Cheapest and Safest Way to Pay on Alibaba in 2021

Cheapest and Safest Way to Pay on Alibaba in 2021

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Like many ecommerce guys, I use Alibaba to find factories around the globe to manufacture goods. I also pay on Alibaba for these goods. 2020 was a great year for eCommerce businesses. Forecasts for this year are even better for online entrepreneurs. With my orders now climbing to the 10’s of thousands of dollars, the payment process has become steadily more important.

I want to ensure that the safest service is used both for protection of my money and for protection of my rights as a buyer, and all for the cheapest cost to me. We’re trying to run a business here!

The common methods to pay on Alibaba are PayPal, wire transfer (T/T) or by debit/credit card. PayPal is the safest of the three as it affords some payment protection with the ability to open a dispute if there is a problem.

It doesn’t however, provide any buyer protection for example if the goods you receive are substandard in quality or arrive three months late with half of it missing. It also costs the seller a nifty 5%, which you the buyer, will usually end up covering.

To improve the safety of the buyer/seller exchange, Alibaba have created an escrow service called Trade Assurance. Which does what it says on the tin, a third party holds the funds until the goods are delivered. This allows us as the receiving party, to open a dispute should we be unhappy with the service.

How to pay on Alibaba

I always ensure that my manufactures accept payment by Trade Assurance, as it is the safest way to do business on Alibaba. I’ve made around 30 orders using Trade Assurance and have never run into a problem, I’m not saying that it can’t happen though.

Ok so that’s the safest way to pay on Alibaba, now what’s the cheapest?

PayPal is great but is best when making small orders such as samples and prototypes where the protection is worth the fee. However, PayPal can’t be used in conjunction with Trade Assurance, bummer.

But Debit/credit cards and wire transfer can be used with Trade Assurance.

Previously I’ve used a business debit card to make purchases and eaten the 2.5% fee (now risen to 2.95%). Kindly your bank will also provide a less than desirable exchange rate if for example you’re in the UK with a GBP account, like me.  The payment is swift arriving in 2-4 days and fine for smaller volume orders however, when your ordering $1000’s worth of product, the fees and exchange rate become more worrisome.

Thus, we are left with the wire transfer. Traditionally considered a riskier and cheaper way to pay on Alibaba however, if used in conjunction with Trade Assurance, the funds will be sent to an intermediator bank account owned by Alibaba, not the manufacturer’s unrecognizable and anxiety enducing Chinese address. The funds will only be released to the manufacturer when we have received the goods and are happy.

A wire transfer can be completed by going into your bank or by using online banking. I bank with NatWest, who charge a hefty fee for international payments and provide another suboptimal exchange rate.

In the below tables I compared the available payment options and their costs. For transfers done from USD accounts there are no currency exchange fees, only international bank transfer fees. I also compared the price of a $1000 transfer done from a UK GBP account. Please note that I didn’t take in to account the intermediary bank fees. From my experience they range anywhere from $20 to $50. Depending on the order value. Some sellers ask to add this amount to the purchase value, others don’t. Additionally PayPal payments might occur extra costs. Sellers sometimes add $10 – $20 to the total price for costs associated with Paypal payments on their side. Another variable are the currency exchange rates. To get the latest market currency exchange rates visit the TransferWise calculator here.

Average cost to send $1000 from your USD account to an Alibaba supplier USD account

Bank Transfer
* transfer fees $20 up to $80, we used an average of 40$


Debit Visa and Mastercard
* fees 2.95%, Amex fees 3.5%


Western Union
* only available for US customer 1.8%


* possible additional costs - depends on the seller


* international transfer fee $1.05



Average cost to send $1000 from your UK GBP account to an Alibaba supplier USD account

Bank Transfer
* transfer fees £10 up to £20 + currency exchange markup


Visa and Mastercard
* fees 2.95%, Amex fees 3.5% + currency exchange markup


Online transfer - EU only
* min. $15 dollar fee + currency exchange


* possible additional costs - depends on the seller


* fees + real market exchange rate


Related: The ULTIMATE TransferWise Review | How Does it Work | TransferWise vs PayPal vs Revolut

This drove me to look for alternatives

I now use TransferWise, a free to use online payment service who have banks in multiple countries to eliminate international exchange fees (it’s more clever than that but keeping it billy-basic). They are simply the cheapest way I’ve found, to send money internationally.

I like their website, it allows you to see how much it will cost to send a payment with no hidden charges. It also gives a comparison to the UK banks prices which is constantly updated.

On a recent $3000ish payment to China, I paid £17 in fees. NatWest would have charged me close to £100 after exchange rate and fees were applied.

Here’s an example of how it works, if I was going to send $8000, it would cost me £25.46 in fees with a great exchange rate.

TW Ex1

Now compare the price to the banks, the savings are clear.

TW Ex2

If I used HSBC for example, I would be $207.90 further out of pocket!!

These savings really do make a difference, enough to compel me to write an article about it. I didn’t realise these amazing payment services existed – I thought that we had to wait for cryptocurrencies to bring the international payment prices down.

TransferWise use a novel concept that I’d encourage you to read about on their website to enable their cheaper pricing. Who would have thought it would be my countryside, bed & breakfast owning father that would discover them and tell me about it – good work!

Parting thoughts – How to Pay on Alibaba using Transferwise

So to summarise my thoughts on the matter: use Alibaba Trade Assurance to cover you for any issues with the goods. Upon receipt of the escrow bank account, use TransferWise to cost effectively send the money across, voila. Cheap and safe.

This article is angled towards the Amazon FBA and ecommerce audience looking to pay on Alibaba however, TransferWise can be used for anything and everything, international or not. They are my new favourite money saving ally.

Related: How to Start an Amazon FBA Business 6 Step Guide

I hope this has inspired you to do a bit of research around payment options, how to pay on Alibaba and save some hard-earned capital – I know it was a revelation for me.


Take care,

Dom Sign off

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