December 7, 2019

How to Pay Supplier from China: 4 Most Common Ways with Tips for Amazon Sellers

Currently looking for information on how to pay for your suppliers from China? Fret not because we’ve gathered the best options for you. Read this post to know more!

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Understanding how to approach payment to your suppliers in China could be a stressing endeavor, particularly if you need to think about the customs and different currencies in place. Indeed,it is possible. However, you need to safeguard yourself from fraud deals and make your business worthwhile to your sellers at the same time.

In this guide, we will uncover the different payment methods you can use to pay your Chinese suppliers. Aside from that, we will also give you useful tips on how to work best with your suppliers. Are you now ready? Without further ado, let’s dive in!

Why Do You Need to Pay Special Attention to the Issue of Payment for Goods?

Finding out which types of payment methods to utilize are vital for your business, especially if you’re setting up an online store. Not simply because you will find various types to choose from. Specific types are rationalized to maximize income opportunities. Here are some reasons why you need to put extra attention to your mode of payment:

  • The supplier may not work with the payment method you have chosen, and this needs to be clarified at the initial negotiations stage.
  • A payment method is associated with great risk for buyers. The payment method chosen by the supplier may not be acceptable to you.
  • The commission for transferring money is different. In addition, there are peculiarities for each payment method, which you need to know about before making a payment.

Relatively Safe Methods of Transferring Money for an Order

Seeking the best options for paying to Alibaba supplier could be overpowering considering the different currencies, payment methods, and customs, which are in place. Bear in mind that when you’re procuring products from China, there’s no “BEST” payment method. Your choices of payment methods will vary in different aspects.


PayPal is enough for small purchases like samples because it’s buyer-friendly and fast. Both the receiver and the sender should have an active PayPal account. The sender could utilize their bankcard or make a standard bank transfer.

PayPal is widespread throughout the world, but in China this method of payment for goods is not very popular. The buyer is well protected during the transaction, as it may require a refund. But the seller in this case is not protected in any way, and many simply do not risk using this method of payment when selling their goods.

And although PayPal is very convenient for the buyer, there is at least one significant minus that you should know about - the commission that is charged from the seller. And since he certainly does not want to pay it, he will redirect these expenses to you.

The advantages of the method:

  • simplicity of payment (it is possible to use a credit card or bank transfer);
  • fast transactions;
  • risk reduction when placing first orders with new suppliers;
  • there is no commission for the buyer.

The disadvantages of the method:

  • not all suppliers in China work with PayPal payments;
  • the buyer usually pays the seller’s (Chinese supplier) commission in the amount of 4-5% for transactions;
  • an increase in total expenses when purchasing large quantities of goods (the more you order, the more commission you will pay, since manufacturers will pass all these expenses on to you).

However, this is the most reliable way to pay for goods that you import from China. It is suitable for paying for ordered samples, as well as for the purchase of small batches of goods with an overall low cost.

Escrow (Alibaba Secure Payment)

This payment system is based on escrow service. The supplier will not receive payment for his goods until you receive it and confirm the transaction. With this method of payment, you will have to pay the full price for your order, but in case of disagreement, you can file a complaint against Alibaba. Then the trial will begin (most likely, with the involvement of a third party - an independent auditor). And you, if the supplier has not really complied with the terms of the contract, will be able to return your money.

For buyers, this method of payment for goods does not incur an additional commission, but for the seller (manufacturer) a commission of 5% is provided.

Also keep in mind that not every supplier can participate in the Alibaba Secure Payment program. This method becomes available only after the supplier retention procedure. Therefore, not every one of them will want to participate in this.

The advantages of the method:

  • reduction of risks for the buyer - although your money is withheld from the account, it does not transfer to the supplier until the transaction is confirmed;
  • ease of use - the service is available for every customer on Alibaba, so you do not need to register anywhere else;
  • possibility of payment by bank card, bank transfer, money from e-wallets;
  • buyer no need to pay commission.

The disadvantages of the method:

  • a limited number of suppliers who are approved to participate in the program;
  • the commission that the seller must pay, in reality, the buyer always pays - any manufacturer with this type of transaction transfers this additional commission to you;
  • your money in fact is blocked - even if you are dissatisfied with the quality of the goods, you cannot just return the funds; it will take time and some effort.

In addition, the amount that you can transfer to the supplier for a consignment of goods depends on the method of payment (bank card, bank transfer, etc.). It is important to consider this when choosing the best payment option.

Alibaba Pay Later

This is the newest payment option for purchases made on the platform. It provides access to lines of credit issued by third-party financial organization partners of Alibaba.

This program is currently available only to those customers who have an American company, reside permanently in the United States or are citizens of that country. In addition, your business must be registered for at least 1 year.

After considering your application, you can open a credit line for up to $ 150,000. You can use the funds to pay for the current order or get a loan in advance to pay for the following orders.

You pay fees of between 1.25% per month. At the same time, there is no commission for early repayment of a loan, for making payments through the Alibaba platform, for servicing, etc.

The advantages of the method:

  • ease of obtaining a loan - fill out the form and get a decision on the issue of money within 10 minutes (for most cases);
  • credit available up to $ 150,000;
  • no additional fees for early repayments, money transfers, etc.

The disadvantages of the method:

  • you pay a commission for using money, starting from 1.25% monthly;
  • you are not protected from possible troubles with suppliers in any way, because money simply transferred at the seller’s account in full (if you do not agree on a partial payment);
  • you and your company must be approved before you get a loan.

In fact, this method simply allows you to receive funds to pay for your order, if at the moment you do not have them. Yes, it is absolutely safe, because a third-party organization that gives you credit is an official partner of Alibaba.

However, this method of payment does not help you to avoid fraud on the part of sellers on the site. You simply borrow money to pay for your order. But no one guarantees that your supplier will not be a fraud or a deceiver.

Letter of Credit

This payment method is a proven financial instrument, which safeguards the interests of the parties engaged in global trade. Western companies fear that they might lose their money if paid to an untrustworthy Chinese supplier. Therefore, for large transactions (usually more than $ 30,000), this method of payment is most preferred.

The supplier will not receive payment, and the buyer will not lose his money until all the details of the contract between them are observed. This significantly reduces risks for both parties.

However, this method of payment requires a rather complicated preparation of documents. Another cons is the commission which you need to pay the bank. Therefore, such deals are not common among sellers and buyers on Alibaba due to many difficulties. Especially if the transaction amount is too small. In this case, Chinese suppliers simply refuse to work on such conditions.

The advantages of the method:

  • minimal risks for the buyer;
  • the supplier is also protected, so he is more willing to cooperate with the client (of course, if the order amount is large enough);
  • payment of money occurs only after confirmation that the manufacturer has fulfilled its obligations.

The disadvantages of the method:

  • complex preparation of documents;
  • additional commission for the buyer for banking services;
  • suppliers are reluctant to cooperate on Letter of Credit for small orders;
  • Letters of Credit are limited in time, they must be used before the expiration of the specified period;
  • confirmation for the bank is the shipping documents, but not the actual condition of the goods that you receive; however, you can still challenge this point by proving that the quality of the products does not match what is stated in the contract.

Nevertheless, if you intend to place an order for a large batch of goods and pay for it, be sure to consider this method for payments with the manufacturer.

Payment Methods Associated with Increased Risk for the Buyer

When you are searching how to pay Supplier from China safely on Alibaba, you should be especially careful if the manufacturer asks you to pay for the goods in one of the following ways. We listed payment options that are connected with raised risk for the buyer.


Western Union

Western Union is another payment option that buyers must take precautions. The reason we do not recommend buyers from using this payment method and other similar funds transfer services is that you will never receive a guarantee that after such payment for the goods, it will at all ever be delivered to you. When the supplier receives payment for the goods, he has no motivation to work on time. In addition, the quality of the product may not be what you expected, but it will be very difficult to make a claim.

In this way, you can try to pay only for small orders and only if you are confident in the supplier. The fact is that if you fall for scammers, it will be almost impossible to return your payment, and therefore your money.

The advantages of the method:

  • high speed of transaction;
  • payment method is widespread in China;
  • minimum fees for suppliers, so many agree to this method of payment good.

The disadvantages of the method:

  • high risks for the buyer - if you transferred the money and the supplier turned out to be a scam, you are unlikely to be able to return them  back;
  • conversion fees  - you lose money due to a higher exchange rate;
  • applicable only in extreme cases - if the transaction amount is small and only provided that you have previously cooperated with this supplier and are confident in its reliability.

T/T Payment

This is an electronic option of sending funds from one bank account to the other. Wire transfers are the other name for it. Buyers must be aware of the dangers before going ahead with this payment option as bank transfers are a favorite payment choice for scammers.

But even in this case, you can use this method. However, you must first agree with the supplier on a partial payment for the goods: 30% - advance payment, 70% - after shipment or after receipt of goods.There are also other partial payment options you should be aware of. Indeed, as your business grows, so will the amount of orders for Alibaba. This type of payment is one of the most beneficial for the buyer in terms of commission.

An additional argument to the crawl of this is its widespread use in China. Almost every supplier works with Telegraphic Transfer Payments, so you are not limited in the choice according to this criterion.

The advantages of the method:

  • widespread in the world, including in China;
  • small fixed commission for bank transfer;
  • cost reduction when transferring large amounts of money.

The disadvantages of the method:

  • long transfer time - 3-7 days;
  • even a small mistake in filling out the documents necessary for sending the transfer will lead to a significant delay in payment;
  • risk for the buyer - you will not be able to withdraw the payment, so you need to agree on a partial payment.

Tips for Working with Chinese Suppliers

Apart from understanding how to pay suppliers from China, you must also understand how to work with them smoothly. Take note that payment fraud is a typical and easy scam. For example, the buyer is motivated to send funds to a bank account that wasn’t held by the suppliers.

Here are some helpful tips you need to consider.

1. Agree on Partial Payment

When paying for orders, especially for the first time, it is important to try to agree on a partial payment for the goods. Before full payment, it is necessary to conduct an inspection of the first batch of goods.

2. Create a strong agreement

You must safeguard your interests first before you pay your potential suppliers any money. Draft a strong payment term into the agreement you sign with them. Such terms connect to the choice of payment method and timing of the payment.

3. Do not send money to a personal account or any mode of payment

Make sure you insist on asking for details of the business account of the company you are working with. Do not do business with such Chinese suppliers if they cannot give you one. Do not fall for excuses by sending money into a personal account unless you like to watch your money vanish or compromise your merchandise.

4. Request for references

If your supplier cannot offer you several satisfied clients, that’s a red flag you must take caution.

5. Take advantage of Financial Due Diligence

FDD is cheap and is readily accessible from providers such as Verify and You can utilize it to understand the financial stability and ownership of your supplier.

6. Visit the Factory

If you have the chance, try to visit the factory of the supplier to make sure they aren’t a trading firm. Trading firms could vanish into thin air than a legitimate factory that has real staff, addresses, and assets.


You will find various types of payment methods to choose from. Knowing and understanding each of them and their function will help you make the decision on which payment methods to use. We hope we presented you with all the information you need for this topic. Good luck!