As China remains its high position in manufacturing and foreign trading, but enforces strict policies in capital controls, many western importers are looking for more time and cost efficient ways to pay Chinese suppliers.
There are some commonly used approaches like letters of credit, PayPal, wise transfers. This article will discuss several payment methods. Remember, there is no one-size-fits-all answer as each one has its own pros and cons.
International wire transfer / Telegraphic Transfer (T/T)
Bank-to-bank wire transfers are one of the most common methods of payment. It is best used if you have done some due diligence on the supplier (for instance, verifying that they are legitimate suppliers with a registered business before sending any money to them.)
This mode of payment is widely accepted by both buyers and sellers since it is generally considered safe. However, the charges may be high and take long days to process. Since these transactions can take between two and five business days to process, the supplier is also at risk of currency exchange fluctuation just like with cash.
Letters of credit
Larger suppliers and international trading companies with large orders are normally happy to accept LCs and consider it as the most reliable and safest way. However, due to the cumbersome process with plenty of paperwork and high cost, this form of payment is not that friendly to small and medium-sized businesses.
This mode of payment is good for small orders or for initial samples. Fees are charged as a percentage and there are also substantial exchange rate costs. If you’re buying small quantities or samples, PayPal can be a convenient way to pay. However, the fees increase quickly as the size of the transaction grows. A fixed fee of 3 percent to 5 percent of the invoice value plus PayPal’s own marked-up currency conversion rates may discourage lots of users.
Another risk of paying through PayPal is that most PayPal accounts in China are held by individuals and not businesses. This raises the buyer’s risk of paying the wrong person.
iPeakoin Global Account
iPeakoin offers a fast and low-cost payment approach for enterprises of all business sizes. Enterprises can open a multi-currency account through iPeakoin, and easily pay Chinese suppliers on an online platform at anytime and anywhere with fixed fee rate.
If you want to pay various suppliers at the same time, iPeakoin also supports bulk payments, which brings great convenience for business holders.
As for safety, iPeakoin is an FDIC-insured Fintech and each account holder is available for insurance coverage of $250,000.
In general, for any importing business, you should take careful consideration of cash flow. Choosing a payment method may be nerve-wracking, you can contact us for more information.
If you have any questions or feedback, or just want to say hi, send us a note at firstname.lastname@example.org. We always love to chat.
As a neobank, iPeakoin builds a new generation of banking for all businesses to operate without borders and restrictions. We aim to create social value, serve the public good and drive sustainable growth for our customers.