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Are you having doubts about Alibaba payment methods? Are you afraid of the risks associated with an online business, such as being scammed in Alibaba payment?
Alibaba is an international B2B and B2C site for e-commerce and suppliers from China. It serves as a bridge between you as a buyer and supplier to make a business deal. You need to be aware of the process and make sure not to deal with fake suppliers.
There are various risks you can face with any transaction when you pay with Alibaba. This article will guide you through the safest Alibaba payment options if you want to be secure in your payment transactions.
We will thoroughly discuss the following topics:
Before you click the Pay Now button, if you are wondering whether to use PayPal, Alibaba Escrow Service, or other payment methods, please learn the difference between the Alibaba payment methods. It may vary on the number of orders and if you are qualified to use other payment services.
There are various ways to pay your suppliers in Alibaba. You can pay through the Alibaba payment system or negotiate with your supplier and pay outside the platform. With this regard, please be minded of the risks on payment security.
If you are an importer for large volumes, here are the common Alibaba payment methods:
These methods are more secure and provides peace of mind
If you are importer of small volumes then Western Union is feasible but is tagged as high-risk Alibaba payment methods. .
Local Chinese payment transfers through WeChat and Alipay are also risky since they are not considered as an international transaction and will be seemed illegal payment transfer.
Various methods of payment can be made in Alibaba. This article will guide how bank transfer, Alibaba Secure Payment, Alibaba Trade Assurance, Payment Links, Pay Later, etc., works. You must know which types of Alibaba payment methods are applicable for you.
A Telegraphic Transfer or TT is an electronic way to transfer funds. It is commonly used for any overseas wire transactions. The money is transferred electronically to other banks. The term “telegraphic transfer” has its origin in the way that banks used to make international money transfers.
The most important thing to remember when you use the TT way of payment is to complete the supplier’s information, such as the complete address and the beneficiary (name of the supplier).
Then the bank account details – bank address, swift code, and country. The bank transfer process in the US may take from 2-4 working days to complete.
If something goes wrong with your TT transfer, call the bank and present the correct bank account details or wait for the money to be returned to your bank account. Usually, it takes three weeks before the complete transfer. Calling the bank may be costly but can speed up the process.
Here are the pros and cons of paying through Telegraphic transfer:
It is best practice to negotiate the payment terms to pay only a small proportion of the money and pay the remaining balance upon inspection or delivery.
Alibaba offers this Alibaba Secure Payment service (formerly Escrow), whose primary benefit is to hold buyers’ funds until they receive and approve the orders they purchased. So, in case of any disputes, Alibaba can act as a mediating platform to help the buyer get a refund.
The downside of Alibaba Secure Payment is its limitation to pre-approved suppliers on Alibaba only.
Meaning, if you searched your suppliers in a trade show or Global Sources, they wouldn’t be qualified unless they are pre-approved Alibaba suppliers. Also, Alibaba suppliers are charged for 5% service fee and will credit you. It would also mean additional cost and risk for the suppliers.
For buyers, the payment is released to the suppliers only after you confirm the receipt of your order without any complaints or disputes.
For suppliers, Secure Payment verifies all the payment details in every transaction. The suppliers are required to ship the products after the confirmation of payment receipt.
Therefore, Alibaba’s secure payment only allows the buyer to deposit an unlocked payment to the supplier once the buyer confirms the products.
Here are the simple steps on how Escrow payment works:
Once the buyer rejects the products, the payment is withheld. It depends on the circumstances whether the buyer’s dispute will be granted. Alibaba would require a third-party inspection that would cost around $200-300 to validate the dispute.
To avoid the hassle of refund and return products, read the product description carefully upon placing your orders. A product claim can be filed if the supplier did not ship the right products based on the order and listed specifications.
Alibaba protects its buyers with Trade Insurance, built-in order protection you can trust. It will save you from the event that order quantity, product quality, or shipment date would vary based on what you agreed to with the supplier.
-Here is a quick tip on how Alibaba Trade Assurance works:
-If you pay for a Trade Assurance order via Online Transfer, here are the complete steps you need to follow:
-Then, from the Online Transfer, choose the bank account, payment channel, and country.
Suppose the supplier failed to ship on time or the product you receive varies from what you have agreed upon. In that case, you can apply for a refund within 30 days of the delivery. Keep in mind that you file a dispute, communicate with the supplier using only the secure Alibaba messaging platform.
Since Alibaba charges transaction fees on specific payment methods, it will not charge you any additional Trade Assurance fees. However, using PayPal or other payment methods directly to the supplier, you are not covered by the Trade Assurance.
|Payment Method||Currency/Limit||Transaction Fee||Processing Time|
|Visa and Master Credit/Debit Card||Multi-currency(up to $12,000)||2.95% of payment amount (3.5% for Amex)||1-2 hours|
|Only Bank Payment (US Account)||USD only (up to $50,000)||$15-30 ( depends om the payment amount)||4-5 business days|
|Only Bank Payment (Europe Account)||EUR only (up to $10,000)||$15-30 ( depends om the payment amount)||9-10 business days|
|Online Transfer||Local Currency Only (up to $300,000)||$15-30 ( depends om the payment amount)||1-3 business days|
|Wire Transfer (TT Domestic)||Local Currency Only (up to $300,000)||Around 1 unit of local currency||1-2 business days|
|Wire Transfer (TT International)||Multi-currency||Around $40 (depends on your bank)||3-7 business days|
|Boleto||USD Only (up to $3,000 per month)||1.30% of payment amoun||3-4 business days|
|Western Union||USD Only (up to $2,500)||$4.90-45.00||1Business Day|
|Pay Later||USD Only (up to $150,000)||FREE||1-3 business days|
While Alibaba Trade Assurance gives the buyers safety, it is also worth taking notes on the downside of Alibaba Trade Assurance on the suppliers that may affect the products’ pricing.
The Table above explains everything you need to know about payment methods and Alibaba trade assurance fees.
For small purchases, Alibaba’s payment gateway is widely used for paying product samples. Suppliers may create an invoice directly from their Alibaba account, and then generate a payment link. The link will expire after 72 hours.
Alibaba payment links ensure that your payment to the supplier will not go to an employee or subcontractor. It goes directly to an account in Alibaba.com or to the supplier’s bank account.
The transaction fees are smaller than those banks charging for wire transfers. You can get the funds immediately, which reduces some delays.
Pay with Alibaba Payment Terms is another type of financing option. You place orders even in a small down payment like 30%. You can pay the remaining balance and defer the payment up to 60 days from the day you receive the payment.
Even if there is an Alibaba platform for the Payment Terms, you still need to communicate with the seller about this.
Here are the quick tips when you negotiate for the Alibaba Payment Option Terms:
To apply for the Alibaba.com Payment Terms, your account must be in good standing with a valid business domain email address. It must be in the US. Once you get approved, you will receive an invoice for the order and be given up to 60 days to pay the remaining balance.
You will receive a credit line from $5,000- $ 2 million. Your approval will not impact your credit score. There are neither transaction fees nor hidden charges when you use Alibaba.com Payment Terms. You have to pay the balance within 60-day payment terms.
To pay your Payment Terms invoices, you can pay via Check, ACH, wire transfer, or direct debit. Just follow the instructions detailed on every invoice you will receive. It shows on the Alibaba.com Payment terms dashboard.
If you ask for refunds, it will be issued by a third-party financial service provider. It will be directed to your Alibaba.com Payment Terms account. If you have any balance owed to you, request a refund based on your account’s information.
Currently, Alibaba.com Payment Terms is an invitation-only program. It is only available to US-based registered business which has a TAX ID.
If your business is a sole proprietorship, you can apply if you have EIN. If you are not invited, the “Apply” button is in the color gray. If you are interested in participating in the program, you may email them at Payment terms.
You can apply in minutes for Alibaba Pay Later service and get up to $150,000 of the credit limit. You can purchase from Alibaba.com and repay over six months.
Then, you would know instantly if your business is qualified for financing. Then, once qualified, you can use your credit for Trade Assurance purchases on Alibaba.com
Visit paylater.alibaba.com or click the “Apply Now” at the checkout process. Enter your business information. You will also provide your identity verification.
Even if you have a small business and have an existing account in Alibaba.com, you can apply for Trade Finance (Kabbage Funding). You will not be eligible if you have a current credit outside the Pay Later program of Alibaba.
To qualify, your business must be existing for one year and a U.S based company. You must be a U.S citizen or holding a legal permanent residence card. Your credit limit depends on the business performance. You can get up to a $150,000 credit line.
You would know if you are qualified in few minutes after you submit your application.
The monthly fee starts at 1.25% monthly for the remaining balance. There are no prepayment penalties, no order transaction, or maintenance fee.
For European importers, Alibaba launched online transfer as a payment gateway to allow the money transfer in domestic currencies.
Here are the countries supported by this service:
Transaction fees are the following:
Alibaba does not officially support PayPal. But you can communicate with the supplier if you opt for this method of payment. Paying as “Goods and Services” via PayPal is under PayPal’s buyer protection which is also very safe for international buyers.
If your supplier agrees to accept payment via the PayPal platform, you can log in to your PayPal account and click the send and request link. Type the PayPal email address of your supplier.
Make sure to check your settings so that you could pay for an item or service and not sending to family or friends.
PayPal protects you and gives bio protection. PayPal will mediate for the money back in any case that your suppliers get away with your transaction. Make sure to enter the correct amount with the accurate conversion of the currency you are using.
PayPal is widely used worldwide as it offers payment protection for buyers. However, it is essential to weigh the pros and cons of using the PayPal method in Alibaba.
For best practice using the PayPal method, ask your suppliers if they accept PayPal payment at the start of the negotiation.
As discussed in this article, the payment forms that Alibaba accept are the following:
If you use a secured payment in Alibaba like Alipay and Trade Assurance option, you can request a refund. However, as mentioned in this article, Alibaba will arrange a third-party inspection and ask for a processing fee. If you won the dispute, a complete refund would be transferred to you.
Please take note that in most cases, Alibaba may refund your money for two conditions, first, if the supplier failed to ship your orders on time. Second, when your orders are damaged or vary from the specified product page.
For your refund request, please provide the following information:
You can use a Letter of Credit as a way of payment. For a small number of orders, this method is not recommended.
Using a payment method through a Letter of Credit can lower your risk as it ensures that you will receive the goods according to what is agreed upon on the documents stated in the LC.
It also builds trust with your supplier. In this way, you can ensure that your supplier will receive the payment for the order. This is assuming that all the necessary documents are presented.
Alibaba also supports this payment option. However, the platform is not responsible if your payment is made directly to your supplier. The transaction does not happen in the Alibaba system.
Western Union Transaction fee details (Prices are for reference only)
|Order Payment Amount||Transaction Fee|
|$1,000-$5,000||1.80% of payment amount|
It is easier said than done to advise about payment fraud. There are so many things to consider when transacting to legit suppliers. Although you pay in a secure platform that gives you buyer protection, it would be safe if you know how to deal with legit suppliers.
Transfer the money to bank accounts held by a beneficiary (company) that would match the company listed on Alibaba.com. Never transfer funds to bank accounts in different countries or held by individuals- even if the bank details are provided by a person operating the supplier’s account.
To avoid payment fraud, do not transact outside the Alibaba safe platform. If you make private conversations, Alibaba cannot guarantee the mediation process or refund.
It is safe to pay on Alibaba if you know which mode of payment works to protect you as buyer when buying from Alibaba. Whether you opt to pay through Alibaba.com Secure Payment System or TT payment methods, or through Alibaba Payment links, always weigh the pros and cons.
If you opt for an Alibaba Payment terms order, you will get all the benefits you can have from Trade Assurance. If the delivery time or the product quality will not meet the agreed standards, you can file for a dispute. Go to the Trade Assurance Management page for managing and tracking your orders.
The same thing applies to the necessary documents you need to present when you file the dispute. You can also check the status of the dispute on the Trade Assurance management page.
Please take note of the payment processing timeline in each payment method:
Alibaba.com is considered a safe platform to gather suppliers and buyers worldwide. We hope that this article gives clarity on different payment methods in Alibaba.com. Whichever payment methods you use, it is essential to be careful in the payment process.
We wish you nothing but success in your business. If you want to ensure that you get the right supplier and pay securely, you may hire the best sourcing agent to help you in product sourcing. EJET Sourcing is a one-stop service in any service you need for your import business.