14 December 2007

One problem often encountered with buying and selling domain names is that of trust - for larger transactions the buyer has reservations about pre-paying for the domain name but the seller will of course not risk transferring the domain name away until payment has been received in full. Some potential transactions may not close for this very reason.

One possibly to lower the risk of the transaction is to have buy-side and sell-side lawyers draft a contract for the sale and have the money paid into a trust account that can only be released once both parties are happy with the outcome of the transaction, but this process is typically too costly and time consuming for all but the largest domain name transactions.

A more economical and quicker alternative is to use a company that specialises in escrow transactions of auctioned goods or private sales. One such service that can be used within the New Zealand marketplace is SafeTraderTM, an escrow service set up by TradeMe to increase the security of transactions on their auction site. SafeTrader is really geared up for sales of actual goods that require shipping however we are aware of domain name transactions that have successfully used the service.

Below is a simple list of steps to follow should you wish to transact your domain transfer using SafeTrader. For domain name transactions involving one or more parties not resident in New Zealand you will have to use an alternative domain escrow service.

How to perform a domain name transaction using SafeTraderTM

  1. Read the buyer's guide and the seller's guide on the SafeTrader website.
  2. Register for a SafeTrader account.
  3. The buyer sends the seller details of their SafeTrader email address.
  4. The seller logs into SafeTrader and initiates a transaction - entering details such as the buyer's email address, the sale price and who will pay the escrow fees.
  5. Both the buyer and the seller login and confirm the details of the transaction.
  6. The seller should send an email to SafeTrader support, notifying them that the transaction is for domain name transfer (not an actual good requiring shipping) - this is necessary since the SafeTrader system requires the courier tracking number to be entered so SafeTrader staff need to be informed that you'll be entering a dummy shipping number. Be sure to mention the SafeTrader transaction number in your email. Note: hopefully SafeTrader will soon adjust their system to not require this step!
  7. The buyer makes payment to SafeTrader
  8. Once the payment has cleared, SafeTrafer will place the money into a trust account and notify the seller that the "goods should be shipped".
  9. The seller should now enter a dummy shipping number into the SafeTrader system and send the buyer the UDAI (unique domain identifier code) or domain password so that the buyer can initiate a transfer of the doman name to their registrar of choice.
  10. The buyer uses the details from the previous step to transfer the domain name into their account.
  11. The buyer logs into SafeTrader and confirms that they have "received the goods" and the "goods are in a suitable condition" - i.e. the buyer confirms that they are in control of the domain name.
  12. SafeTrader will request the seller's payment details (NZ bank account or address for a cheque).
  13. The seller confirms their payment details with SafeTrader and the funds will subsequentally be released, thus completing the process.

The whole process can be completed in as little as three business days if both the buyer and the seller are prompt with each step.

There you have it - a secure method for domain name transfers within New Zealand.

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