How to Pay Chinese Suppliers Safely: T/T, L/C, Trade Assurance and More

Payment is where most China sourcing losses actually happen: a deposit sent to the wrong account, a balance paid before anyone checked the goods, or a "protected" payment that turns out not to cover business purchases. The method you choose decides how much leverage you keep after the money leaves your account.

This guide compares the main options, what each one costs and protects, and the checks that stop the most common payment fraud.

The main payment methods compared#

Each method trades cost against protection. Bank transfer is the cheapest for larger amounts but gives no built-in recourse; platform and card payments cost more but add a dispute process.

The U.S. International Trade Administration ranks the classic trade payment methods by risk: cash in advance is the riskiest for the buyer, open account the safest, and letters of credit protect both sides. In China sourcing, "cash in advance" usually means a T/T deposit plus balance.

T/T bank transfer and deposit terms#

A T/T (telegraphic transfer) is an international wire, normally sent over SWIFT in US dollars to the supplier's company account in China. It is the default for manufacturing orders because suppliers are used to it and the cost does not scale with order size the way card or PayPal fees do.

The protection in a T/T deal comes from how you split the payment, not from the transfer itself. Common structures:

1. 30% deposit, 70% before shipment. The most common pattern for custom production. The deposit funds materials; you pay the balance once a pre-shipment inspection passes.
2. 30% deposit, 70% against a copy of the bill of lading. Gives you slightly more leverage because the goods have physically shipped, though the supplier may hold the original documents until paid.
3. 100% upfront. Normal for samples and small stock orders. Keep amounts small until you trust the supplier.
4. Open account (e.g. 30 days after shipment). Usually only offered after a long track record.

Tie the balance to a condition you control. "Balance due within 3 working days after the inspection report shows PASS" is far stronger than "balance before shipment". See the pre-shipment inspection checklist for what that inspection should cover.

When you send the wire, you choose who pays the charges: OUR (you pay everything), SHA (shared) or BEN (the supplier pays). With SHA or BEN, intermediary banks may deduct fees, and the supplier receives less than the invoice amount. Agree the charge option in advance so a short payment does not delay shipment.

How to stop bank-detail-change fraud#

The most damaging payment fraud in international trade is not a fake supplier but a fake email from your real supplier. Criminals compromise or imitate an email account, then send a message saying the bank account has changed. You pay the new account, and the real supplier never receives the money.

The FBI's Internet Crime Complaint Center reported more than US$55 billion in exposed losses from business email compromise between October 2013 and December 2023, and noted that banks in Hong Kong and mainland China were among common destinations for the stolen funds. Its core advice is to verify any change of account information through a second channel.

A practical routine:

1. Save the supplier's bank details once, at the start of the relationship, and treat that record as the only valid one.
2. Treat every change request as suspicious, however urgent or official it looks. Legitimate suppliers rarely change banks mid-order.
3. Call a number you already had (from earlier calls, the contract or the supplier's verified platform profile), never a number in the email asking for the change. A video call or a message on an existing WeChat thread works too.
4. Check the sender's address character by character. Look-alike domains and lookalike free-mail accounts are common.
5. Confirm the beneficiary name matches the contract. Some providers, such as Wise, reject transfers when the name does not match the account, but do not rely on that as your only check.
6. Send a small test amount to a new account and have the supplier confirm receipt by phone before sending the rest.

If you do pay a fraudulent account, contact your bank immediately and ask it to recall the wire. Speed matters; the chance of recovery falls quickly once funds move on.

When to use a letter of credit#

A letter of credit is a bank's commitment to pay the supplier once they present documents that match the credit's terms exactly. It is worth the cost and paperwork for large orders with a supplier you have not worked with, or when you need a credit line from your bank to fund the purchase.

Most L/Cs are issued subject to the ICC's Uniform Customs and Practice for Documentary Credits (UCP 600), the rules in force since July 1, 2007. Two principles in UCP 600 matter most for importers:

• Banks deal with documents, not goods. The bank checks that the invoice, bill of lading and other documents comply with the credit. It does not inspect the product.
• Banks have a fixed time to examine documents, a maximum of five banking days after presentation under UCP 600.

That first point is why an L/C does not guarantee quality on its own. To make it protect you, require an inspection certificate issued by a third-party inspection company you name as one of the presentation documents. If the goods fail inspection, the supplier cannot present a clean certificate and cannot draw on the credit.

The U.S. ITA notes that L/Cs are labor-intensive and relatively expensive because of bank fees, and that document errors frequently cause discrepancies and delays. For orders of a few thousand dollars, the fees and admin usually outweigh the benefit. Ask your bank for its current fee schedule before you commit.

Trade Assurance, PayPal, Wise and Alipay#

Platform and fintech options are useful for smaller orders, but each has limits you should understand before relying on it.

Alibaba.com Trade Assurance. Covers orders placed and paid through Alibaba.com. As of September 2026, Alibaba's money-back policy describes refunds for orders that do not ship as agreed or arrive defective, incorrect or damaged, with a 30-day window after delivery for standard buyers (60 days for Enterprise tiers). The online order is the basis of any claim, so write product specifications, packaging and inspection terms into it. Paying the same supplier by direct transfer outside the platform removes this protection. See how Alibaba Trade Assurance works.

PayPal. Convenient for samples. However, PayPal's own help pages list items intended for resale, industrial machinery and certain custom-made items among purchases not covered by Purchase Protection. Because PayPal's fees fall on the receiving seller, suppliers may add a surcharge to cover them.

Wise. A Wise Business account can send yuan (CNY) to a company account in mainland China at a CIPS member bank. Wise states the recipient name must fully match the bank account name or the transfer is rejected, and the receiving bank may ask for a contract and invoice. If your invoice is in US dollars, pay in dollars.

Alipay. Foreign cards linked to Alipay are designed for paying merchants rather than making transfers, so it suits small purchases rather than production orders. Buying on domestic platforms such as 1688 usually goes through an agent; see how to buy from 1688.

A payment plan for your first order#

Use this sequence for a first production order with a new supplier:

1. Verify the company and its business license before paying anything (how to verify a supplier).
2. Pay for samples by a low-cost method; small losses here are acceptable.
3. Put payment terms, bank details, Incoterm and inspection standard in the purchase order.
4. Pay a deposit (commonly 30%) by T/T to the company account named in the contract, or through Trade Assurance.
5. Book an independent pre-shipment inspection.
6. Pay the balance only after the report passes, and after confirming bank details by phone.