"
  • After approval: Seller clicks "Return to Buyer"
  • During dispute: Agent selects "Return to Buyer"
  • After expiration: Buyer clicks "Take Funds"

🎯 Key Summary

  1. Escrow is a Safety Net

    • Steem's built-in smart contract holds the money
    • Released after mutual agreement
    • Agent resolves disputes. Choosing the right agent is crucial.
  2. Three People Work Together

    • Buyer: Person sending money
    • Seller: Person providing service
    • Agent: Person supervising transaction
  3. 5-Stage Process

    • Start → Approve → Transact → (Dispute) → Complete
  4. Respect Deadlines

    • Check approval deadline
    • Check escrow expiration
  5. Agent Selection is Critical

    • Check reputation
    • Review past records
    • Refer to community reviews

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