When you buy products from Alibaba, you need to know the best ways to pay for your purchases. Find out the cheapest and safest payment methods for your suppliers on Alibaba in this article.
‘Cheap’ and ‘Safe’ sound like terms that rarely work interchangeably, especially when dealing with online payments or fintech platforms. Affordability often comes at the cost of security and vice versa. Striking the right balance depends on your purchasing priorities. However, there are tested and proven methods that traders can use to make payments on Alibaba successfully on both terms.
Alibaba’s platform caters to a global audience, offering various payment methods tailored to diverse needs. One standout option for ensuring transaction safety is Alibaba’s Trade Assurance which safeguards payments until buyers confirm their satisfaction with received orders, marrying security with the potential for better negotiation on prices. While this may be a safer method for trading on Alibaba, it might not solve the affordability problem for others like Cedar Money would.
Cedar Money offers more flexibility and convenience for buyers and sellers, as they can use their currencies and bank accounts without relying on Alibaba’s platform or Alipay’s system.
Let’s start by looking at Alibaba’s payment landscape.
Related: 7 ways to pay your Chinese suppliers in Nigeria
Understanding Alibaba’s Payment Landscape
Trade Assurance on Alibaba provides a layer of security without direct fees, but the payment methods under it come with their costs. Here’s a quick rundown:
Credit Cards: They offer quick transactions but include a 2.95% processing charge.
Online Bank Payments: These come with varying fees and processing times, depending on your location.
T/T Telegraph Transfers: Ideal for large orders due to fixed fees, offering cost benefits.
Western Union & Boleto: Provide faster processing, yet with particular fees and restrictions.
Pay Later & E-Checking: Present innovative, low-to-no fee options, though limited by eligibility criteria.
Moreso, sellers face a service charge post-payment reception for orders exceeding $5,000—5% for wholesale and 1-2% for custom products, based on shipping arrangements. Notably, for orders beyond $5,000 that leverage Alibaba’s logistics (One Touch), no service fee is applied.
Cheapest ways to pay on Alibaba
In searching for the most cost-effective ways to pay on Alibaba, certain payment options stand out for their service charges, currency conversion fees etc. Here’s a closer look at some of the most wallet-friendly methods:!
Wise (Formerly TransferWise)
With Wise, you can pay your Alibaba suppliers in their currency, using the real exchange rate and low fees. You can also open an international account and get local bank details for different countries, so you can manage your money across borders easily.
Wise is a great option if you want to avoid hidden fees and unfavourable exchange rates that other payment methods may charge you.
Bank Wire Transfers
Bank wire transfers are a traditional way of sending money from one bank account to another. They are usually cheaper than credit cards, but they may take longer to process and have higher fees than Wise.
If you use bank wire transfers to pay on Alibaba, you should always use Trade Assurance, as this ensures that your money is sent to an escrow account owned by Alibaba, not directly to the supplier’s bank account. This way, you can avoid fraud and disputes.
Debit/Credit Cards
Debit and credit cards are a convenient and widely accepted way to pay for online purchases. They are fast and easy to use, with most payments clearing in around 1-2 hours.
Alibaba accepts all major cards, including Visa, MasterCard, and American Express. However, debit and credit cards also have some drawbacks. They charge a 2.95% fee of the total amount on every transaction, which can add up quickly.
They also do not have complete control over scams and frauds, so you should be careful when choosing your supplier and use Trade Assurance whenever possible.
Western Union
Western Union is a money transfer service that allows you to send cash to someone for pickup or delivery. Western Union can be used to make an Alibaba payment, but it has many limitations and restrictions.
It is only available for buyers from the US, and it has a very low maximum transaction amount of $2,500. It also only supports payments made in USD, which means you may lose money on currency conversion.
Western Union is not a recommended option for paying on Alibaba unless you have no other choice. If you use Western Union, make sure you also use Trade Assurance to protect your payment. The table below shows the specific Alibaba Payment fees for Western Union:
| Payment amount | Transaction fee |
| $0.01-$50 | $4.9 |
| $50.01-$100.00 | $8 |
| $100.01-$250.00 | $10 |
| $250.01-$500.00 | $12 |
| $500.01-$750.00 | $15 |
| $750.01-$1000.00 | $18 |
| $1000.01-$2500.00 | 1.8% of the payment amount |
Safest ways to pay on Alibaba
The security of the payment method you choose refers to how well it protects your personal and financial information and how it handles disputes and fraud. Some payment methods are more secure than others, and some may offer more protection or guarantees than others.
PayPal
Although not officially supported by Alibaba, PayPal is a favoured choice due to its convenience and the level of buyer protection it offers. However, it’s crucial to note that PayPal transactions aren’t covered by Alibaba’s Trade Assurance, and accounts are susceptible to being frozen, often without explicit reasons.
Alibaba Trade Assurance
For those prioritizing transaction security, Alibaba’s Trade Assurance covers you in the event of shipping or quality-related disputes.
You’re covered if:
Your products are not shipped on time as per the contract with your supplier
Your products do not meet the quality standards as per the contract with your supplier.
To use Trade Assurance, you need to place an order online with a Trade Assurance supplier and make a payment to the bank account designated by Alibaba.com.
You can pay online directly on the platform via Credit Card, Online Transfer, Boleto (for Brazilians), Western Union, or Pay Later (only available for some USA buyers).
Trade Assurance is a safe and convenient way to pay on Alibaba, but the process might be lengthy and may involve some limitations.
Alibaba Payment Links
Quick and efficient for samples or smaller transfers, Alibaba payment links direct payments to the supplier’s bank account linked to their Alibaba account, safeguarding against scams. However, this method requires building trust as it’s less common.
Alibaba Payment Links are a quick and safe way to pay for samples or small amounts on Alibaba. Your Alibaba supplier can generate a payment link directly from their Alibaba account, and send it to you. The link remains valid for 72 hours, giving you enough time to complete the purchase.
The payment link looks something like this: biz.alibaba.com/detail.htm?orderId=XXXXX89.
By using payment links, you can ensure that you are paying directly to the supplier’s bank account associated with their Alibaba account and avoid scams. However, payment links are rare and require trust between the buyer and the supplier. They are also not covered by Trade Assurance or any other buyer protection.
Cedar Money
Cedar Money stands out for international transfers, offering both affordability and security. With Cedar Money, you can pay your Alibaba suppliers in their own currency, using the real exchange rate and low fees.
After you sign up for an account and complete the registration process, this service allows you to pay suppliers in their currency, directly from the Send dashboard, using your local currency.
For every transaction, you’ll need to provide an invoice, ensuring all payments are verified and linked to actual purchases.
Cedar Money is a great option if you want to avoid unfavourable exchange rates that other payment methods may charge you.
Practical Tips for Alibaba Buyers
For large orders, leverage T/T’s fixed fees and negotiate payment terms to minimize upfront costs.
Utilize Trade Assurance for an added security layer on all transactions.
Consider E-Checking for low-fee transactions within the US and Europe.
Avoid direct transfers to Chinese accounts unless the recipient is personally known to mitigate fraud risks.
Making Informed Payment Decisions
When navigating Alibaba’s payment methods, consider both the fees involved and the security each option provides. Some options offer fixed costs and require diligence in contract details that might lead to delays. Meanwhile, other options are geographically restricted.
By carefully selecting your payment method on Alibaba, you can achieve a balance between minimizing costs and maximizing transaction security. Whether opting for traditional bank transfers or exploring newer fintech solutions, staying informed is key to a smooth Alibaba purchasing experience.