Payment Protection

Learn how we protect your money with escrow

What is escrow?

Escrow is a financial tool where payments are held by a third-party on behalf of transacting parties. It keeps payments more secure by ensuring funds are not released until both parties have met the obligations of the contract. Escrow is used in many different industries, for example real estate, where mortgages are held in escrow for home lenders.

Payment protection for freelancing

The traditional way of freelancing

Escrow is the future of freelancing


Traditionally a freelancer & client would sign a Work Contract at the start of a project which states the agreed payments & terms. If things go wrong there are several costly problems with relying on this method, costly in time, money and stress. And unfortunately 70% of freelancers do eventually have payment problems with a client.

The cost when freelance relationships break down:

  • A lawyer may need to be hired which can be expensive
  • Travel to court can be costly in time & money
  • Resolving problems can be stressful as well as time consuming
  • Complications can arise with international transactions which are in different legal systems.
  • Collection agencies often charge 30% of collected amount.
  • Loss of earnings can effect freelancer's livelihood & life

Escrow for freelancers & clients

Escrow for freelancing


PayPact ensures that instead of solely relying on a work contract, the payments are held in an secure escrow wallet. Funds are only released when the accepted criteria has been met. The system has been designed to treat both freelancer & client fairly.

Client protection & rights

To receive completed work

If Freelancer did not complete work for disputed milestone as per Job Agreement & evidence, client receives a full refund.

To receive quality work

If work was not completed to a high standard, or to standard agreed in Job Agreement, client receive partial refund.

To receive work on-time

If work was not completed & delivered to the client within the timeframe specified on the Job Agreement client receives a partial refund.

Freelancer protection & rights

To be paid on-time

Once the Freelancer has requested to be paid & the client has not requested any new changes, the funds will be automatically released within 14 days.

To be paid in full

The full amount for each milestone must be deposited into escrow before the work commences. Freelancers can be safe in the knowledge that the funds are secure before they start work.

Protection from cancelled work

Once the amount is in escrow the freelancer can begin work. The client cannot cancel a milestone already funded unless a compensation amount is agreed by the freelancer.

How payment protection works
How escrow for freelancers works

Freelancer & client create & agree the specs in a Job Agreement

Client funds a milestone into a secure escrow wallet

Freelancer completes the milestone work

Client reviews the work and releases the funds to the freelancer

Freelancer gets paid

If things go wrong
Dispute resolution

Over 99% of jobs go smoothly through PayPact but occasionally problems do happen. We have designed a dispute resolution process which aims to solve any of these disputes fairly & quickly.

To start the dispute resolution process please email with the details of your problem.

2 steps to a quick solution

What is involved: PayPact support staff facilitate a conversation between the client & freelancer to help both parties reach an amicable resolution to the dispute. During mediation, the freelancer can opt to give a refund, or the client can opt to release the milestone payment. When the terms are accepted by both parties in writing the agreed amounts will then be released within 72 hours. This will end the dispute.

What is involved: If an amicable agreement cannot be reached between the two parties during mediation the dispute will go into arbitration. This is provided by a neutral party of PayPact or chosen by PayPact. To proceed, both Freelancer & Client have 3 days to pay a *refundable arbitration fee of $50usd, and the same 3 day period in which to submit any evidence they wish to be considered to A resolution will be determined by the arbitrator based on the evidence & requirements set in the job agreement. The result from arbitration is final and cannot be appealed by either party.

* Refundable arbitration fees: In the interests of fairness, which ever party wins the dispute receives a refund of their share of the arbitration fee.

If the client wins a refund the following table is used as a guide to work out the refund value. The refund is a percentage of the milestone value in dispute:


Refund Guideline

Uncomplete work
The work was not completed for the milestone in dispute, as stated in the Job Agreement

100% Full Refund

Low quality work
The work for the milestone was not completed to the standard stated in the Job Agreement

75% Partial Refund

Late work
The work for the milestone was not completed by the date stated in the Job Agreement

25% Partial Refund

Complete work
The work for the milestone was completed on time, in-full & to the standard set in the Job Agreement

0 Refund

Please note: These values are a guide only, values will be decided at the sole discretion of the arbitrator based on the situation and evidence provided.

All dispute policies are backed by the Terms and Conditions of PayPact. They can be viewed here. All resolutions are final, non-reversible, and, in the unfortunate case that either party should disagree, it means that PayPact cannot be held legally liable.

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