Almost every story about losing money in China importing ends the same way: the buyer sent money to an account they had never verified, for goods that no one had inspected, on terms that gave the supplier the entire balance before anything was shipped. The payment method is not a detail — it is the control system for the whole order. This guide covers the four methods that work, the fee ranges you should expect in 2026, the milestone structures that keep the balance in your hands, and the one email that costs more than any of it.
- Where the money actually goes wrong
- T/T — the default, structured properly
- Alibaba Trade Assurance — what it does and does not cover
- Letters of credit — when they earn their fee
- PayPal, cards, Wise and D/P
- Payment routes to never use
- Bank-detail fraud: the $50,000 email
- A payment schedule by order size
Where the money actually goes wrong
Your money is exposed at three separate moments, and each one needs its own defence:
- The deposit. On a 30/70 order, 30% of the value leaves before a single unit exists. Nothing in a bank transfer protects this. It is protected by verification done before you send it — licence, account name, factory visit. Our supplier verification checklist covers that side in detail.
- The balance. This is the leverage payment. If the balance is released before the goods are made and inspected, you have no way to correct defects except goodwill. Tie it to a report, not to a ship date.
- The bank details themselves. Most large losses do not come from a fake supplier. They come from a real order where the payment went to an account the buyer never confirmed — sometimes opened by a fraudster who intercepted the invoice. This is the risk that catches experienced buyers, and it is covered in the section below.
Everything else in this guide is about moving those three risks to someone else — a factory, an escrow platform, or a bank.
T/T — the default, structured properly
T/T (telegraphic transfer, i.e. a bank wire) is how the vast majority of China orders are paid, including ours. It is cheap, fast, accepted by every factory, and reversible only with the supplier's cooperation. The method is not the problem; the structure is.
The industry standard is 30% deposit, 70% balance, and the useful question is what the 70% is released against:
| Structure | Balance released against | Where it fits |
|---|---|---|
| 30 / 70 | Copy of the bill of lading (proof of shipment) | The baseline. Acceptable on low-risk orders with a verified, long-standing supplier. |
| 30 / 40 / 30 | 40% after a passed pre-shipment inspection, 30% against the B/L copy | Best balance for most first orders. The supplier is paid for work done, and the largest slice is still tied to quality. |
| 30 / 30 / 30 / 10 | 30% at inspection, 30% at shipment, 10% after arrival | High-value or high-defect-risk orders; the retained 10% funds any final settlement. |
| 100% deposit | Nothing | Samples and small orders under a few thousand dollars, and then only after verification. |
| 100% after arrival (open account) | Supplier carries the whole risk | Repeat orders after years of clean history. Expect a price premium or a refusal from anyone you have not worked with. |
Costs on your side of a T/T in 2026:
| Charge | Typical range | Note |
|---|---|---|
| Outgoing wire fee | $20–$60 per transfer | Two transfers on a 30/70 order |
| Intermediary / correspondent bank | $15–$45 per transfer | Often deducted in transit, so the supplier receives less and may invoice the shortfall. Ask your bank for OUR charges |
| Currency conversion spread | 0.2–1% | Usually the largest single cost. Compare against a mid-market rate before you confirm |
| Inspection before balance release | $200–$400 per man-day | The cheapest insurance in the trade — see inspection gating |
Two habits worth building. First, ask for the bank details to be printed on the proforma invoice and confirmed by voice or video with a person you have already spoken to — not by email alone. Second, write the payment milestones into the contract or sales agreement: amounts, currency, what evidence triggers each payment, and what happens if the inspection fails.
Alibaba Trade Assurance — what it covers and what it does not
Trade Assurance is the payment escrow built into Alibaba.com orders. It is free to buyers (the supplier pays the platform fee), and for a first order placed on the platform it is worth using. The catch is what it actually guarantees.
It covers two situations only: the supplier fails to ship by the date written into the order, or the delivered goods do not match the specification written into the order. Nothing else. Subjective quality ("it feels cheap"), damage after shipment, missed certification, IP copying, and loss of profit are all outside the programme.
The escrow releases on shipment, not on delivery. Many buyers assume their money is held until they confirm receipt. It is not: Alibaba releases funds to the supplier once a valid shipment is recorded. If defects show up on arrival, you are in a dispute to claw money back from a company that already has it.
The window is short and hard. A dispute must be opened within 30 days of delivery or expected delivery. Late shipment claims are easy to win because platform timestamps prove them. Quality claims are won with a third-party inspection report — without one, it becomes your word against the supplier's photos.
Coverage is capped per supplier, commonly in the $50,000–$150,000 range depending on the account. And anything paid off-platform — a wire to the supplier's bank, Western Union, a friend's account — has no Trade Assurance protection at all, whatever the profile page says.
The practical rule: use Trade Assurance when you order through the platform, always write the specification into the order text itself (material, dimensions, colour codes, packaging, defect limits), and still book an inspection above roughly $5,000. Trade Assurance protects the transaction. It does not verify the supplier, and it does not survive a vaguely written spec. For the scam patterns that sit outside it, see our sourcing scams guide.
Letters of credit — when they earn their fee
A letter of credit moves the guarantee from the supplier to a bank. Your bank pays only against a defined document set — typically a clean on-board bill of lading, commercial invoice, packing list, certificate of origin, and, if you insist on it, an inspection certificate. If the documents do not comply, the money stays put. That is real protection, and it is why large first orders with unverified factories are still done this way.
It is also bureaucratic and priced accordingly:
| Charge | Typical range |
|---|---|
| Issuance / opening commission | 0.1–0.4% of value, minimum $200–$500 |
| Advising bank fee | $50–$120 |
| Negotiation / document examination | 0.1–0.25% of value |
| Discrepancy fee | $60–$150 per discrepancy |
| Amendment | $50–$200 each |
| Confirmation (if required) | 0.1–0.5% of value |
All in, expect 1–2.5% of order value versus well under 1% for T/T. Two further realities: a large share of first presentations contain at least one discrepancy — a misspelled name, a missing signature — each of which stalls payment; and many smaller factories simply cannot handle L/C paperwork and will either refuse or price the hassle in.
Where it is clearly worth it: a new, unverified factory and an order above roughly $50,000–$100,000, where the fee is a fraction of the deposit at risk. Below $20,000 with a verified supplier, the same money is better spent on an inspection and a staged T/T. If quality is the concern rather than non-delivery, remember the bank reads documents, not goods — the inspection certificate has to be written into the credit as a required document, or the L/C protects the wrong thing.
PayPal, cards, Wise and D/P
These four are useful in narrow situations and expensive or unsafe outside them:
| Method | Good for | Cost / limit |
|---|---|---|
| PayPal | Samples and small orders; it is the method most factories accept for a $300 sample set | Around 4%+ in cross-border fees, and most factories refuse it for bulk or add the fee to the price. Disputes favour buyers on non-delivery but not on manufacturing quality |
| Credit / debit card (platform) | Convenience on platform orders with escrow | 1–3% processing surcharge, and chargeback rights weaken on custom-manufactured goods |
| Wise or similar transfer services | Paying the supplier's RMB or USD account when they accept it, especially on repeat orders | Roughly 0.5–1% all-in, close to the mid-market rate; the supplier must agree and provide an account in the company's registered name |
| D/P (documents against payment) | Mid-size orders with a supplier you have shipped with before | Bank collection fees of roughly 0.1–0.3%; the bank releases shipping documents on payment, which proves shipment but still does not prove quality |
Note the pattern: every route that is cheaper than T/T asks the supplier to give up something. When a supplier digs in on payment method, that is information — sometimes about their cash flow, sometimes about their intentions.
Payment routes to never use
- Western Union, MoneyGram, any cash-equivalent. Irrecoverable once collected, and a standard feature of advance-fee fraud. Legitimate factories have corporate bank accounts; a supplier who can only take Western Union for a bulk order is telling you what they are.
- Crypto. Same problem, with no paper trail at all.
- Personal bank accounts. The account holder must be the company you contracted with. A "sales manager's" personal account — often in a different province, occasionally in Hong Kong or Singapore — gives you no legal link to the entity you are buying from.
- Accounts in a third party's name ("our trading partner will receive it"). Common with small factories that use an export agent, but if you contract with company A and pay company B, sorting out a dispute becomes a question about who your contract was actually with.
- 100% upfront on a first order. Not a red flag on its own for a $500 sample order; a serious one above a few thousand dollars. Standard practice is a deposit plus a balance against documents.
Bank-detail fraud: the $50,000 email
The most expensive single failure in China importing is not a fake factory. It is a payment sent to the wrong account because someone changed the bank details in an email thread. The pattern: a real order is progressing, a message arrives from an address that looks like the supplier's — sometimes a reply inside the genuine thread — explaining that the company has "changed banks" or "the old account is frozen," and asking for the balance to be redirected. Twenty minutes later the money is gone, and because the buyer authorised the transfer, the bank will not reverse it. Reported losses from these business email compromise cases commonly run from tens of thousands into the hundreds of thousands of dollars.
Defences, in order of importance:
- Confirm bank details by voice or video, once, before the first payment — with a person you have already met on a call, at a number that came from the contract rather than the email.
- Match the account name to the legal company name on the business licence. If the licence says Foshan Jiaxin Furniture Co., Ltd, the beneficiary must not be a different surname or a personal name.
- Treat any change of bank details as fraud until proven otherwise. Call the old number. No legitimate supplier minds this; the good ones quite like being asked.
- Check the SWIFT code resolves to a Chinese bank branch consistent with the supplier's city, and that the address on the instruction matches the invoice.
- Never send a balance before inspection passes. Even in the worst case of a redirected payment, if the largest slice is still unpaid, your exposure is capped.
Inspection gating is the part that pays for itself repeatedly. A pre-shipment inspection under AQL 2.5 typically costs $200–$400 per man-day; on a $60,000 order it is under 1% of exposure and it converts "the supplier says it is fine" into a written report that either releases the balance or triggers rework. We book third-party inspections with SGS, BV or TÜV, or with whichever firm the buyer nominates, and the balance is released after the report clears — that is the standard we work to on every order.
A payment schedule by order size
What normal practice looks like, before any negotiation about your specific factory:
| Order value | Structure | Protection layer |
|---|---|---|
| Under $2,000 | 100% on the proforma invoice | Licence check and account-name match; consider PayPal |
| $2,000–$20,000 | 30% deposit / 70% after passed inspection and B/L copy | Inspection before the balance; Trade Assurance if ordered on Alibaba |
| $20,000–$50,000 | 30 / 40 / 30 — deposit, inspection, shipment | Inspection plus verified corporate account; supplier references |
| $50,000–$100,000, new supplier | 30 / 30 / 30 / 10, or an irrevocable L/C at sight with an inspection certificate as a document | Bank-mediated documents and a retained 10% |
| Repeat orders | Negotiate the deposit down, e.g. 20 / 80, keep inspection gating | Track record — earned, not assumed |
If you use a sourcing agent, the service fee (typically 5–15% of order value, 3–5% on large orders) sits on top of these costs and should never be buried inside the unit price. Ask for the factory quote and the agent fee as two separate numbers — if they cannot be separated, you cannot verify either. The full breakdown of agent fee models is in what a sourcing agent does and charges.
Frequently asked questions
Is T/T safe when paying a Chinese supplier?
It is as safe as the verification behind it. A wire to a corporate account whose name matches the business licence, released in stages against an inspection report, is how most of the trade is paid. A wire to a personal account with no verified factory behind it is not a payment method problem, it is a supplier problem.
Should I ask for 100% payment after delivery?
You can ask; most factories will decline on a first order, because they carry the raw-material cost. A fair first-order compromise is a modest deposit, a large inspection-gated middle payment, and a small retained balance. Once you have a clean history, open-account terms become realistic.
Who pays the bank charges?
Market convention is that each side pays its own bank's charges, with intermediary charges deducted from the transfer in transit — which is why suppliers occasionally invoice a shortfall. Put one line in the contract: all bank charges for whose account, and whether intermediary fees are shared. It prevents a small argument later.
What currency should I pay in?
USD is the default in China trade, though RMB settlement is increasingly common for repeat orders and can reduce the supplier's conversion cost. Pay in the currency on the contract and invoice, and confirm the FX spread you are being charged — on a $50,000 order, half a percentage point is $250.
Want the payment structure handled for you?
We verify the supplier and the bank account, book the inspection that releases your balance, and give you the factory price and our fee as two separate numbers. Send us your order and we will tell you which structure fits it.