Digital Escrow and Conditional Payment Logic Using Blockchain for B2B Cross-Border Trade

Abstract

Cross-border B2B trade relies heavily on trust, verification, and timely settlement, yet traditional mechanisms such as letters of credit and centralized escrow services remain slow, costly, and vulnerable to disputes and documentation errors. Blockchain-enabled digital escrow introduces a programmable, transparent, and automated alternative that strengthens payment security while reducing dependency on intermediaries. This study proposes a blockchain-backed digital escrow and conditional payment framework designed to streamline global trade settlement by leveraging smart contracts, oracle-based verification, and decentralized audit trails. In the proposed model, conditional payment logic—such as delivery confirmation, document compliance, IoT shipment tracking, and multi-party approval—executes autonomously on-chain, releasing escrow funds only when verifiable conditions are met. The architecture integrates permissioned distributed ledgers, cryptographic hashing, and regulatory compliance modules to ensure legal enforceability, privacy protection, and resilience against fraud or manipulation. By automating verification events and embedding trade rules directly into smart contracts, the system reduces settlement latency, minimizes operational risk, and enhances transparency among buyers, sellers, logistics providers, and regulators. The paper concludes that blockchain-based escrow can significantly transform B2B cross-border trade, while also highlighting challenges related to oracle trust models, global regulatory harmonization, interoperability, and digital identity integration.