An Analysis On the Payment Methods When Importing From China

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Are you wondering which is the best way to pay your Chinese suppliers? There is no easy answer to this question because each payment method has its pros and cons, largely depending on the value of your order. In this article, we will introduce some of the most common payment methods and analyze their pros and cons to help you choose the best payment method for you.

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Wire Transfer / Telegraphic Transfer (T/T)

Wire transfer is the most common form of payment and can be made directly through online banking or local banks. Using this method involves a certain amount of risk for both the buyer and the seller. The supplier usually requires the buyer to pay 30% of the order value as a deposit before the production can begin. The buyer will have to pay the balance before the goods are manufactured and shipped.

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  • It’s very simple and convenient. You can go to a local bank or just operate through bank’s e-banking portal.
  • No need to open a new account or anything else.


  • Charge is high. Because you have to pay a fixed fee for each transaction,and there is also a rate difference when the currency is converted. The supplier may also have to pay some sort of fixed fee when they receive the money.
  • Irrevocable.
  • It usually takes a few days to transfer.


Escrow payment means you pay into an account held by a third-party agent in advance before dispatch, and after you confirm receipt of the goods, they give your money to the supplier.This payment method is very popular in China, just like Trade Assurance on Alibaba platform.

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  • A good method to protect both parties. Buyers can ask for a refund if they are not satisfied with the products while suppliers don’t have to worry about the fake customers.
  • Convenient for low-value transactions.


  • There is a charge for this service. The charge, usually 5% of the transaction value, is charged to the supplier first and then passed on to you.
  • Unsuitable for large orders since it may tie up money for a long time which will put pressure on cash flow.


Paypal is a popular payment method used by many Western entrepreneurs, but in fact, many Chinese suppliers currently do not accept this payment method, because it is not an esay thing to get a Paypal account in China. Businesses can choose to send money through PayPal because it ensures that you send the money to a legitimate account.

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  • Convenient and fast. The transfer is usually instant and you can operate it easily.
  • Suitable for small orders such as small samples.
  • Provide discounts for loyal customers.


  • The charge is high. Fees are charged on a percentage basis and paypal is a convenient way to pay if you are buying in small batches or samples. However, as the order size expands, so does the charge.
  • Not widely accepted among Chinese suppliers.

Letter of Credit (L/C)

A letter of credit is a written document issued by a bank with a conditional promise of payment. The seller and buyer sign a sales agreement, which specifies the conditions that must be met before payment can be made. When these conditions are met, the buyer can pay the money to the seller through the bank.Payment by L/C requires no deposit, which greatly reduces the buyer’s risk. If you want to know more about L/C, please refer to this article: Import From China: Letter of Credit Explained

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  • No deposit.
  • Customized. The terms of the letter of credit can be negotiated between the buyer and the seller, and the most suitable terms can be formulated according to their own conditions.


  • You may get scammed. For example, there may be a risk of unscrupulous merchants conspiring with shipowners to commit bill of lading fraud.
  • The fee is very high which is suitable for very large transactions.

Western Union

While Western Union is convenient for individuals who want to send money urgently around the world, most serious buyers avoid this method of payment. When you send money through Western Union, you get a 10-digit remittance control number, then you transfer the number to the person you are paying. Anyone can use this number to withdraw money from a Western Union branch.

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  • Convenient and fast, especially convenient for small to medium transactions.
  • Low transfer fee.


  • High risky. Western Union doesn’t really provide any payment protection for customers, and once money is paid, there’s no way to get it back.
  • High charge in exchange. Western Union will make money by increasing exchange rate. For example, they charge more to buy yuan than their published exchange rate.

International Credit Cards

At present, very few Chinese suppliers are willing to accept credit card payment, because the risk to the buyer is low but the risk to the supplier is high. Fraudulent buyers can cause huge losses to sellers.

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  • Low risk for buyer.
  • Convenient and easy to use.


  • High risk for suppliers.
  • High cost. Credit card fees are high, and buyers have to foot the bill.

Sourcing Agent

If you have a trusted sourcing agent in China, then you can pay your suppliers through your sourcing agent. But you need to check whether the sourcing agent will charge you for this fee on top of the purchase fee.



  • Low risk. As far as our company is concerned, the supplier will be verified before payment and the full payment will be made only after the goods meet the requirements.
  • Save unnecessary transfer fees.


  • Some sourcing agents may charge a fee.

Tips for Making Payment to Your Chinese Suppliers

In fact, it is hard to say which one is the best payment methods for you when importing from China. You need to choose the most suitable method according to the actual situation. No matter what method you choose, please keep the following tips in mind.

Don’t Transfer Money to the Following Accounts

It is generally suggested that you do not make payments under these circumstances because it is risky to do so.

  • A bitcoin account
  • HK offshore account
  • Company account not matching beneficiary
  • Private account

Never Pay 100% in Advance

This is not recommended even if you have worked with the supplier for many years. Because you could end up paying a terrible price.

Conduct Background Check

If you are cooperating with this supplier for the first time, it is highly recommended that you should hire a third-party agent to verify the company for you to avoid being cheated.

Pay Attention to Your Cash Flow

Pay attention to your cash flow distribution when choosing your payment method. Because some payment methods tie up cash for too long, it can put a strain on your funds. So be sure to choose the most suitable payment method while ensuring that cash flow is abundant.


This article analyzes the pros and cons of several commonly used payment methods, and if you have any questions about choosing a payment method, we are willing to help.

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