Business trade is becoming more and more global, what all buyers and sellers care mostly during shopping is the Payment method. For now, these six payment methods are the most widely-used: Telegraphic Transfer, Letter of credit, PayPal, western union, Alibaba TA and international credit card. Do you know their usage and precautions? How to receive goods and payment safely in international trade is crucial, so today I will share this post to you.
Telegraphic Transfer – the most common payment term requested by Chinese suppliers?
Telegraphic Transfer or telex transfer, often abbreviated to TT, is a term used to refer to an electronic means of transferring funds. A transfer charge is often charged by the sending bank and in some cases by the receiving bank.
Important tips for you when choose Telegraphic Transfer T/T
- I strongly suggest you ask for that information earlier (as part of your pre-qualification of a potential supplier). Many buyers have been scammed by hackers who send invoices with their own bank account information…
- Make sure to avoid any misspelling, which might cause the payment instruction to be held in limbo for weeks!
- You will need to write the company name in English, not in Chinese. Don’t try to do your own translation job, even if your written Chinese is excellent! It has to match exactly the English name under that is registered in the seller’s bank records.
- If the company name is too long, keep writing it in the “address 1” field. This is sometimes mentioned on the T/T forms of banks that work a lot with China:
Letter of credit-a very important Payment method of international trade.
A letter of credit is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. Due to the nature of international dealings, including factors such as distance, differing laws in each country, and difficulty in knowing each party personally. If you’re familiar with escrow services, the concept is similar: Banks act as “disinterested” third parties (they don’t take anybody’s side), and they release funds only after certain conditions are met. Letters of credit are common in international trade.
If you rely on a letter of credit to receive payment, here’s are the important tips for you.
- Carefully review all requirements for the letter of credit before agreeing to any deal.
- Understand all of the documents required. If you don’t know what something is, ask your bank.
- Will truly be able to get all of the necessary documents for the letter of credit.
- Understand the time limits associated with the letter of credit, and whether or not they are reasonable.
- Know how quickly your service providers (shippers, etc.) will produce documents for you.
- Can get the documents to the bank on time.
- Make sure all documents required by the letter of credit match the letter of credit application exactly. Even typographical errors or common substitutions can cause problems.
Paypal-the most safe and easy payment method
PayPal is safe for both buyers and sellers if they follow the appropriate security protocols like using two-factor verification, and take full advantage of the security measures PayPal offers its customer base, according to security experts. Still, with the burgeoning use of PayPal – there were 237 million active PayPal accounts in the first quarter of 2018 – users have every right to wonder whether PayPal is safe to digitally send and receive money. Paypal is now the most recommended payment method by RunSourcing.
Tips for Safe Buying By payment method Paypal Take precautions to ensure that your personal and financial information stays safe.
- Keep software up-to-date on your computer or mobile device—especially security software.
- Avoid public Wi-Fi for financial transactions, including managing or even viewing your PayPal account. Use mobile data instead if you’re out and about.
- Use a credit card as your funding method instead of a debit card or direct bank transfer (more on that below).
- Use a dedicated computer for financial transactions if you want to be especially safe. Don’t use that device for surfing and social media.
- Be wary of links in emails. Phishing scams may feature messages that appear to come from PayPal but really link to impostor sites that steal your account information.
Western Union-A popular payment method
Western Union is a popular way for scam artists to receive money from their victims, so be absolutely sure that you know the person that you are sending the money to, and that you trust what the money is for.
Western Union has the following guidelines on when not to send money:
- Never send money to a grandchild, family member, or friend for an emergency situation that you haven’t personally confirmed through a reliable source.
- Never send money to someone you just met online.
- Never use Western Union for internet purchases (there is no guarantee that the person will send the purchased goods to you).
- Never send money through Western Union for an employment opportunity or to claim “lottery winnings”. You will often be prompted via email to send money to West African countries, such as Nigeria or Ghana in these situations. Remember that unsolicited emails are often scams – you did not win a lottery and you weren’t selected by a “prince” to receive millions of dollars.
- Never send Western Union transfers for purchases or sales on sites like Craigslist.com. Sometimes, a buyer will claim to purchase something you have put up for sale and send a check for more than the price. They will then ask you to send a Western Union transfer for the difference. This is a common scam.
Trade Assurance of Alibaba-The secure online environment for global trade
You could use Trade Assurance service as following tips
- Find a participating supplier. Look for the products or suppliers with the Trade Assurance mark
- Negotiate with the supplier. Negotiate with a supplier about order details, like product price, quantity, shipment date, etc.
- Start order/draft contract. Place an order on Alibaba.com by clicking “Start Order” or by asking the supplier to draft a Trade Assurance contract. You can upload a PI or place an order online by filling in the order details.
- Post-delivery coverage applies for Trade Assurance service, and all your actual total payment is covered. If the quality/shipment does not match the standards in your contract, you can open a dispute within 30 days after confirming receipt of the order.
International credit card
Credit cards are one of the most widely used online payment methods and allow sellers to accept both local and international payments. Accept Visa and Mastercard credit card payments directly on your blog, website or shopping cart system.
Smart ways to use your credit card
- Balance alerts can help you keep your spending in check
- Spending analysis tools make sticking to your budget a cinch
- Mid-cycle payments could improve your credit score
- Shopping through rewards malls will earn you stellar rewards
- Moving your due date could help you avoid missing a payment
- Strategic swiping is the best way to maximize rewards earning
- APR promotions could save you big bucks on interest
As for how to choose the Proper payment method in different situations and orders, we will continue to share in the following articles. If you have any further questions or special concerns, you can leave a message below.
Among the upon discription, here’s the Payment Method Comparision
1. Accepted by all suppliers with a bank account
2. Low cost
1. Requires an upfront deposit payment
2. No payment protection
1. No deposit payment required
2. Puts pressure on the supplier to comply with buyer requirements
1. Rarely accepted for very small orders (e.g. Below $30,000)
2. Not accepted by all suppliers
3. High fees
1. Integrated with Alibaba’s supplier directory
2. Funds are withheld by Alibaba until the buyer ‘approves’ the goods
1. Not accepted by all Alibaba suppliers
1. Suitable for very small transactions (e.g. Sample orders)
2. Fast. Payments arrive instantly.
1. Not accepted by all suppliers
2. High fees