When you need to send payment to China supplier or travel agency, you would doubt which is the best payment way to address the money, to make sure it is safe and low handling cost.
Importing products from China is a great way to boost your global business, we usually focused on the profits of the product itself, and not many companies will be thinking about finding a good payment method to pay their suppliers in China, which also save an unexpected ton of money.
Let’s work through the simple 6 methods to get the best one for your business.
Wire Transfers
Technically, this method is creating a network combining banks and agencies across the world to transfer and receive money via a bank code.
Bank-to-bank wire transfers are the most common one, the safest one, and also the most expensive one. The bank charges both the payer and the receiver.
International wire transfers typically take 2–5 business days to process, meaning the supplier will be at risk of currency exchange fluctuation during the interim period.
Banks run forms of identity checks on both parties, meaning you’ll be more protected than you are with other payment options. You can also further protect yourself from risk by paying suppliers in tranches, for example, 30% on placing an order and 70% down after quality inspection and shipping.
Escrow
This is a trustworthy payment method that protects both parties by holding funds in an intermediary source. Funds are released to the seller only when predetermined criteria have been met, like for example when you’ve received the merchandise within an agreed time window.
Many Chinese businesses offer a service similar to Escrow known as ‘Trade Assurance’, so, for example, if you’re looking at how to get furniture from China, you can protect yourself by utilizing an approach that adds an extra layer of security.
Escrow is often preferred because it protects both the buyer and seller. When engaging through Escrow, sellers are incentivized to accept preferable terms because they’ll be guaranteed payment providing they deliver goods as promised.
Letters of Credit
Letters of credit, also known as a documentary credit or banker’s commercial credit, or letter of undertaking, is a payment mechanism that’s orchestrated via a bank guarantee.
Letters of credit represent an agreement to pay a seller on your behalf. Banks usually issue these letters for buyers who have pledged collateral, before charging a percentage of this as a fee for the arrangement.
Letters of credit are great for large companies with high orders, otherwise, the high bank fees can offset the tight margins made by smaller companies. With this being said, letters of credit are undesirable in many cases due to being expensive, involving lots of paperwork, and being cumbersome.
Western Union
Though it’s a convenient payment method for urgently sending money across the globe, serious buyers often avoid Western Union. That’s because it fails to offer any payment protection and involves high charges.
When sending money via Western Union, you’ll be given a 10-digit Money Transfer Control Number that you should hand to the person you’re paying. When sending money to another party, they can pick up the funds from a Western Union branch using the code and their ID.
The more troublesome aspect of this approach is that if anyone disappears with your money there is nothing that can be done to recover that funds. Legitimate suppliers rarely demand payment via Western Union, so always have your guard up if a supplier insists on this method.
Sourcing Agents
Working with a sourcing agent like ZakeSports is a great way to elevate buyer protection and operate with maximum reassurance. Not only can sourcing agents help you find the products you need, but they can also coordinate a secure payment arrangement too.
A trustworthy sourcing agent will coordinate a reliable payment method, though it’s important to check the sourcing fee and other attached charges. Working with a sourcing agent is a great way to eradicate some of the associated risks of dealing with Chinese companies, as you’ll only have to deal with a domestic firm.
ZakeSports works with reputable Chinese companies, having established collaborative relationships that can be leveraged for maximum client benefit. The collaboration will help you secure faster lead times, better pricing, improved product quality, and most importantly elite buyer protection.
PayPal
If you’re looking to import a small number of goods, Paypal is a great payment method because it’s swift and effortless. However, a percentage will be added on every transaction, plus currency conversion fee, it is not very friendly on a large order via Paypal. Please in mind that you are making a payment to a business account, instead of a personal account.