How to Send Money to China Safely: 5 Main Common Methods
Are you a manufacturer in China and concerned about international payment methods and the process? This guide is for you; continue reading it, and we will discuss everything about how to send money to China or transfer money to china. So stay connected!
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 common methods typically used when how to send money to Chinese suppliers.
How to Send Money to China Payment Method Overview
- Telegraphic Transfer (T/T)
- Alibaba Trade Assurance
- Letter of Credit (L/C)
- Western Union
Transfer Money to China at the Right Time Helps Your Business and is Key to Success
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.
Are You Paying The Right Company?
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 Alibaba.com, and guess what, the scam is super successful! Know more about How to Avoid Alibaba Scams 2020. Most buyers don’t bother to check whether the account actually belongs to the supplier. However, so due to such reasons, overseas buyers fail to common sense while dealing with Asian suppliers.
China is one of the largest international markets globally. People are doing business with the country. Business dealings mean online money transactions and procedures. So are you also looking for how to send money to China? This article will guide you in detail.
Telegraphic Transfer or TT
A T/T is known as a standard money transaction from a bank – the transaction can occur through the city branch of the bank or via the internet banking system. All Chinese sellers accept this method. 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.
Telegraphic transfer T/T procedure of payments:
The process of T/T consists of:
- 30% payment deposit
- Start of the production
- Completion of production
- Now the products are tested for quality and compliance
- After approval, it moves to buyers to approve the batch
- Once it’s approved, the products are delivered at the loading port.
- During landing, the bill of scan copies are provided
- The rest is now shipment and loading procedure
- After shipment, the balance amount of 70% is paid.
- The seller ensures sending the original Landing bill and other necessary documents required for the destination Port’s cargo luggage release.
How to send money to China T/T Suggestions
Here are a few tips regarding the transaction of money to China
- To save procedure and reduce risk, payment should be divided into two halves 30% as deposit money and 70 % after completion of an order.
- Please ensure that you do not deposit any money before signing and completing the sales contract and performance invoice.
- 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.
- 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.
- 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)
T/T is one of the insecure money 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. Click to learn how to use L/C methods while importing from China.
Letter of Credit Payment procedure:
Here is how you can transact money through L/C method
- 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.
- The buyer will contact the local bank and apply for the Letter of Credit payment.
- After it, the buyer contacts the seller’s bank in China and presents the L/C.
- Afterward, the manufacturer or seller bank will contact the respective person and offer payment advice.
- Now after the production starts and is completed, it moves for quality inspection and product testing.
- Once the product gets clearance from the quality and product inspection, it is sent for delivery to the port of loading and shipment.
- The consignee provides the relevant documents to the bank – these documents can be quality assurance reports or freight documents.
- Once all the conditions are met, banks release the funds.
Alibaba Trade Assurance
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 Telegraphic transfer or credit card before the production procedure starts.
Is Alibaba Trade Assurance trustworthy?
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.
The procedure to get a refund from Alibaba:
- Once you sign in with the Alibaba.com 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 from Master Card user and American Express Payment.
The relevant cost will be deducted from your account once you make your payment.
How to use Trade Assurance on Alibaba.com?
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 is:
- Search & contact the Trade Assurance Supplier
- Now place your order.
- Select the type of coverage
- Lastly, Confirm your Order
- Lastly, Confirm your Order
How to Send Money to China use PayPal
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 PayPal.com)
In what amount makes PayPal fit for use 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 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
- 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 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 correct. 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.
7 tips for how to send money to China
If you are looking for more tips for China’s international payment methods, there are many ways to transfer it. 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 China.
- Check the Chinese currency rules.
- Compare exchange rates and transfer fees.
- Prefer an online money transfer service
- Make sure to look for refund policies for any unexpected expenses.
- Use registered payment solutions.
- Prefer to send for a bank account, not for cash collection.
- Pay via local bank service or cheapest transaction methods.
Frequently Asked Questions（how to send money to China FAQ）
– What are the standard payment terms when from China?
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 fraudulent. 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.
– How to send money to China when importing products?
Safe payment is depended all 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.
– 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.
– What is the best way to send money to China?
The best way to send money to China depends on your specific needs and requirements. WU and Xoom are common – whereas TransferWise ensures the mid-market rate. WorldRemit and Remitly connect with AliPay and helps to provide quick and convenient delivery. Also, InstaReM and XE offer fee-free transfers.
Finally, I hope you get to know how to send money to China from my article. Either way, Just free to leave a quick comment below, and feel free to consult our sourcing agent services if you have any problem.