![]() ![]() This is a payment mechanism through which a bank guarantees payment to a seller on behalf of the buyer. Also, you need to make a full payment at the initial stage itself, so your money can be tied up for some time. Even within that platform, you will have to pick from a smaller basket as not all suppliers on Alibaba have signed up for this service because it charges them a 5% fee (which many presumably pass on to the buyer). Sellers are protected as they are guaranteed payment from the buyer if the goods are delivered as promised.įor buyers, the limitations with regard to the Alibaba Trade Assurance is that you will be restricted to suppliers on Alibaba. The buyer is protected from fraud from sellers who disappear as soon as they receive the money without sending the merchandise. This mode of payment is, however, not very popular among suppliers in China.Įscrows protects both buyer and seller. Your product does not meet predetermined quality standards. Your shipment is delayed, beyond the promised date.ī. Alibaba says the assurance adds an extra layer of security for buyers dealing with Chinese suppliers. Chinese business-to-business platform Alibaba offers a service for buyers and sellers that it calls “Trade Assurance”, which is similar to an escrow service. In this method of payment, a trusted third party holds the funds the buyer has agreed to pay the supplier and only transfers the money to the seller if certain predetermined criteria are met – such as the buyer receiving the merchandise (as described) on time. You can protect yourself from risk while using this form of payment if you pay the supplier in tranches – say, a deposit of 30% on placing the order and 70% after a quality inspection and shipping. Though there is no in-built payment protection here, banks usually do some kind of identity check on businesses and people who have accounts with them so this is considered a safer mode of payment than many others. Since these transactions can take between two and five business days to process, the supplier is also at risk of currency exchange fluctuation from the time the payment order is signed to the date payment is credited into the supplier’s bank. The receiver may also have to pay some kind of a fixed fee when they get the money. The charges can be high, however, as you will need to factor in your bank’s rate for foreign exchange (which is never in your favor) as well as pay a fixed fee per transaction. This mode of payment is widely accepted by both buyers and sellers. ![]() It is best used if you have done some due diligence on the supplier (for instance, verifying that they are legitimate suppliers with a registered business before sending any money to them.) Bank-to-bank wire transfers are one of the most common methods of payment. This includes bank-to-bank money transfers as well as transfers that companies such as Western Union deal with (more on that later). This is an umbrella term that involves the electronic transfer of funds from one place to another using a network of banks and transfer agencies across the world. We now detail the various modes of payment – along with their advantages or disadvantages – that those buying or manufacturing products from China can use to pay their suppliers. These terms relate to timing of payment and choice of payment method. Draft a strong agreement: Ideally before you pay potential suppliers any money, you must secure your interests by drafting strong payment terms into the agreement you sign with them.Don’t fall for excuses and send money into a personal account unless you never want to see your money or promised merchandise again. Never send money to personal accounts via any method of payment: Insist on being given details of the business account of the company you are dealing with, and if you cannot be provided with one, don’t do business with them.What is crucial, however, is to follow these golden rules: The answer to that isn’t really simple as each payment method has its pros and cons, and a lot also depends on the size of your order. On the internet, several potential western importers have echoed one question again and again: “What is the best way to pay my Chinese supplier?” ![]()
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