When you start your importing, pay suppliers in China is the crucial part that you shall be aware of.

There are different kinds of payment methods you should know well and choose the best one for you and the suppliers.

In this article, we majorly introduce:

  • 7 most common payment methods to pay suppliers in China
  • Pros and Cons of each payment methods

Table  of content

1) Pay Chinese Suppliers Through Telegraphic Transfer (T/T)

2) Pay Chinese Suppliers Through Escrow Method

3) Pay Supplier in China Through Letters of Credit (LCs)

4) PayPal Method to Pay Suppliers in China

5) Pay Through Western Union Method

6) International credit or debit cards

7) Pay Chinese Suppliers Cash

8) Pros and Cons of each payment methods

1) Pay Chinese Suppliers Through Telegraphic Transfer (T/T)

This is the most common payment method and has been widely accepted by the suppliers.

There are risks on both sides. Suppliers usually insist on requiring a deposit to reduce risk and meanwhile increase risk on your part. The more customized the product or the hard to sell the product is, the higher deposit the supplier will ask for. Therefore, it is better to establish a good relationship with the supplier.

Just like cash, you will bear the costs of foreign exchange transactions. Such high costs include published fees, several fixed SWIFT fees that the intermediary bank may charge, and spreads-the exchange rate difference that you can find on the online currency converter.

Therefore, although wire transfer may be a common payment method, it costs the buyer more than most ways.

2)Pay Chinese Suppliers Through Escrow Method

Escrow is a good way to protect both parties. This means that you pay before shipment, but the funds are held by a third party. They will not be sent to the supplier until you receive the goods.

Despite its popularity in China, acceptance of international transactions is still low. However, if you purchased through Alibaba, you can use Alipay hosting services to pay you.

The idea of ​​escrow reduces the risk by prolonging the waiting time between order and receipt. However, there are still disputes, and it is difficult to get the dispute resolution team to work on your behalf.

The fee is usually 5% of the transaction, which is initially charged to the supplier but will be passed on to you.

Escrow, like PayPal (which we will discuss later) is very convenient for low-value transactions. Although it may take up your money for some time due to increased fees and reality, you may want to skip large transactions.


3) Pay Supplier in China Through Letters of Credit (LCs)

Larger suppliers and international trading companies are usually happy to accept letters of credit. In fact, some people may insist on them. However, due to its complexity and additional language barriers, small and medium-sized factories usually refuse to accept this payment method.

The letter of credit reduces the risk of non-payment by the supplier and buyer. As a buyer, the letter of credit also reassures you that the supplier will comply with any terms you agree to. This explains their popularity in very large transactions over £50,000.

On the other hand, the cost is high and the paperwork is complicated. Therefore, getting professional advice in the first transaction is crucial.

In essence, a letter of credit is a rather expensive option. They are usually only used for very large transactions, or only when the supplier makes them a business condition.

4) PayPal Method to Pay Suppliers in China

Many Chinese suppliers have not yet accepted Paypal, but the number is growing. For small transactions, especially electronic product sales, it is becoming more and more popular. The service is not universally popular among suppliers.

Although PayPal focuses on protecting buyers, there are still some risks. Their protection policies are complex, especially for international transactions. If there is a dispute, it may take some time to file a claim, of course, you may not win.

The fee is charged as a percentage, and there are also a lot of exchange rate costs. If you want to buy a small amount or samples, PayPal is a convenient payment method. However, fees increase rapidly with the growth of the transaction size.

Most importantly, PayPal may be suitable for low-value transactions if it has a choice. But for serious importers, this is too expensive.

5) Pay Through Western Union Method

Western Union (WU) is widely accepted by small and medium-sized transactions. It is very popular with suppliers because it is fast, easy to use, and cheap for them.

However, there are some real risks. Once you send money, you have very little protection. Unless you know and trust the supplier, you shouldn’t even consider using WU.

Although the cost of publishing is lower, you will eventually need to pay a higher price for the product. This is because WU increases charge through an exchange. The fees they charge you for buying Chinese currency exceed the level implied by their published exchange rates.

Moreover, if you quickly search for currency pairs on Google, you will find a big difference. But you won’t see the markup in their online price calculator-you must create an account and log in to understand the price they offer.

In contrast, TransferWise did not increase the fare. All transactions are conducted at the actual exchange rate-the same exchange rate you find on Google.

The reality is that WU can easily conduct small and medium-sized transactions, but even so, it is still risky and costly.

6) International credit or debit cards

Today, some technology suppliers accept card payments. As a buyer, your risk is low, but for a supplier, the risk is high. Fraudulent purchasers may cause the seller to suffer huge losses. This makes business cards unpopular among Chinese suppliers.

The cost is also high-the supplier will transfer it to you whenever possible.

In general, credit card payments are not only unpopular among suppliers but also very expensive for many buyers.

7) Pay Chinese Suppliers Cash

Suppliers like cash and Chinese suppliers are no exception. In China, cash payments are common, and cash discounts are sometimes offered.

However, this is the most dangerous payment method for you. Like WU, there is almost no protection if you are not satisfied with the product.

You still have to face costs, especially those associated with any foreign exchange transactions. In addition to the prescribed fees, you also need to check the exchange rate changes you will face.

If you attribute it to cash, although cash is very popular in China, it is very risky for you. Not only that, but you also need to beware of hidden fees in exchange rates.



There is always some risk with international payments. No way we can claim now is 100% secure. To minimize risks and avoid scams, you have to do due diligence, verify all the suppliers’ information, and ensure that they are a legitimate company.

As for the various payment method. Each method has its pros and cons. And there are some methods especially favored by the supplier. What you have to do is make a thorough comparison, and talk to your supplier, to find out the best solution to your payment methods and terms.