How to pay a supplier on Alibaba? We explain how to do it:
– through Alibaba’s integrated payment platform,
– through the external “off-platform” platform.
Find out how to pay suppliers by bank transfer, credit card and secure payment system and how to ask for a refund if the goods do not correspond to those displayed, but it is not always so simple: we also explain how to win a dispute.
What we are going to talk about:
- Bank transfer
- Alibaba Secure Payment (Escrow)
- Alibaba Payment Link
- Online payment on Alibaba
- Pay Later (for US importers only)
Bank transfer
Alibaba.com is an online platform for searching for factories and wholesalers in China and other countries around the world.
Although it has offered an ever-increasing number of payment solutions in recent years, most buyers turn to Alibaba.com to find suppliers and, for this reason, continue the business elsewhere. Therefore, most transactions are still carried out outside the Alibaba.com ecosystem.
We often get questions about “how to pay Alibaba suppliers”, but the truth is that they are paid in the same way as the manufacturers listed on Alibaba and the payment is mainly made by bank transfer.
In other words, with a standard bank transfer.
As mentioned, Alibaba.com acts as an intermediary, while the conversion between buyer and seller, including payments, takes place “off-page” at an early stage.
In short, you manage and pay “Alibaba suppliers” in the same way you pay a supplier you find at a trade show, or anywhere else. However, it is worth mentioning that Alibaba, through its trade assurance program, is integrating wire transfer payments into its business practices.
Things to keep in mind: Orders taken outside of your page are often referred to as “offline orders” Alibaba.com
How does the bank transfer process work?
The first step in the process is to contact the supplier for confirmation of their bank account details:
- Beneficiary
- Beneficiary address
- Bank account number
- Bank
- Bank address
- Swift Code
- Nation
You can transfer funds in US currency from your online bank directly to the provider. Keep in mind that it usually takes 2 to 4 business days for the money to be transferred.
How to avoid payment fraud
You should only transfer money to bank accounts held by beneficiaries (companies) corresponding to companies listed on Alibaba.com.
Do not transfer funds to bank accounts in different countries, or held by other companies or individuals, even if the account details are provided by a person who manages the provider’s account.
Alibaba Secure Payment (Escrow)
Although Alibaba.com started as a supplier list, in fact, through Alipay, it is one of China’s largest financial companies.
Through Alipay, Alibaba.com offers buyers the option to pay suppliers through an escrow system.
So, what is escrow and how does it work?
For buyers, payment is made to the supplier only after confirming receipt of the order.
For suppliers, Secure Payment verifies the balance details of each transaction, and you are simply required to ship the order after confirmation of receipt of payment by Alibaba Singapore City Bank.
In a nutshell, Alibaba’s secure payment system allows buyers to make the balance of a deposit, which is only released by the supplier after the goods have been confirmed by the buyer.
Escrow payment methods
Alibaba.com integrates with a range of existing payment systems, including the following:
- Credit Card ($50,000 Limit)
- Bank transfer (unlimited)
- Western Union ($5,000 cap)
- QIWI ($5,000 cap)
- Web Money (Maximum Limit: $10,000)
- Yandex (Maximum Limit: 1,000 USD)
- Wholesale Program
However, there are some limitations, as the secure payment feature is only available when you purchase products from suppliers who are part of the Wholesale program.
Therefore, it may not be an alternative for importers of custom products (OEMs) or custom branded factory products (ODMs). Fortunately, there are other services available for these types of products.
How does the escrow payment process work?
Here are the basic points:
- Customer pays deposit
- The supplier ships the goods to the customer
- Products are imported and cleared through customs
- The buyer receives the goods that he accepts or rejects.
If the buyer refuses the goods, payment is not made. However, additional evidence could be adduced to support the buyer’s position. Keep in mind that Alibaba.com acts as a neutral party and automatically does not side with the buyer.
Before placing an order, always read the product description carefully. You can only make a claim on an item based on the supplier’s shipment of a product that does not match the listed specifications (or if it is obviously damaged or defective).
You can’t base a refund on general expectations, or on a vague idea of what corresponds to the concept of “good quality”. Therefore, I recommend that you always buy product samples, before placing a larger order, even when the transaction is covered by the secure payment system.
Payment by credit and debit cards
Alibaba secure payment allows you to make payments via credit and debit cards, issued by Visa and MasterCard.
However, keep in mind that there is a maximum transaction amount, paid by credit card, of 50,000 USD. In addition, credit card companies charge a higher transaction fee than bank transfer payments.
Payment Link on Alibaba
Alibaba’s payment system is increasingly being used as a system to pay for small transactions to suppliers, including product samples. Suppliers can prepare an invoice directly from their Alibaba account, which, as a result, generates a payment link.
Example
biz.alibaba.com/ta/detail.htm?orderId=XXXXXXXXXXXXXX
The payment link directs you to the online invoice, which automatically expires after 72 hours.
Advantages
- You can be sure that the payment is not diverted to an employee or subcontractor, but ends up directly in the supplier’s bank account, or, at least, in an account held by Alibaba.com.
- Transaction fees are lower than for bank transfer
- Funds arrive instantly, thus reducing delays
Alibaba’s online transfer
For European importers, Alibaba has launched online transfer as a payment system, which allows you to make payments in national currencies.
Some of the countries that recognize Alibaba’s online transfer:
United Kingdom
Germany
Spain
Italy
Netherlands
Poland
Ireland
Finland
Estonia
Switzerland
Belgium
Transaction fees
$1 to $1,000: $15
$1,001 to $10,000: $20
Over 10,000 USD: 25 USD
Alibaba’s Pay Later
The Pay Later program allows U.S. importers to apply for trade financing directly on Alibaba.com. You will receive a response within minutes and the funds can be used to place an order with the suppliers on the list.
Maximum amount: $150,000
Commission: 1.25% to 2.75%
Repayment plan: 1 to 6 months
Keep in mind that Pay Later is only available to companies that meet the following requirements:
- Your company must have been registered for at least 1 year
- You are a U.S. citizen or a permanent resident
Faq
Does Alibaba refund me, if I receive defective or wrong items?
You can only request a refund if the following two conditions are met:
- The supplier failed to ship the goods on time
- The goods are damaged and/or do not comply with what is specified on the product page
You cannot expect a refund if the goods show up as specified, even if they do not match your expectations. Keep in mind that there is no universal, or technical, definition of the concept of “good quality.”
To make a refund request, you must produce the following:
- Photos showing the damage/defects
- An overview of the defective quantity of products (and their value)
- A detailed description of all defects
Also, before placing your order, keep a copy of the product description, so that you have some sort of quality reference.
Here you can find a detailed description of the refund request process.
How do I win a payment dispute?
It is a matter of proving the supplier wrong. Some cases can be quite “obvious”, especially when the goods are damaged, or are seriously defective, or are not even shipped.
However, we have received reports from disgruntled buyers around the world who claim that Alibaba did not do enough to protect them when things went wrong.
That said, in all the cases we have examined, the dispute has been filed based on the product not conforming to the quality standard perceived by the buyer.
This process is extremely complex, as Alibaba.com simply cannot act on this, as if they were to issue a refund every time a buyer claims that they are not satisfied with the quality standard – and without having to return the goods – sellers would be exposed to systematic fraud and go bankrupt within a few weeks.
The truth is that the buyer is not always right, and unless the quality, design, or functionality of the product conflicts with its description, it is not fair to ask for a refund. To obtain it, you must prove that the products are damaged/defective, or that they do not match their description.
Can I pay Alibaba.com suppliers with a letter of credit (L/C)?
Yes, as mentioned above, Alibaba’s secure payment system is optional and is mainly used for purchasing the products in bulk. Larger orders are often negotiated and processed outside of the platform.
Since many buyers prefer to pay their suppliers directly via bank transfer, you can also negotiate with your supplier about payment by letter of credit (L/C).
The procedure is somewhat similar to that of Alibaba’s secure payment system, as funds are only “unlocked” when certain conditions are met.
The main difference is that you can set these conditions.
At a minimum, payment by letter of credit (L/C) is released once the supplier produces a copy of the bill of lading, proving that the goods have been shipped. However, this only proves that “something” (e.g., a container full of bricks) has been shipped.
To further reduce risk and tie payment to product quality and compliance, you must require the following documents to be part of the letter of credit (L/C) payment process:
- Quality Control Test Report (Approved)
- Lab Test Report
Keep in mind that you’ve established payment terms.
Is it safe to pay suppliers on Alibaba.com via Western Union?
You should only use Western Union to pay your supplier if you pay the fee through one of Alibaba’s payment systems. You should not use Western Union to pay a supplier directly.
Alibaba.com does PayPal support?
No, when you pay vendors on Alibaba.com PayPal is not supported. This makes sense as Alipay has a similar payment platform.
Is it safe to pay suppliers on Alibaba.com through PayPal?
PayPal is commonly used for paying for product samples. Even though PayPal is a reliable payment platform, we recommend that you pay for product samples using Alibaba’s payment system. This way you can be sure that the money is being paid out to the right company.
How can I pay for product samples on Alibaba?
You can request your supplier to create a Trade Assurance order, which generates the payment link. Using your credit card, you can then pay the supplier directly, to ensure that they start making samples of your products quickly.
Need help importing products from China?
Our agency can offer you professional 360° import advice and can assist you at every stage of your project!
Rely on the experts at ImportazioneFacile.it, they will support you step by step by putting their many years of experience at your service, to face all the possible pitfalls that lie behind an import.
Fill out the form to get a free consultation now, describe your project and they will contact you to evaluate the best way to make it happen!
