Thursday, 2 March 2023, 3 minute read
Alibaba is one of the biggest online marketplaces in the world, connecting millions of suppliers and buyers from around the globe. It's an excellent platform for businesses looking to import goods from China, where many suppliers offer competitive prices and high-quality products.
However, choosing the right payment method is crucial when working with Alibaba suppliers. The international payment method you choose can impact your business' financial security, profits and importing timelines.
In today’s article, we'll discuss the various ways you can pay Alibaba suppliers, and highlight their pros and cons, so you can make an informed decision about the best way for your business to send money overseas.
The best way to pay Alibaba suppliers safely
It’s very important to do your research when choosing an Alibaba supplier. Before you make any decisions about payments, check the overseas supplier’s reputation, reviews and ratings to ensure that you're dealing with a legitimate and trustworthy international supplier. This will help you avoid any potential scams or fraudulent activities.
It’s also important to communicate with your overseas supplier, so before you decide on your payment method, you should ask them which payment method they prefer and ensure you’re both comfortable with the payment terms.
Ensure you’re also legally protected by applying for your import license and checking the local terms and regulations before paying for or ordering any goods from Chinese suppliers.
How to pay suppliers on Alibaba
There are many ways to pay Chinese suppliers, and Alibaba offers importers several popular ways for UK companies to pay for goods. Let’s take a look at the pros and cons of each:
International wire transfers
Let's start with one of the most common payment methods used by businesses to pay international invoices and Alibaba suppliers – international wire transfers.
International wire transfers are a fairly secure way to pay overseas suppliers, especially when you buy through Alibaba’s Trade Assurance scheme. They’re also slightly faster than paying by bank transfer.
International wire transfers are an expensive way to pay overseas suppliers, and you should also expect to be charged high fees in the process. Alibaba will charge you up to £30 per international transfer, and your bank may add on some additional fees. So, for smaller businesses or businesses making regular payments to overseas suppliers, this payment method may not be the best option.
Use an open banking platform
As you may have noticed, all of the other ways to pay Alibaba suppliers involve businesses losing money. This is because, unfortunately, many traditional banks will charge you excessive fees to transfer money abroad, and won’t offer you the best exchange rate.
However, there is a simple way to reduce the cost of paying for goods from Alibaba suppliers. With a digital account-to-account payments solution like Crezco, you can pay foreign suppliers directly from your existing local bank account, benefitting from competitive rates - and no extra charges.
Crezco can help
Crezco makes international account-to-account payments easy and secure, letting you make international payments directly to the supplier’s existing local bank account without creating any virtual IBANs or local wallets.
With Crezco, you’re guaranteed a low exchange rate and no hidden fees.
The platform is extremely intuitive and easy to use.
Crezco will provide both you and your Alibaba supplier with complete transparency at every stage of the payment process, as both you and the supplier will get live updates when payments leave your account and arrive in theirs.
As far as security is concerned, Crezco offers the safest way to pay your Chinese supplier, thanks to its use of open banking and award-winning proprietary risk tools (Sentinel), which keep international payments safe and secure.
Your supplier will also automatically receive remittance advice as soon as you make your payment, serving as an official record of the transaction and letting them know the payment has been made.
You can make international payments to Alibaba suppliers either individually or in bulk, to over 50 currencies worldwide (including the Chinese Yuan), making Crezco’s solution an ideal choice when paying Alibaba suppliers for goods.
PayPal is a popular online payment system that allows businesses to send and receive payments securely and quickly.
PayPal is a fast and convenient payment method that's widely accepted by Alibaba suppliers.
It's easy to set up an account and send payments via PayPal.
PayPal’s exchange rate mark-ups are high, making it an expensive option when you’re making bulk or repeat purchases.
On top of this, PayPal charges fixed percentage fees for international transactions, which can quickly add up. So, if you're buying in large quantities or looking to save money, it’s worth considering more cost-effective payment methods.
Pay by credit card
Most Alibaba suppliers accept payment by major credit card providers, including MasterCard, Visa and American Express.
Credit card payments to Alibaba suppliers are generally quite speedy, taking no more than a couple of hours to clear.
Paying Chinese suppliers by credit card may not be the most cost-effective payment method. When you pay with a credit card, you’ll be charged a transaction fee of around 3%, on top of any foreign transaction or currency conversion fees imposed by your bank.
Keep in mind that the current exchange rate can also work against you, potentially leading to higher costs for your purchase. You can use Crezco’s currency converter to determine the current exchange rate.
Alibaba Trade Assurance
Alibaba Trade Assurance is an escrow service, which means you (the buyer) make your payment to the company, which holds the funds until you have received your goods and confirmed that you’re satisfied with your purchase. Alibaba Trade Assurance then releases the payment to the supplier.
The process is similar to buying a house, where a solicitor or other third party agent holds all funds in escrow until completion takes place.
This payment method provides a high level of financial security for both you and your Chinese supplier. Alibaba Trade Assurance acts as a neutral mediator, ensuring that the payment is made only once the goods have been delivered and both parties are satisfied with the transaction.
Escrow services like this can be expensive, as Alibaba Trade Assurance will charge fees for their services.
Using escrow services like Alibaba Trade Assurance can also be time-consuming, as the company may need to verify the goods' quality and delivery before releasing the funds.
The best way to pay Alibaba suppliers
Choosing the best way to pay Alibaba suppliers can be a daunting task, but it's crucial you do your research to ensure a smooth and secure payment process. Reading this article was definitely a step in the right direction!
Weighing up all of the above options, the best way to pay Alibaba suppliers is using an online open banking payments solution like Crezco, as this option strikes a balance between financial security, transaction fees, convenience and ease of use.
With this in mind, we hope you now feel a little more equipped to start paying Alibaba suppliers safely, quickly and cost-effectively. Good luck!