Things to Consider: Best Way to Pay Overseas Suppliers

Dec 27, 2023 Chapter 3. Payment

What is the best way to pay overseas suppliers? We understand the significant impact of payment methods on the outcome. It acts as a thin line between success and failure, especially when you buy from overseas suppliers. Today, in this guide, we will be sharing 5 main best way to to pay international vendors.





Pay Overseas Suppliers at the Right Time 

Depositing 30% upfront before manufacturing is the standard payment term and balances payment upon completion but only before supplying. However, when and understand which condition you’re making this second and final payment matters.

It’s all belongs to an incentive given to the supplier to comply with your unique requirements. However, when the buyer pays suppliers full payment, before any regulatory compliance and quality check, the buyer takes the incentive away, and thus payment must be withheld.

However, this payment method is not secure and doesn’t protect the initial deposit payment; the supplier still has a lot to lose, even with a deposit payment secured.



best way to pay overseas suppliers
payment methods pros and cons between importer and exporter





5 Best Ways to Pay Overseas Suppliers

Safe Way to Send Money to China payment is dependent on all types of transactions and how they are managed. Wire transfers are considered unsafe as there is no refund method available. Whereas, if you manage the entire procedure well, it may provide you the maximum control.

You can add L/C for an extra layer of security. But it can be risky sometimes if someone with insufficient experience or expertise sets the terms.



Telegraphic Transfer or T/T payment to China

Security: 1 out of 5


What is a TT payment and how does it work?

T/T payment stands for telegraphic transfer. T/T payment refers to an electronic method through which funds are transferred primarily for overseas wire transactions. They are sent from the buyers’ bank to the seller’s bank.

When a supplier in China asks to be paid through this method, they really mean a wire transfer. Actually, A wire transfer is not the same as T/T payment.

In Asian countries, the most common payment method used for interns treads is wire transfer. It takes about 3 to 5 working days to clear the payment, and the cost ranges between 25 to 50 US dollars. The exact amount depends upon your agreement with the banks’ commercial department.


TT payment send money to China


How to send T/T payment to overseas suppliers? 

To send a T/T payment to overseas, you need to contact the bank’s commercial department and tell them the amount of money you need to wire to a Chinese company. They will first give you a form to fill. If it’s not your first time using this payment method, their internet banking application will save you time.

The Chinese supplier is likely to send you a pro forma invoice. This invoice will consist of their bank account information. It is strongly advised that you ask for all that information beforehand. A lot of buyers tend to get scammed by hackers that send invoices with their bank account information.

After all that, you need to take a screenshot or get a digital copy and send it directly to your Chinese supplier.


Follow these important tips:

      • Ensure that you are not misspelling anything as that can put your payment instruction on hold for weeks.
      • The name of the company should be in Chinese. You need to write it in English. Don’t get the name translated yourself; ask the supplier because they know the exact registered name.
      • If the company’s name is long, write the name in the “address 1” field.


Telegraphic transfer T/T procedure of payments:

The process of T/T payment to China consists of:

        1. 30% payment deposit
        2. Start of the production
        3. Completion of production
        4. Now the products are tested for quality and compliance
        5. After approval, it moves to buyers to approve the batch
        6. Once it’s approved, the products are delivered at the loading port.
        7. During landing, the bill of scan copies are provided
        8. The rest is now shipment and loading procedure
        9. After shipment, the balance amount of 70% is paid.
        10. The seller ensures sending the original Landing bill and other necessary documents required for the destination Port’s cargo luggage release.



Which payment method is requested by overseas suppliers frequently? 

overseas suppliers usually request a bank wire. Read below to find out how it works:

      • The supplier will develop samples of the product until they produce the same product you are looking for.
      • Before the production begins, you will send a 30% deposit (by T/T).
      • Then your supplier will purchase the materials and start the production.
      • You can partner with a quality assurance firm so that they can inspect the product quality.
      • Then you have to pay the remaining 70% before the shipment process.
      • Then the supplier will ship the goods and send documents using a courier service.


In graphical form, it looks like this:

How to send money to China TT PAYMENT



How to send T/T payment to overseas suggestions

All Chinese sellers accept T/T payment methods. T/T is an accepted method, yet it contains no protection except the relevant L/C. That’s why it is considered an unsafe payment procedure. Here are a few tips regarding sending money to China

      1. To save procedure and reduce risk, payment should be divided into two halves 30% as deposit money and 70 % after completion of an order.
      2. Please ensure that you do not deposit any money before signing and completing the sales contract and performance invoice.
      3. Ensure that you pay the remaining balance amount after quality control reports and inspections in China, or you have received the relevant reports from quality report test results.
      4. Never pay the entire amount in advance. The act may cause you to remove from the supplier’s motivation to remake/repair any defective item or low-quality product.
      5. You may have to pay an advance of 30 % before 30 days – because many companies in the country of China don’t have already-made products in their stock. So they may be forwarding your order to some local manufacturing factory.




L/C (Letter of Credit Payment procedure) payment

-Security: 4 out of 5


T/T is one of best way to pay overseas suppliers transaction methods – whereas an L/C provides the buyer with extra security. A letter of Credit forces the supplier or manufacturer fulfills some pre-determined and specific requirements until the money is entirely transferred. In this whole procedure, no deposit funds are needed. That makes the minimum possible risk for buyers.

Here the query arises, which is while choosing the payment procedure through L/C, what will be the clauses for payments release?

The answer is that the bank eventually makes the payment to the sender and credits the buyers once every condition is fulfilled. Bank personals are not one of the industry people, and they check all the relevant documentation thoroughly. Once every document is standardized, they will transfer the money.

The buyers and sellers are responsible for the negotiation process. They will decide which particular documents the letter must provide per transaction. Some condition examples are:

      • Approved quality reports of products after complete inspection to avoid shipment of defective items.
      • Bill of landing which is issued before or on a specific date to remit delays
      • To avoid any non-compliant items for shipment – an approved report of laboratory testing.


All manufacturers/suppliers in China and the Asian region accept the payment by letter of credit L/C. 



Letter of Credit (L/C)Payment procedure:

Here is how you can transact money through L/C payment to China.

      1. Both parties, i.e., the seller. manufacturer and buyer, negotiate and on conditions and sign a sales agreement that states the relevant requirements must be fulfilled before the payment release.
      2. The buyer will contact the local bank and apply for the Letter of Credit payment.
      3. After it, the buyer contacts the seller’s bank in China and presents the L/C.
      4. Afterward, the manufacturer or seller bank will contact the respective person and offer payment advice.
      5. Now after the production starts and is completed, it moves for quality inspection and product testing.
      6. Once the product gets clearance from the quality and product inspection, it is sent for delivery to the port of loading and shipment.
      7. The consignee provides the relevant documents to the bank – these documents can be quality assurance reports or freight documents.
      8. Once all the conditions are met, banks release the funds.




Use Alibaba Trade Assurance

-Security: 4.5 out of 5


Letter of credit and Alibaba Trade assurance is a somewhat similar payment method because – both offer to release payment once all requirements are filled. The provisions of payments can be:


      • Complete the order before or on the final delivery time as specified
      • The products match and fulfill all the approved specifications and requirements for the best quality.


The procedure that makes both of them different is that a buyer must deposit the money to an Alibaba account through a Telegraphic transfer or credit card before the production procedure starts.


Is Alibaba Trade Assurance safe?

Of course, Trade Assurance is one of the safest procedures to buy products through Alibaba. Being one of the safest methods means your orders are under protection until you get them. That eventually means that for any reason, if you do not get your products, Alibaba will accept total liability. Not only this, they will handle all sorts of disputes between you and the manufacturer/supplier.


Will Alibaba refund my money?

 If the Alibaba supplier fails to ship your goods on time or the product quality varies from what has been agreed upon, you may apply for a refund on Alibaba within 30 days of delivery and Alibaba shall support the Refund.

The procedure to get a refund from Alibaba:


      • Once you sign in with the application, follow these steps:
      • Open the application and go to the tab ‘My Alibaba-manage order” & click on order detail.
      • Once the page opens, click t apply for a refund to open the dispute.
      • Fill out the dispute form and click on the tab Submit.
      • Once you have submitted the dispute, please wait for the supplier’s response.


Alibaba charges per transaction:

The payment processing fee is 2.95% of the total payable amount. The limit amount can vary between Master Card users and American Express Payment.

The relevant cost will be deducted from your account once you make your payment.


How to set up Alibaba trade assurance?

If you want to use Trade Assurance on Alibaba, pay the manufacturer or supplier via Alibaba designated CITIBANK account. The payment can be made through e-check, credit card, or Bank Transfer.

The procedure set up Alibaba trade assurance is:


      • Search & contact the Trade Assurance Supplier
      • Now place your order.
      • Select the type of coverage
      • Lastly, Confirm your Order
      • Lastly, Confirm your Order





-Security: 4 out of 5


PayPal charges high transaction fees comparatively; that’s why it is only a convenient choice for sample orders and small orders. The transaction fee is generally around 3.4 to 4.4%. PayPal method is rarely considered as a method for entire orders.

PayPal offers a free transfer if both the seller and buyers are from the U.S. But while doing business with Chinese suppliers, it is not possible. Mostly, Chinese suppliers create an account using the Chinese address, and PayPal also monitors network IP by visiting their website.

So if you want to save some money, it is a friendly suggestion to register for a PayPal account using a bank account. Instead of credit or debit cards – the bank account transfer is through the ACH channel, hard to cheat. The debit card is easy to report for the loss than restraining money transfer to increase PayPal’s risk to charge some extra handling fee. Click here to see the PayPal fee details.  (* Fee cost from


In what amount makes PayPal fit for using to send money to China?

PayPal accepts a credit card payment, making shopping more comfortable when you have a low cash flow or an item is higher in price. PayPal provides six months refund protection; the recipient will worry about cheating, and the cheater can apply for a refund after complete information of the courier is provided.

To avoid any cheating or scams, Chinese manufacturers and suppliers prefer to receive a smaller amount under 500 USD from the PayPal payment method. For orders more than 500 USD, they might ask for other payment procedures.

The cons of PayPal for Chinese sellers do not end here. The Chinese recipient cannot withdraw money from a PayPal account in USD, and they will need to convert it into RMB. PayPal is charging a significantly high cost of 35 USD on every withdrawal.




Western Union

– Security: 0 out of 5


Western Union is a popular name for money transfer services since 1871.

It has a long history of providing payment solutions worldwide. Western Union has a vast network of 5 hundred thousand agent locations.


How to send money to China by using Western Union?

Western Union has changed transaction rules and regulations with time. Long before, they made it compulsory that the sender must be present at their agent locations for money transactions. But now, you can transfer money online or through in-store or via mobile app – any way you can think.

Western Union charges different handling fees for different sending methods. But if you are transacting money through counter operation, it will set a significantly lower price than other methods. Western Union transfer is simple, and the recipient may even don’t need a banking account, and you may only need to provide information like – Name, city province, and contact number.

Once you have sent the money, you will provide the following information to the receiver for collecting money.

      • MTCN number which is given by the Western Union system
      • Name of sender
      • Amount
      • And lastly, the beneficiary.


When you transfer money to any place in China – once payment is made, they will provide all information to the China receiver, take their ID card and visit the agent locations in China to fill the form and get the cash.


Transfer Fee of Western Union:

To quickly check the handling fee for your transfer, visit Western Union’s official site.

To save amount on handling fees while sending money to China, you can:

      • Send cash through Western Union. For sending money from credit or debit cards, PayPal rates are a better option.
      • Western Union charges different handling fees according to the money transfer plan you may select. For instance, if you want the money to be received on the same day, the price will be higher.
      • If the recipient collects money by western union location, that will save a significant amount of handling fee than receiving in the account.


Any tips for ensuring the Western Union transfer are smooth?

To make sending and receiving payment to China more convenient and more comfortable, you can follow the following points.

      • Make sure that you have written the Fist and last name/Family name correctly. Sometimes the payment gets delayed due to a mistake of the word.
      • If you detect some fault or mistake on recipient information, immediately contact Western Union location for correction.
      • Do not show any business information for transfer as the western union does not allow a transaction for commercial purposes.
      • One Chinese recipient can receive a payment of 50,000 USD per year. Before making payments, make sure to check the remaining quota.


Special notes when using Western Union to send money to China:

Western Union exchange rate is a week, so you should not use it for exchange transfers, such as sending in dollars and receiving in RMB.

When you send a high amount, make sure to compare the handling fee and T/T service fee.

Western Union is losing its popularity in China because many WU agents ask for higher fees during transactions. So when you are using WU services, make sure to check that they are easy to make payment with WU or not.





Negotiate Better Payment Terms to Pay International Suppliers and Maximize Profits?

With the below 3 situations, you can negotiate with the oversea supplier for a better payment.

If your company is famous and established, you can negotiate for the payment. You can arrange the financing of your overseas suppliers.

If you have strong financial guarantees, you can buy more than 1 million American dollars per year. You can work with a company that specializes in trade assurance solutions. You can send the cash to your supplier when they need it, and your account will be debited a lot later.

If you have a buying office in overseas, your presence in the country will help. The supplier will feel less at risk if your have office. You might be able to negotiate a 0% deposit and 100% after the shipment.




Pay for international to Avoid Scams

Payment fraud or scam is common in every field and point in the business. This is done by convincing buyers to transfer funds to a bank that doesn’t belong to the supplier. This scam could be conducted simply by changing the bank details on the Proforma Invoice. However, the method to do this fraud varies, where sometimes it is carried out by corrupted employees.

Moreover, other advanced methods of classic payment fraud involve email account hacking. Yes, an outside party hacks the supplier’s email account, alters the bank details on the invoice, and forwards it to the purchasing manager.

Such frauds carry out using email accounts and are often hosted on different publicly available mail services rather than a renowned domain provider company.

Occasionally, the scammers even take it to the next level by diverting the email communication between the supplier and the buyer to guarantee that no contradictory communication happens between the two parties.

However, due to this fraudulent activity, suppliers never receive money, and without omission, they reject to ship the purchased goods. This way, retrieving the payment is impossible and taken days for suppliers and buyers to understand what happened—suppliers often complain about the payment fraud issues.

Many suppliers put bank details directly on the supplier directory pages, like, and guess what, the scam is super successful!



Best Way to Pay International Vendors Tips   

If you are looking for more tips for paying international payment methods, there are many ways to transfer them. However, few are quicker, safer, and economical than many others. According to World Bank studies, China is one of the biggest hubs of imports and exports, making it among the biggest receiving countries for remittances. These seven tips will help you find one of the most economical, fast, and safe options for money transactions to overseas supplier.

    1. Check the currency rules.

    2. Compare exchange rates and transfer fees.

    3. Prefer an online money transfer service

    4. Make sure to look for refund policies for any unexpected expenses.

    5. Use registered payment solutions.

    6. Prefer to send for a bank account, not for cash collection.

    7. Pay via local bank service or cheapest transaction methods.






Finally, I hope you get to know how to pay international vendors from my article. Either way, Just free to leave a quick comment below, and feel free to consult our product sourcing company services if you have any problem.


Overall, it is important to keep in mind that you don’t have to pick just one of these all payment methods.

A mix of methods can apply at different stages, such as before production, before shipment, and upon delivery. Consider how a mix of sending money to overseas suppliers can provide a more balanced transaction for you.





Best Way to Pay Overseas Suppliers FAQ

The most common terms are 30% in advance and the remaining 70% before shipment. It contains the risk of deposit but also maintains control over the remaining 70%. The remaining amount is payable after quality control and lab testing.

Can I pay my supplier after the goods arrive?

No, it is not possible. The seller or supplier can agree to accept payment upon release of the landing bill but not more than that. By receiving payment after getting products, the supplier will be exposed to fraud. Not to mention buyers can fabricate quality issues and thousands of reasons not to pay.

Can I pay Chinese suppliers in Euros, AUD, GBP, or other currencies?

It is technically possible to transfer money in Euros to account holders in Hong Kong and mainland China because few buyers accept Euros payments since 2010. Now, US dollars are the only duo currency acceptable by Chinese suppliers.

Do I need a USD bank account to pay my supplier in China?

It is not necessary; you can convert it while wiring to your supplier’s bank account. But opening a USD bank account can help to control the exchange rate risks.

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