Payment Methods Guide: T/T, L/C, and Trade Assurance

# Payment Methods Guide: Paying Chinese Factories You have negotiated the price, signed the Proforma Invoice (PI), and are ready to start manufacturing. Now comes the most terrifying part of international trade: wiring tens of thousands of dollars to a bank account in China. If you use the wrong payment method or the wrong structure, your leverage drops to zero. > **💡 Withyou Trip Expert Verdict:** > "The absolute golden standard for global manufacturing is the **30/70 T/T Split**. You wire a 30% deposit via Telegraphic Transfer (T/T) to start production. You NEVER pay the remaining 70% until your third-party inspector has verified the goods are perfect, and you have received a copy of the Bill of Lading (B/L). If a factory demands 100% payment upfront, walk away immediately." ## 1. The Global Payment Matrix | Payment Method | Cost to Use | Security for Buyer | Verdict | | :--- | :--- | :--- | :--- | | **30/70 T/T (Wire Transfer)** | ~$40 Bank Fee | ⭐⭐⭐ (Standard) | 🟢 **The universal standard for B2B trade.** | | **L/C (Letter of Credit)** | High Bank Fees | ⭐⭐⭐⭐⭐ (Bulletproof) | 🟡 Only use for massive orders (>$100,000). | | **Alibaba Trade Assurance**| 3% Credit Card Fee | ⭐⭐⭐⭐ (Escrow) | 🟢 Excellent for small orders or first-time buyers. | | **Western Union / Cash** | High Fees | ☠️ Zero | 🔴 SCAM. Never use this for B2B. | ## 2. Navigating Telegraphic Transfers (T/T) T/T is simply a SWIFT international wire transfer from your bank to the factory's bank. * **The Trap:** Hackers frequently intercept factory emails and change the PDF invoice to show their own bank account numbers. * **The Defense:** Before you wire the 30% deposit, you MUST call the factory boss on a WeChat video or voice call and read the bank account numbers aloud to confirm them. * **The Name Match:** The beneficiary name on the bank account must *exactly* match the factory name on the stamped Proforma Invoice. ## 3. Letter of Credit (L/C): The Nuclear Option If you are buying $200,000 worth of heavy machinery, a 30% deposit is still a massive risk. * In this scenario, use a **Letter of Credit (L/C)**. * Your bank freezes the funds in your home country. The money is only released to the Chinese factory's bank when they present highly specific, flawless shipping documents (verifying the goods are on the boat). * While L/Cs are expensive and require complex paperwork, they remove all financial risk from the transaction. ## ❓ Frequently Asked Questions (FAQ) **Q: Can I pay my supplier using PayPal?** A: Factories hate PayPal because the fees are very high (4%+), and PayPal heavily favors the buyer in disputes, allowing buyers to reverse charges months later. A factory might accept PayPal for a $50 sample shipment, but they will never accept it for a $10,000 bulk order.