[Mithaldu]

The end point you imagine there often does not happen because it is REALLY useful to have an escrow agent inbetween. I use odesk/upwork personally, and it provides me a lot of value.

It bills my work to my clients weekly, and automatically withdraws the money from their credit card. This means if a client is unhappy with a freelancer it's easy for them to start a dialogue and start it early; and at the same time the freelancer has protection with less-than-honest clients and can lose, at most, a week's worth of work.

Compare this to normal freelancer contracts where the cash is typically paid monthly, with a delay of 14+ days after receipt of invoice. If a client acts in bad faith in that case, the freelancer loses a lot more, and to get money back, would have to go through international courts, which often costs more than the money they lost.

[jalopy]

Very helpful insight, thanks. To summarize - the value added services of billing, monitoring and dispute resolution make it worthwhile for the contractor to use the service.