Reliable Methods Used by Importers to Pay Chinese Suppliers

Paying for the products you order is the most important thing when you are just starting out with your Chinese suppliers.What are the trusted payment methods for importers to pay Chinese suppliers? Here are 8 common ways to pay your Chinese suppliers.

1.Wise Business

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2. International wire transfer / Telegraphic Transfer (T/T)

Wire transfers are also known as telex transfers (TT) or more generally as wire transfers or electronic funds transfers.
International wire transfer is a common payment method widely accepted by Chinese suppliers. This is probably also the oldest payment method in international trade after the barter system, and the most popular, especially for low-end transactions. Usually, the advance payment is sent before production, and the balance is sent according to the payment terms. If something goes wrong, the main risk for the importer is the loss of the advance payment.
Typically, wire transfers are completed within two to four business days, depending on the origin and destination of the transfer, as well as any currency conversion requirements. During the telegraphic transfer, the bank will charge the remitter a certain remittance fee, and send a telegram or telex to the remittance bank, instructing the remittance to pay a certain amount to the payee. The recipient is not charged. Among the three traditional remittance methods, compared with bill transfer and mail transfer, wire transfer is faster but more expensive.

3.Escrow

Escrow is a legal concept that describes a financial agreement in which a third party holds assets or money on behalf of two other parties completing a transaction. Often used for small transactions
Escrow protects both parties. This means you pay an initial deposit before shipping, but the funds are held by a third party. The third party will not release funds to the supplier until you have received the goods. Alipay Escrow is the most popular escrow service for Chinese importers. It’s owned by the Alibaba Group, so it does have some credibility. While popular in China, acceptance for international deals remains low.

4. Letter of Credit (LC)

Larger suppliers and international trading companies are usually glad to accept LC. However, for small and medium-sized factories ，they are normallyreluctant to accept this payment method due to the complexity and additional language barriers.
Letter of credit reduce the supplier’s risk of non-payment by the buyer. As a buyer, a letter of credit can also give you peace of mind that the supplier will abide by any terms you agree to.
But on the other hand, letters of credit are very expensive and the paperwork is very complicated. In essence, a letter of credit is a rather expensive option. They are usually only used for very large transactions, or when Chinese suppliers make it a condition of their business.

5. PayPal

Paypal has gained more and more acceptance over the past few years and is now a generally accepted payment method, especially for tech-savvy ECommerce sellers.
Paypal is not suitable for larger transactions as their fees are percentage based and the exchange rate costs are high. But is a very good payment method for buying very small quantities and samples.
Although PayPal focuses on buyer protection, there are still certain risks. Their protection policies are complex, especially for international transactions. In the event of a dispute, it may take time to file a claim, and of course, you may not win the case.

6. Western Union

Western Union is second only to Paypal in terms of ease of use, Western Union is the payment method of choice for supplier sample payments and small payments.
Western Union (WU) is widely accepted for small to medium transactions. One of the reasons they are popular with Chinese suppliers (especially small ones) is that they can be collected easily and quickly, and at a very low cost compared to some other methods.
However, there are risks. Once the money is sent, you have very little protection. WU should not be considered unless you know and trust your provider.
Although the advertised fee is low, you end up paying more for the item. This is because WU makes money through currency exchange.

7. Credit card

Today, some technology Chinese suppliers accept credit card payments, such as computer accessories and similar technology-oriented industries. But other than that, credit cards are rarely an option because for the buyer it’s low risk, but for the Chinese suppliers it’s high risk.
One thing to remember about fraud in international trade is that it doesn’t just happen to buyers, it often happens to suppliers as well. Fraudulent buyers lead to high losses for sellers, and it is just a high-risk payment method for suppliers due to chargeback issues as well as expensive options in terms of fees.

8. Cash payment

Cash is a common payment method accepted by Chinese suppliers. Even large transactions are often done in cash, and there are cash discounts. Cash payment is valid when the importer is represented in China or represented by a local purchasing company/agent.
From an importer’s perspective, cash is relatively high risk, with little protection if you’re not happy with your item. Not only that, but you also need to be aware of hidden fees in the exchange rate.Cash is usually only used for smaller transactions and with a certain level of trust with the Chinese suppliers.