Choosing a safe payment method for a Chinese supplier is no less important than choosing the product itself. A single mistake could cost you the entire value of the shipment. In this guide from MESAMA, we compare the main payment methods and how to protect your money from fraud.
Main payment methods
| Method | Safety | Notes |
|---|---|---|
| T/T bank transfer | Medium | The most common; pay in installments, not the full amount upfront |
| Trade Assurance | High | Protection through the Alibaba platform |
| Letter of Credit (L/C) | High | For large deals |
| PayPal | High for the buyer | For samples and small amounts |
| Full cash upfront | Risky | Avoid it with a new supplier |
The installment rule (30/70)
The most common in T/T: 30% upfront and 70% before shipping, after seeing photos/an inspection report. Don't pay the full amount upfront to a supplier you haven't dealt with before.
Letters of credit for large deals
For large amounts, a letter of credit (L/C) protects both parties through the banks, since the supplier isn't paid until the agreed documents are met.
How do you avoid fraud?
- Don't transfer to a personal account; the account should be in the registered company's name.
- Verify the supplier's credibility before any payment.
- Tie the 70% payment to a pre-shipment quality inspection.
- Beware offers far cheaper than the market; see how to avoid import fraud.
MESAMA's tips
- Document every agreement in a Proforma Invoice that specifies the specs, quantities, payment terms, and Incoterms.
- Use a trusted middleman in China who verifies and receives on your behalf.
MESAMA's team in China verifies suppliers and follows production and inspection before releasing payments.
Want safe payment and worry-free importing? Get in touch with MESAMA to get started.