Payments
How to pay a Chinese supplier safely, from deposit to balance.
Once a transfer has left your bank, getting it back depends on the banks, the supplier and how fast you act. What protects you is decided before you pay: the method, how much you pay before the goods are checked, and whether the account really belongs to your supplier. Here is how each method works, where its protection stops, and the checks to run before every transfer.
Updated 16 October 2026 · 8 min read
In short
How do you pay a Chinese supplier safely?
Pay by bank transfer to a company account in the supplier's own legal name, held in its own jurisdiction, and confirm any change of bank details by phone on a number you already had. Keep the deposit limited, pay the balance only after a passed inspection, and use a letter of credit or escrow where the risk justifies it.
Four ways to pay, compared
Importers buying from China meet four payment methods. They differ in who holds the money, and until when.
| Method | How it works | What protects you | Where protection stops |
|---|---|---|---|
| Bank transfer (T/T) | A SWIFT wire from your bank to the supplier's bank, usually split into a deposit and a balance. | Only the payment schedule: how much you pay before the goods are checked. | Money sent is with the supplier, or with whoever controls the account. |
| Letter of credit (L/C) | Your bank undertakes to pay the supplier when it presents the documents the credit requires, under the ICC's UCP 600 rules. | Payment only against complying documents, such as a bill of lading that proves shipment. | Banks examine documents, not goods. Bank fees and careful drafting. |
| Escrow, such as Alibaba Trade Assurance | A third party holds your payment and releases it to the supplier once you have received and confirmed the goods. | A dispute process if the goods do not arrive or do not match the order. | Only orders paid through the platform, and only within its rules. |
| Payment platforms such as PayPal | Card or wallet payment with the platform's buyer protection. | A claim if the item does not arrive or is significantly not as described. | Made for small purchases. PayPal's US terms exclude items bought for resale. |
Bank transfer: deposit and balance
A SWIFT wire is the most common way to pay suppliers in Asia, and the method Chinese factories usually ask for. Its protection is not in the transfer itself but in the schedule: how much of the price you pay before the goods exist, and what must happen before you pay the rest.
| Structure | How it works | Your position |
|---|---|---|
| 100% in advance | You pay the full price before production starts. | No leverage left. The US International Trade Administration calls it the least attractive option for the buyer. |
| 30% deposit, 70% before shipment | The term Chinese suppliers most often request: a deposit to start production, the balance when the goods are ready. | Better, but the balance is paid on the supplier's word unless an inspection comes first. |
| 30% deposit, 70% after a passed inspection | The balance falls due only once an independent pre-shipment inspection has passed. | The quality check comes before the money. This is the structure to aim for. |
| 30% deposit, 70% against a copy of the bill of lading | You pay the balance once the goods are on the ship and the bill of lading copy matches the order; the supplier then sends you the original. | You know the goods have left. Harder to obtain on a small first order. |
Agree in writing who pays the bank charges. The fees of an international wire are either paid by the sender or deducted by the banks from the amount sent, in which case the supplier receives less than the invoice.
Letter of credit: payment against documents
Most documentary credits today are issued subject to the ICC's Uniform Customs and Practice for Documentary Credits, UCP 600, a set of 39 articles. Your bank, the issuing bank, commits to pay the supplier once it presents documents that comply with the credit: typically the commercial invoice, a packing list, the bill of lading and any certificate of origin or insurance you require.
- A credit is irrevocable unless it states otherwise: it cannot be changed or cancelled without the agreement of the buyer, the banks and the supplier.
- Banks deal in documents only. They do not check whether the goods match the contract, so pair the credit with a pre-shipment inspection.
- Under UCP 600, a bank has at most five banking days after presentation to examine the documents.
- Letters of credit are labour-intensive and relatively expensive in bank fees. The US International Trade Administration recommends them for higher-risk situations and new or less-established trade relationships.
Draft the list of required documents with your bank before the supplier sees it. Each document is a condition the supplier must meet, and each discrepancy delays payment.
Escrow, Trade Assurance and payment platforms
Escrow puts a third party between you and the supplier: you pay the escrow service, the supplier ships, and the funds are released once you accept the goods or the inspection period ends. The US International Trade Administration presents cross-border escrow as an option for small transactions.
- Alibaba Trade Assurance applies to orders agreed with a supplier on Alibaba.com and paid through Alibaba.com: the payment is held and released to the supplier after you receive and confirm the product. A transfer straight to the supplier's own account leaves the scheme.
- Put the specifications, packaging and inspection terms in the Trade Assurance order itself, so that a dispute can be measured against them.
- Card and wallet payments suit samples. PayPal's Purchase Protection covers items not received or significantly not as described, within set deadlines; its US terms exclude items intended for resale, industrial machinery used in manufacturing, payments sent to friends and family, and, for not-as-described claims, custom-made items.
Platform terms differ by country and change over time. Read the terms that apply to your account before you rely on them.
Verify the bank details before every transfer
Business email compromise turns a genuine order into a payment to someone else. The FBI's Internet Crime Complaint Center counted more than 55 billion US dollars in exposed losses between October 2013 and December 2023, reported from 186 countries. The fraudster reads the email thread between buyer and supplier, then sends new bank details at the moment of payment, often from the supplier's real, hacked mailbox.
- 01
Collect the details early
Ask for the bank details while you qualify the supplier, before any invoice exists, and check them against the business licence: same company, a company account, a bank in the company's own jurisdiction.
- 02
Fix them in the contract
The account named in the signed contract or proforma is the only one you pay. Any other account is a change, and every change is checked.
- 03
Verify any change through another channel
Call a number you already had, never one given in the message that announces the change. The FBI recommends a secondary channel or two-factor authentication for any request to change account details.
- 04
Read the sender's address
Compare it character by character with earlier messages. On a phone, open the full address rather than trusting the display name.
- 05
Confirm the first payment
After the first transfer to a new supplier, ask for confirmation of receipt before you send anything else.
If you have paid a fraudulent account, time counts. Contact your bank immediately and ask it to recall the transfer, with the indemnification documents it requires. The FBI also asks victims to file a complaint at ic3.gov, whatever the amount; report it to the police in your own country as well.
Red flags before you pay
- A personal account. The EU SME Centre's advice is plain: the account must not belong to an individual.
- A beneficiary that does not match. The account holder must be the company on the business licence and the contract, not a sister company, a partner or an agent you never agreed to pay.
- An account outside the company's jurisdiction. Ask why. In 2023, the FBI found that banks in the United Kingdom and Hong Kong often served as an intermediary stop for diverted funds, followed by China, Mexico and the United Arab Emirates.
- A change of bank details, above all just before a payment is due, whatever the reason given. Changing bank accounts is unusual, and any unexpected request deserves suspicion.
- Pressure: a deadline, a price that expires today, an aggressive caller pushing for speed.
- A demand for full payment in advance by T/T, or for extra fees, such as notary costs, before the deal can proceed.
One red flag does not prove fraud, and no red flag does not prove honesty. Treat each one as a reason to stop and verify before the money leaves.
What to write in the contract
- The supplier's Chinese registered name: in China, a company name in English has no legal value.
- The beneficiary account in full (holder, bank, account number, SWIFT code) and a clause that no change is valid without a signed and stamped amendment, confirmed by phone.
- The payment schedule: the amount and currency of the deposit, and the event that makes the balance due, such as a passed pre-shipment inspection at an agreed AQL.
- Who pays the bank charges, at your end and at the supplier's.
- The product reference: approved sample, specifications, packaging and the defect list used at inspection.
- The Incoterm with its named place, the delivery date, and what happens if the goods fail inspection or ship late.
- A valid company stamp: an official Chinese company chop is round and red, with a star in the middle.
Frequently asked questions
Sources
- FBI IC3: Business Email Compromise, the 55 billion dollar scam (2024)
- US International Trade Administration: Trade Finance Guide (2022)
- ICC Academy: documentary credits, rules and terminology (UCP 600)
- EU SME Centre: primary due diligence in China
- EU SME Centre: simple steps to minimise the risk of scams
- Alibaba.com: Trade Assurance
- PayPal: Purchase Protection program (United States)
- Raiffeisen Bank International: payment redirection fraud
- Global Sources: paying Chinese suppliers by T/T
See how payments to NovaLink work
Missions under 700 US dollars are paid upfront by secure link. Larger orders run on a proforma invoice, with a 30% deposit and the balance due after the inspection report reaches you.