China’s DHgate Adds MasterPass For Cross-Border B2B Payments

China’s DHgate recently integrated and deployed MasterPass into its B2B eCommerce platform, becoming the first merchant in that country to go live with MasterCard’s digital-wallet service. In doing so, it has enabled a simplified online-payment process for its cross-border customers, 90 percent of whom pay with a credit card.

DHgate, which is based in Beijing, says it is the world’s leading B2B online trading marketplace for goods manufactured in China, serving the world’s small and midsize sized enterprises (SMEs) since 2004. The company says its listings exceed 30 million online products, and it connects 1.2 million sellers with 5.5 million buyers from 227 countries and regions. It celebrated its 10th anniversary last month.

In a recent interview with Internet Retailer, Noah Herschman, DHgate chief operating officer, noted the company earns its revenue from commissions charged to sellers. Commissions typically vary by product category, but generally sellers pay a 4.5 percent commission on sales of $300 of more and 8 percent to 12 percent on sales less than $300, he says. DHgate collects the payment from buyers and forwards the proceeds minus its commission to sellers, according to the article.

Through its platform, DHgate says businesses can buy directly from factories at lower prices than retail. DHgate and MasterCard became strategic partners in December, expediting seamless payment solutions for Chinese SMEs and creating convenience for clients globally to source for Chinese products.

More than 40,000 merchants in 10 markets that include China, Australia, Canada, Italy, New Zealand, Poland, Singapore, South Africa, United Kingdom and the U.S. accept MasterPass, which lunched in February 2013. China Construction Bank began offering MasterPass in March, becoming the first issuer in China and Asia to implement MasterPass with its own digital wallet, LongPass, according MasterCard’s DHgate announcement.

More than 40,000 merchants in 10 different markets accept MasterPass. Market Platform Dynamics CEO Karen Webster caught up with Vib Prasad, group head of MasterPass, to talk about how the app is continuing to grow into different market segments around the world, how MasterCard is motivating consumers to use it, and how the company plans to keep issuer brands alive.

When using MasterPass online or through a smartphone, businesses click on the “Buy With MasterPass” button at checkout, unlock their MasterPass account, and select the payment and shipping option. They then confirm the purchase to complete the order. MasterPass also can facilitate in-store payments through Near Field Communication, QR codes or other functionality, depending on the issuer’s desire.

Because the digital wallet is global, it easily facilitates cross-border online purchases, which are becoming increasingly important for many businesses, according to Dennis Chang, MasterCard’s head of China.

“With more cross-border eCommerce activities undertaken by SMEs in China, MasterPass provides an innovative payment solution with just a few clicks to facilitate secure and convenient transactions,” he said in the DHgate announcement. “We are pleased to be working with DHgate to support SMEs in cross-border e-commerce business development.”

Shen Hao, DHgate vice president, also acknowledged MasterPass’ safer, more convenient online transaction capabilities. “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,” he said.