September 2, 2014, 12:21 PM

DHgate offers buyers a new way to pay suppliers in China

The Beijing-based B2B marketplace is the first e-commerce site in China to offer as a payment option MasterCard’s MasterPass digital wallet.

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DHgate, which says it connects more than 5 million buyers from 227 countries with some 1.2 million suppliers in China, sees about 90% of transactions processed via credit cards—a rate that has been fairly constant in recent years, the company says. But now it’s offering a new service to make credit card payments more attractive to the other 10%.

DHgate.com, where companies can buy from among 25 million and 30 million items, including consumer electronics, apparel, jewelry, car and motorcycle parts, sports equipment, and home and garden supplies, is the first e-commerce site in China to let buyers pay through MasterCard International’s MasterPass digital wallet service, MasterCard says. DHgate says it expects the digital wallet service more small and midsized companies more comfortable with online purchasing.

“As an e-wallet of for customer credit cards, it attracts customers who in general don’t like to type their credit card numbers into computers for security reasons, or who leverage mobile platforms more frequently and prefer the convenience of a digital wallet,” says Noah Herschman, chief operating officer of DHgate.

“DHgate is committed to creating an online ‘silk road’ for the new era, developing overseas channels for Chinese SMEs and bringing Chinese products to the world,” adds DHgate vice president Shen Hao.

MasterCard says the MasterPass service in China is being offered in conjunction with LongPass, a digital wallet service offered in China buy China Construction Bank. Cardholders register with LongPass, then can use the MasterPass service to make payments on any e-commerce site that accepts MasterPass. By using a digital wallet, which stores a cardholder’s account and shipping information on the Internet, buyers don’t have to enter their credit card and shipping information when making an online purchase.

Since MasterPass launched in February 2013, it now accepted by more than 40,000 online sellers in 10 countries including China, MasterCard says. The other nine are Australia, Canada, Italy, New Zealand, Poland, Singapore, South Africa, United Kingdom and United States.

DHgate earns its revenue in commissions charged to sellers. Commissions can vary by product category, but generally sellers pay a commission of 4.5% on sales of $300 of more and 8% to 12% on sales of under $300, Herschman says. DHgate collects the payment from buyers, then forwards the proceeds minus its commission to sellers.

For a free subscription to B2BecNews, a weekly newsletter that covers technology and business trends in the growing B2B e-commerce industryclick here. B2BecNews is published by Vertical Web Media LLC, which also publishes the monthly trade magazine Internet Retailer.

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