If you've never P2P-traded, the natural worry is: what stops the other side from taking my money and running? The answer is escrow, and it's worth understanding the mechanics so you know exactly when you're protected and when you aren't.
How the freeze works
When you click 'Buy' on a merchant's ad, the exchange instantly debits the merchant's wallet by the trade amount and moves it into a system-controlled escrow address. The merchant cannot withdraw or sell that crypto until either: you both confirm the trade, or compliance arbitrates a dispute.
From your side, you've paid no money yet — INR moves only after the freeze is confirmed. So even before you UPI the merchant, the crypto is already locked.
What escrow does NOT cover
Escrow protects the crypto leg, not the INR leg. If you UPI the wrong account number, escrow doesn't help — that's a payment-app dispute, not an exchange one. If a chargeback hits the merchant's bank 3 days after release, escrow is gone.
The escrow timer is also finite. If you mark 'paid' but don't actually pay, the merchant can dispute and the exchange will look at the lack of UPI receipt and rule against you. There's no protection from your own mistakes.
Key takeaways
- Escrow = the exchange freezes crypto on trade open; merchant can't withdraw until release or arbitration.
- Protects the crypto leg only — INR mistakes are on you.
- Always confirm escrow is showing 'in escrow' before you send INR.
