How to Pay Suppliers on Alibaba: A Complete Guide

Suggestion: Watch the 10 minutes video tutorial before reading this article

Click Here to Get the
Starter Package: All Categories

Found a supplier on Alibaba but not sure how to pay them? In this guide, you will learn how to pay suppliers on the #1 supplier directory, both through the built in Alibaba payment gateway and ‘off platform’.

Keep reading, to learn how you can pay suppliers by wire transfer, credit card and the secure payment system – and how you can claim a refund if the goods are not matching the product description.

In addition, you will also learn why a refund cannot always be taken for granted, and how you can prepare for, and win, a dispute

Telegraphic Transfer (T/T)

Alibaba.com is a supplier directory – an online platform for finding factories and trading companies in China, and other countries around the world.

While Alibaba.com has in recent years expanded into providing payment solutions, most buyers go here to find suppliers, and then continue business discussions elsewhere.

Hence, the transactions are for the most part made outside of the Alibaba.com ecosystem. That is likely to change in the future, but is the case at the time of writing.

We often receive questions about ‘how to pay suppliers on Alibaba’, but the truth is that they are paid the same way as manufacturers that are not listed here – and that is mostly via telegraphic transfer.

In other words, a standard wire transfer.

As said, Alibaba.com acts as the matchmaker, while the conversion between buyer and seller is taken ‘off page’ at an early stage – including payments.

In short, you manage and pay so called ‘Alibaba suppliers’ the same way you pay a supplier that you find at a trade show, or anywhere else for that matter.

It is still worth to mention though that Alibaba, through its successful trade assurance program, is also integrating T/T payments into its trading practices.


Watch this video to learn how to get your product made in China, Vietnam & India

I want to book a free consultation call


Alibaba Secure Payment (Escrow)

While Alibaba.com started out as a supplier directory, it is, through Alipay, one of China’s largest finance companies.

Via Alipay, Alibaba.com offers buyers to pay suppliers through an Escrow system.

So, what’s Escrow? This is how Alibaba themselves explains it:

For buyers, your payment will only be released to the supplier after you confirm satisfactory receipt of your order.

For Suppliers, Secure Payment verifies the payment details for every transaction and you are only required to ship the order after your confirmation of payment receipt by Alibaba Singapore City Bank.

In short, Alibaba’s secure payment system allows buyers to make a deposit payment, that is only unlocked to the supplier after the goods are confirmed by the buyer.

Alibaba.com integrates with a range of existing payment systems, including the following:

  • Credit Cards
  • Telegraphic Transfer
  • Western Union

There are some limitations though, as the Secure payment feature is primarily available for suppliers that are part of the Wholesale program.

Thus, it may not be an option for importers of custom designed (OEM) or private label (ODM) products. Luckily, there are other services available for these types of products.

How does the process work?

Below follows an overview:

1. Customer pays a deposit

2. Supplier ships goods to customer

3. The products are imported and cleared through customs

4. The buyer receives the goods and either approve or reject the goods.

If the buyer rejects the goods, the payment is withheld. However, additional proof may be required to support the buyer’s position. Keep in mind that Alibaba.com acts as a neutral party, and will not side with the buyer by default.

Always read the product description carefully before placing an order. A product claim can only be filed based on the supplier shipping a product that is not matching the listed specifications (or if it’s clearly damaged or defective).

A refund cannot be based on general expectations or a vague idea of ‘good quality’. Therefore, I advise you to always buy product samples before placing a larger order – even when the transaction is covered by the secure payment system.

Alibaba Payment System

Credit and Debit Card Payment

The Alibaba secure payment allows payments via credit card and debit cards, issued by Visa, Mastercard and Maestro.

However, keep in mind that there is a maximum transaction amount, paid via credit card, of US$50,000. In addition, the credit card companies charge a higher transaction fee, as compared to T/T payments.

Will Alibaba refund the money if I receive defective or the wrong items?

You can only request a refund under the following two conditions:

a. The supplier failed to ship the goods on time

b. The goods are damaged and/or not as specified on the product page

You should not expect to get a refund if the goods are as specified, but still not matching your expectations. Keep in mind that there is no such thing as a universal or technical definition of ‘good quality’.

To support a refund request, you should provide the following:

a. Photos showing the damages/defects

b. An overview of the defective quantity of products (and the value)

c. A detailed description of all issues

Further, save a copy of the product description before you place your order, so you have some sort of quality reference.

A detailed description of the refund claim process can be found here.

How do I win a dispute?

It’s a matter of proving the supplier wrong. Some cases can be rather ‘obvious’, especially when the goods get damaged or are severely defective – or not even shipped.

However, we have received reports from disgruntled buyers around the world, claiming that Alibaba has not done enough to protect them when things went wrong.

That said, in all the cases that we received, the dispute was filed based on the product not meeting the buyer’s perceived quality standard.

This is extremely tricky, as Alibaba.com simply cannot act based on this. If they had to issue refunds every time a buyer claimed to not be satisfied with the quality standard – and without the need to return the goods – the sellers would be exposed to systematic fraud and be bankrupted within a matter of weeks.

The truth is that the buyer is not always right, and unless the product quality, design or functions conflicts with the description – it is not fair to demand a refund.

To win a refund claim, you need to prove that the products are either damaged / defective or not matching the product description.

Can I pay suppliers on Alibaba.com by Letter of Credit (L/C)?

Yes, as previously mentioned, the Alibaba secure payment system is optional and primarily used for wholesale product transactions. Larger orders are often negotiated and processed outside of the platform.

Just as many buyer’s rather pay their suppliers directly via telegraphic transfers, you can also negotiate a Letter of Credit (L/C) payment with your supplier.

The procedure is in some ways similar to that of the Alibaba secure payment system, as the funds are ‘unlocked’ to the supplier when certain conditions are reached.

The main difference is that you can set those conditions.

At a minimum, the L/C payment is unlocked once the supplier provides a bill of lading copy – proving that the goods are shipped. However, that only proves that ‘something’ (for example a container filled with bricks) has been shipped.

To further reduce your risk, and tie the payment to the quality and compliance of the products, require the following documents as part of the L/C payment trigger:

a. Quality control test reports (approved)
b. Lab test reports

Keep in mind that you set the payment terms.

Do you want to launch your own private label or custom designed product?

It can be hard to go from a design drawing to finished product. To help you manage the entire process – from creating a specification, to sampling and quality control – we created a Starter Package:

a. Private Label & OEM Product Manufacturer Lists

b. Product Specification Templates

c. Product Label Samples

d. Tutorials, Video Walkthroughs and Task Lists that guide you step-by-step through the entire process

In addition, you can also book quality inspections, lab testing and shipping directly from the platform. Click here to learn more.

  • Tags:

    33 Responses to “How to Pay Suppliers on Alibaba: A Complete Guide”

    1. Deja July 20, 2017 at 5:24 pm #

      I’ve been contacted by several suppliers offsite. They found me on alibaba looking for a product, then would email, text or facebook me. My question is, some request payment via paypal not via alibaba. Is this standard? When I ask them to send me invoice on Alibaba, they say paypal is more convenient for them. I want to make sure I am not being scammed.

      • ChinaImportal July 23, 2017 at 9:45 am #

        Hi Deja,

        Most suppliers are not using Alibaba’s payment system. That is not necessarily a sign that they are scammers.

      • Dan Edards March 7, 2018 at 1:22 am #

        Same experience here; they found me on Linkedin. I’m asking for at least an initial contact through alibaba.

    2. GY November 20, 2017 at 5:08 am #

      We are trying to buy through a supplier via Alibaba. Credit Card is not accepted and T/T directly to the seller seems to be the only option. However, the “Wire Transfer” option is not activated for the seller, so we have to T/T the seller directly. From reading your guide, it seems like they are not on the wholesaler’s list, and hence these features are not enabled. The problem now is we want to make sure the payment can be made securely via Alibaba. But there are no options to assure us.

      • Fredrik Gronkvist November 26, 2017 at 12:43 pm #

        Hey there,

        Wire transfer is T/T. It’s the same thing.

        If wire transfer is not enabled, then you will not be under Alibaba’s protection.

    3. Abiodun Aladetuyi February 22, 2018 at 3:30 pm #

      Hello Fredrik. Could you tell me the steps to take to order and pay on Alibaba please.

    4. Adam March 1, 2018 at 7:20 pm #

      Hi, If i preorderd and paid invoice they sent me and 2 months pass, my products are ready but they want higher amount or they will send noney back they say. If i got an invoice and paid the price i should have some rights? Or What do you say about this?

      • Fredrik Gronkvist March 4, 2018 at 11:14 am #

        Hi Adam,

        It’s never acceptable that a supplier raise the price after the deposit is paid.

        Did you pay everything upfront?

    5. Aileen March 7, 2018 at 2:07 am #

      Hi Adam!
      I am requesting a sample from a supplier through Alibaba right now, and I asked to pay through paypal but when they sent the ‘trade assurance order’ for me to pay the invoice it doesn’t have a paypal option, just credit/debit card, wire transfer, and e-checking. I’m not understanding where paypal actually comes in. I’m also wondering about how import tax for these sorts of orders works.. We are in the US but our sample is under $50 and our order is only going to be under $300, but since we’ve never dealt with wholesale products from China in particular before, I don’t want our order to get held up.

      Any help on these things would be fantastic, thanks!

      • Fredrik Gronkvist March 11, 2018 at 11:35 am #

        Hi Aileen,

        OK in that case it seems they no longer integrate with PayPal. But you can still pay with your credit card.

        You can add the sample order cost to the mass produced order later on.

    6. aishe hudson March 12, 2018 at 11:14 pm #

      OMG…I am so eternally grateful that I found this site. I am attempting to order wedding invitations and I am completely confused about the process. I see T/T but am scared to death to provide bank account information. I asked to pay through paypal and the customer service rep sent me a link that came up in Chinese that I am unable to read. (she gave me 139015408@qq.com)

      Also, there are so many options for shipping: sea freight, land transportation, air cargo,and express. I have no idea which to choose. Which one applies to DHL?

      Lastly, is the set up that we pay a deposit and the final balance once the goods are received?

      Completely confusing…thank you sooo much for your help!

    7. priscilla March 14, 2018 at 3:41 pm #

      Is there anyway i can make payments through alipay on secure payments on alibaba?the bank card details is not really comfortable.

      • Fredrik Gronkvist March 18, 2018 at 11:28 am #

        I think Alibaba.com is already using AliPay for credit card payments

    8. Paula D Smith June 20, 2018 at 11:47 am #

      once i make deposit payment to supplier via alibaba payment, will the buyer need to send another link to make the balance payment?

      • Fredrik Gronkvist June 24, 2018 at 11:43 am #

        Hi Paula,

        Send another link? Not sure I understand what you mean.

    9. Marie Elizabeth June 20, 2018 at 1:48 pm #

      Hi we opened negotiations with a seller on alibaba using their trade assurance scheme, we’re getting to the final details and the seller is saying 1. that Alibaba cannot accept TT transactions on trade assurance over $5000 dollars so we need to set up 5 individual contracts and wire transfers. 2. That there is a 2% fee for the transactions and 3. that we have to pay it! From my understanding the 2% fee is the sellers fee – are they trying to pass this off to us, the buyers and is this normal practice? Why are they saying that the max TT contract value is $5000 – is this right? It’s a pain if yes, as it means we’ll need to get 5 contracts on the system. Can you help as we’re new to wholesale /imports from China! Thanks

      • Fredrik Gronkvist June 24, 2018 at 11:46 am #

        Hello Marie,

        1. This sounds very strange. Is their trade assurance amount limited to 5 k?

        2. All fees will be passed on to you as a buyer. If they absord this fee, then they must raise their unit price. In the end, you must pay all transaction fees – either directly or indirectly.

        3. You should NOT open 5 contracts for the same order. That likely violates the terms of Alibaba.

        4. Sure, I suggest you watch our free webinar on this topic: http://www.chinaimportal.com/webinar-a

    10. Rajat July 16, 2018 at 4:57 am #

      Hi everyone,
      I wanted to buy a some goods through alibaba,and want to pay through paypal.
      The supplier want me to pay the paypal fee, when i checked with paypal about the fee, it said :
      “There’s no fee to use PayPal to purchase goods or services. However, if you receive money for goods or services (such as from selling an item on eBay), there is a fee for each transaction.”
      However the supplier insist that i should be the one to pay the fees.

      Is this the normal procedure?
      Please educate me on this.

      Thanks in advance.

      • Ivan Malloci July 17, 2018 at 4:51 am #

        Hello Rajat,

        there are no specific “rules” on international trading, everything is up for negotiation. If the supplier insists for not paying the Paypal fee, you have 3 options

        a.) Pay the fee yourself

        b.) Change payment method

        c.) Change supplier

    11. Philippine Dorhout Mees July 21, 2018 at 2:18 pm #

      Hi, we are in the final stage (we negotiated shipment, unit price) of placing an order trough trade assurance. However, the supplier already made the contract for us and is now asking to pay the total amount in 3 parts, which means: 3 separate contracts for the same order (of each 5000 USD). I understand that this is no normal procedure and we won’t approve the 3 contracts. Also, I asked the supplier to let us place the order online ourselves (so we can design the contract incl product requirements). I’m now trying to understand why the supplier divided the total amount (their assurance limit is 57,000 USD)? Does anybody have an idea?

      • Fredrik Gronkvist July 22, 2018 at 10:49 am #

        Hey,

        No, idea, but I doubt they have a legit reason. It sounds very strange, and I would stay away from this supplier.

        • Philippine July 24, 2018 at 10:18 am #

          Hi Fredrik,

          We finally have an answer. Orders via Trade Assurance above 5000 USD have to go via One Touch. My supplier doesn’t have a One Touch account, so it provides me with 3 different payment links via Trade Assurance.

          A reasonable way to handle?

          • Fredrik Gronkvist July 29, 2018 at 11:46 am #

            Hi Philippine,

            Is this supplier even part of the Trade Assurance program? If they are.. they should be able to receive the payment.

    12. Jacob HASSIDIM August 28, 2018 at 12:07 am #

      Hello Fredrik,
      I am trying to pay my supplier via the Alipay. he says, since he’snt member w/Alibaba, he ca’nt receive payment. is that right?
      as long as we ship via ONE TOUCH, I think it would be for him to receive payment w/out being Alibaba member.
      he also said it cost $5000 to become alibaba member. is that correct?
      Jacob

      • Ivan Malloci August 28, 2018 at 8:01 am #

        Hello Jacob,

        maybe he meant he can’t receive money via Alibaba Trade Assurance?

        Also, yes, it costs money to become an Alibaba golden supplier.

    13. Kinkini Bairagya October 12, 2018 at 1:31 am #

      Hello sir,
      I’m from India. Do Alibaba use SBI debit/ credit card as a payment method??

    14. Irena Vardikyan October 16, 2018 at 4:10 pm #

      Service fee on seller: after payment received, Alibaba.com might charge some service fee on seller, not on buyer.
      a. for order amount≤USD5000: seller needs to pay 5% for wholesale products; 1% or 2% for custom products (1% -order must be shipped via Alibaba logistics service,2% -order is not shipped via Alibaba logistics service);
      b. for order amount>USD5000: no service fee on seller, and order must be exported via One Touch.

    15. Crystal November 8, 2018 at 4:06 pm #

      Hello! I just made my first official bulk wholesale purchase with a supplier. It went well so far. I am now in the midst of buying one single item from another seller. They gave me price and DHL shipping quote. Then they asked if I would lay the owner direct to his personal account or western union to save 40USD on customs clearance.

      Is this legit? Do they pay clearance or do I? I’m trying to figure out if they are telling me the quoted DHL price does not include this clearance fee…and if not, who pays it.

      Thank you!
      Crystal

    16. Abel December 26, 2018 at 4:18 am #

      Hi guys i need your help on something…
      I live in Ethiopia n i hv been ordering one of Chinese company product via trade assurance.. n n i want to pay with my friend credit card who lives in US ..do u think the billing adress n contry information wont matter on the payment process.??… Do u think its safe to pay with someone else creditcard through my account??…. Pls help me with that

      • Ivan Malloci December 26, 2018 at 9:53 am #

        Hello Abel,

        I suggest you to get in touch with Trade Assurance help desk and ask to them, before going ahead with such a transaction

      • Fredrik Gronkvist December 30, 2018 at 4:50 pm #

        No, I don’t think that is safe as they will likely flag the transaction based on location.

    17. Not January 4, 2019 at 5:45 am #

      Hi assuming we buy a laptop from Alibaba but seller sends a piece of stone!
      So how we can evidence seller is a scammer?
      What happen in these situations?

    Leave a Reply

    * Checkbox GDPR is required

    *

    I agree