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10 Ways to Pay Your Chinese Suppliers

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Picking the right way to pay your Chinese suppliers is very important, especially for importers, entrepreneurs, and businesses engaging in international trade with China. It’s not just about sending money; it’s about smart, secure, and efficient choices. The perfect payment method eases your business dealings and can save you both time and money. As a professional sourcing agent in China, we’re here to guide you through this process, helping you figure out the most advantageous payment options tailored to your specific needs. So let’s jump right in and explore how to get this crucial step right!

10 Payment Methods to Your Chinese Suppliers

International Wire Transfers (T/T): Traditional and Reliable

bank wire

International wire transfer, commonly known as Telegraphic Transfer (T/T), is a common method of transferring money internationally, particularly in the world of business and international trade. T/T payment involves the electronic transfer of funds from one bank to another.

The vast majority of suppliers in China accept and utilize this method.

Here’s how it typically works:

1. A buyer (importer) and a seller (exporter) agree on the terms of a transaction, including the price of goods or services, shipping details, and payment method.

2. The buyer’s bank initiates a T/T payment by instructing the sender bank (usually the buyer’s bank) to transfer a specific amount of money to the seller’s bank account. This request is usually sent electronically through the SWIFT network.

3. The sender bank deducts the specified amount from the buyer’s account and sends the funds to the recipient bank (the seller’s bank) using a secure and rapid electronic communication system.

4. The recipient bank receives the funds and notifies the seller that the payment has been made.

5. Once the seller confirms the receipt of funds, they can proceed with shipping the goods or providing the agreed-upon services to the buyer.

However, it does come with certain risks. For example, suppliers may ask for a partial deposit to lower their own risk, which in turn increases the risk on your side. Generally, the more customized the goods, the higher the deposit you may be required to pay. Despite these considerations, T/T remains the most widely used and preferred method of payment.

When using T/T, there are additional costs involved. These include processing fees charged by your bank and possibly other intermediary banks that handle the transfer via the SWIFT network. Additionally, there are costs associated with exchange rate differences. It’s important to factor in these expenses when calculating the total cost of your transaction with Chinese suppliers.

Escrow Services: Balancing Safety and Convenience


Escrow offers a safeguard for both buyers and sellers. Here’s how it works: you pay upfront, but instead of the money going straight to the supplier, it’s held by a neutral third party. This third party keeps the payment secure until your goods are safely in your hands.

In China, escrow is a common practice, particularly when using platforms like Alibaba, which typically employs Alipay Escrow for transactions. This method really shines by cutting down the risk that comes with the waiting period from ordering to receiving your items.

Regarding costs, escrow services typically charge about 3.25% of the total transaction value. For international buyers using services like, there might be an additional fee, say $25, to cover any intermediary bank charges.

Escrow is especially handy for smaller deals. For larger transactions, however, you might want to think twice. The fees can add up, and your funds could be tied up for a longer duration than anticipated.

Letters of Credit (L/C): Secure Payments for Large Orders

Letter of Credit

A Letter of Credit (L/C), also known as an L/C, is an important payment method in international trade, especially when there’s little trust between parties involved in cross-border transactions. It provides a level of security and meets the needs of both buyers and sellers.

There are four common situations:

1. High-Risk Countries: When trading with countries or regions facing political or economic instability, both parties may prefer using LCs to reduce risks.

2. International Trade: In cases involving multiple countries in a trade transaction, LCs can offer additional security and trust, making them more prevalent.

3. High-Value Transactions: For valuable goods or services, both parties may be more inclined to opt for LCs to ensure the smooth progression of the transaction.

4. Unfamiliar Trading Partners: LCs can serve as a means to establish trust when trading partners are not well-acquainted or lack mutual trust.

Here’s how it works:

1. The buyer and seller agree on terms, including the price, delivery details, and payment method.

2. The buyer signs an L/C with their bank, specifying the payment amount, delivery deadline, and other conditions.

3. The buyer’s bank issues the L/C to the seller’s bank, promising to pay a certain amount under specified conditions. This commitment is typically transmitted electronically for security.

4. Upon receiving the L/C, the seller can fulfill the contract and submit the required documents to their bank to receive payment.

5. The seller’s bank checks the documents to ensure they meet the L/C’s conditions. If everything is in order, the buyer’s bank releases the payment to the seller’s bank, which then transfers the funds to the seller.

The primary advantage of an L/C is that it provides payment security since the buyer’s bank has committed to making the payment. This reduces the seller’s risk, especially when dealing with unfamiliar buyers. For the buyer, it ensures that payment only occurs if the seller fulfills the contract terms, enhancing payment control.

However, L/Cs come with fees, including issuance and bank charges, and can take time to set up, so buyers and sellers often choose payment methods based on their specific circumstances, considering alternatives like Telegraphic Transfer (T/T) or Documentary Collections (D/P or D/A).

PayPal: Simple Solution for Small Transactions

PayPal logo

PayPal is a widely known payment method that offers convenient and fast transactions through credit cards or linked bank accounts. This has made PayPal one of the preferred payment methods for many businesses and individuals in international trade.

For small transactions, particularly sample orders or low-value deals, PayPal has distinct advantages. Firstly, it offers a secure and swift payment option, allowing buyers to make instant payments with immediate account crediting. Secondly, PayPal’s global reach extends to over 200 countries and regions, supporting multiple currencies, making it suitable for varied international payment needs. Additionally, PayPal has partnerships with some e-commerce websites, becoming one of their payment options.

However, there are some limitations and drawbacks to using PayPal. Firstly, its transaction fees are higher compared to other payment methods. Secondly, not all suppliers accept PayPal for full or large orders, limiting its use in bigger transactions. Moreover, due to high withdrawal fees and restrictions in China, most Chinese suppliers ask foreign buyers to cover their fees (typically around 4.5%).

Western Union: Fast but Risky

western-union logo
Western Union is a company that provides international money transfer services. You can use it to send money to people in many different countries.
  • Pros (Good Points):
    1. Speed: Money is transferred quickly.
    2. Accessibility: It’s available in many places globally.
    3. No Bank Needed: You can send money without a bank account.
  • Cons (Risks):
    1. Costly: Since sending money is Western Union’s main business, the fees can be relatively high, especially for smaller amounts.
    2. Scam Risk: Sometimes used for scams. Be cautious.
    3. Transfer Limits: There might be limits on how much you can send.
    4. Possible impact on trust in transactions: since western union directly transfers money to your supplier’s account. If the supplier receives the payment but refuses to deliver the goods, the buyer may suffer losses. Therefore, in some first-time cooperation or transactions lacking trust, using this payment method may not be suitable.

Mobile Payment Options: WeChat and AliPay


When paying suppliers in China, two popular mobile payment options are WeChat Pay and AliPay. These are like mobile wallets and are widely used in China.

  • WeChat Pay:
    • What It Is: A part of the WeChat app, a popular messaging app in China.
    • How to Use:
      1. Set Up: Link a bank card to your WeChat account.
      2. Make Payments: Send money directly to the supplier’s WeChat account.
      3. Invoice & Records: Keep track of payments with digital invoices and transaction history.
  • AliPay:
    • What It Is: A payment service by Alibaba, a large e-commerce company in China.
    • How to Use:
      1. Set Up: Create an AliPay account and link it to your bank account or credit card.
      2. Make Payments: Transfer money to the supplier’s AliPay account.
      3. Security & Records: Offers secure transactions and keeps a record of all payments.

Benefits of Using WeChat Pay and AliPay:

  • Convenient & Fast: Quick way to transfer money.
  • Widely Accepted: Most suppliers in China use these platforms.
  • Digital Records: Easy to track and manage your payments.

Things to Keep in Mind:

  • Currency Exchange: Check for fees and exchange rates.
  • Security: Ensure you’re paying the correct supplier account.
  • Set-Up Process: This may require some time to set up and verify accounts.

Using WeChat Pay and AliPay can make transactions smoother and more efficient when dealing with Chinese suppliers.

International credit or debit cards

credit card

Another way to pay suppliers in China is by using international credit or debit cards. This method is familiar and can be convenient.

  • How It Works:
    • Direct Payment: You can pay directly with your card if the supplier accepts it.
    • Processing Fees: Be aware of possible transaction fees, especially for international payments.
    • Currency Conversion: The payment will automatically convert to the supplier’s local currency, but check conversion rates.
  • Benefits:
    • Widely Accepted: Many suppliers accept major international cards.
    • Safe & Secure: These payments are generally secure and can be tracked.
    • Rewards & Points: You might earn rewards or points from your card provider.
  • Things to Consider:
    • Supplier’s Payment System: Ensure the supplier can accept your card type.
    • Limits & Approvals: Your bank might have limits or require approval for large international transactions.
    • Exchange Rate Fluctuations: Rates can change, affecting the final amount paid.
Using international credit or debit cards can be a straightforward option, especially for occasional or smaller transactions with Chinese suppliers.

Third-Party Payment Platforms: Modern and Efficient


Third-party payment platforms offer another way to pay suppliers in China. They act as intermediaries in transactions, providing additional security and convenience. For example: TransferWise (now Wise) is known for lower fees and real exchange rates.

  • How to Use:
    • Create an Account: Sign up on the platform.
    • Link Your Bank Account or Card: Connect a payment method to your account.
    • Make Payments: Transfer money to the supplier’s account on the same platform.
  • Benefits:
    • Security: These platforms often have strong security measures.
    • Simplicity: Easy to use, especially for frequent international transactions.
    • Transparency: Fees and exchange rates are usually clear.
  • Considerations:
    • Fees: Check for any transaction fees.
    • Exchange Rates: Be aware of the exchange rates offered.
    • Supplier’s Platform Use: Confirm that your supplier uses the same platform.

Third-party payment platforms can be a reliable and efficient method for conducting transactions with suppliers in China, especially for businesses engaging in regular international trade.



Using cash to pay suppliers in China is less common for international transactions but can be used in certain situations.

  • When to Use:
    • Small, Local Transactions: More suitable for small purchases or when you are physically present in China.
    • Immediate Payments: Useful for immediate, on-the-spot transactions.
  • How It Works:
    • Withdraw Cash: You need to withdraw cash in the local currency (Chinese Yuan, CNY).
    • Direct Payment: Pay the supplier directly with cash.
  • Benefits:
    • Very Easy
  • Considerations:
    • Safety: Carrying large amounts of cash can be risky.
    • Currency Exchange: You’ll need to exchange your currency into CNY, which may incur fees.
    • Receipts: Getting an official receipt for cash transactions is crucial for your records.

Using cash can be a viable option with Chinese suppliers, especially when dealing with smaller amounts.

Sourcing Agents:

Moer sourcing logo

Sourcing agents can be a valuable asset when paying suppliers in China, especially for businesses unfamiliar with the local market.

  • What is a Sourcing Agency?
    • Intermediary Role: A sourcing agent acts as a middleman between you and Chinese suppliers.
    • Local Expertise: They know the local market, language, and business practices.
  • How They Facilitate Payments:
    • Supplier Verification: They help verify the legitimacy of suppliers, reducing the risk of fraud.
    • Negotiating Terms: Sourcing agents can negotiate payment terms and prices on your behalf.
    • Handling Transactions: They manage the payment process, ensuring it aligns with agreed terms.
  • Adding Security:
    • Trust and Transparency: Sourcing agents provide an extra layer of trust and transparency in transactions.
    • Problem Resolution: They can assist in resolving any issues that arise with suppliers.
    • Compliance Check: Ensure that transactions comply with local and international trade laws.
  • Benefits:
    • Time-Saving: Simplifies the process, saving you time and effort.
    • Cultural Bridge: Overcomes language and cultural barriers in business transactions.
    • Market Insights: Offers insights into the best suppliers and market trends.
  • Choosing a Sourcing Agent:
    • Experience and Reputation: Look for agents with a good track record and relevant experience.
    • Clear Communication: Ensure they understand your needs and communicate effectively.

For a better understanding of what a sourcing agent is and its vital role in the international trading business, please read our article: What is a sourcing agent?

Using a sourcing agent can streamline the process of dealing with Chinese suppliers, offering a more secure and efficient way to handle payments, especially for businesses not well-acquainted with the Chinese market. Discover how we do this. Need expert help with your supplier payments? Reach out to us for personalized solutions.

Key Considerations When Paying Chinese Suppliers

When dealing with Chinese suppliers, it’s crucial to assess each situation individually. If you have a long-standing relationship with a supplier, you might already have established payment practices. However, for those unfamiliar with the Chinese market, here are some recommendations:

  1. Large Single Transactions: For significant transactions with a single product and supplier, the typical method is a Telegraphic Transfer (T/T). You generally pay a deposit first, followed by the remaining amount upon receiving the bill of lading. The specific terms will depend on your negotiation with the supplier.
  2. Small Transactions and Samples: For smaller amounts or sample products, PayPal is often a convenient choice. If you have access to WeChat Pay or AliPay, these are also viable options.
  3. Multiple Suppliers and Large Orders: In cases where you’re dealing with multiple suppliers or large order values, employing a sourcing agent can be more beneficial. A sourcing agent can save you considerable effort and money. For those interested in importing from China, MOER SOURCING offers professional assistance in navigating these transactions.

Remember, choosing the right payment method is about finding the right balance between speed, convenience, cost, and security. For smaller to medium-sized transactions, PayPal and Western Union might be more suitable due to their quick and convenient services. In contrast, wire transfers are often preferred for larger deals.

By doing your homework, conducting thorough background checks, and considering your specific needs and the level of trust with your supplier, you can effectively manage this crucial aspect of your business.

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