How to Pay Suppliers on Alibaba: A Complete Guide

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Alibaba Secure Payment (Escrow)

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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 p

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.


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Sande Kennedy

Sande Kennedy is the founder of SandeKennedy.com & Kenyans247.com He is a Kenyan-based Internetprenuer,blogger Political Activist,informer who has an interest in politics, governance, corporate-fraud and human-interest. Kindly drop me a note if you feel aggrieved on any matter that you would want to be highlighted. Twitter @itssandekennedy , Instagram @itssandekennedy WhatsApp: +254791890826 Read More about me here

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