Paypal, Letter of Credit, or International Wire Transfer – Wondering about the safest methods of making international payments? If this question is hindering your path while dealing with the Chinese manufacturers, then fret not and scroll down the page to know about the different payment options.
This simple guide takes you through 5 different possibilities to make a fuss-free payment. Let’s take a look!!
One of the leading payment methods, Escrow is beneficial for both parties, be it the buyer or manufacturer. This payment model involves a trusted third party who holds the fund that the buyer agreed to offer and transfers the same to the manufacturer once certain criteria have met.
This mainly adds an extra layer of security for enterprises dealing with Chinese Suppliers. Moreover, it diminishes the risk that generally arises due to the long wait between the order and the receipt.
It promises a refund if:
- Your product doesn’t meet predetermined quality standards
- Your shipment gets delayed beyond the promised date
2. International Wire Transfers
One of the commonly used payment methods, International Wire Transfers mainly includes the electronic transfer of funds using a network of transfer agencies and banks across the world. Also known as the Telegraphic Transfer, it is widely accepted by both buyers and sellers, owing to its credibility.
However, one thing that must be noted before initiating payments through this mode is its steep transfer fee. The transaction charge is quite high, not just for the sender but for the receiver as well.
3. Letters of Credit
In this payment mechanism, a bank guarantees payment to a supplier on the behalf of the buyer. It works best for large enterprises that can offer some sort of collateral to the bank. In addition to the collateral, the bank also charges the percentage of the value of the letter of credit as their fee.
Keep in the mind the fact that Letters of Credit is a reliable mode of payment and is not exactly desirable, owing to the cumbersome process and its sky-high fees.
4. Sourcing Agents
The next reliable method of making payments to the Chinese manufacturer is the Sourcing Agent. These agents can help you with your Sourcing China projects. However, organizations should only opt for these methods if they have trustworthy sourcing agents.
When a company initiates payment through the sourcing agent, there is a low risk of fraud and other associated risks.
5. Western Union
The ways to make international payments are never-ending but we are wrapping up the list with yet another convenient payment mode i.e. Western Union. This fast and easy-to-use method is widely accepted for small and medium-sized businesses. However, this payment mode doesn’t offer any payment protection, therefore, it is advised not to consider this method unless and until your supplier is trustworthy.
To Wrap Up
There you have it!! Select the payment method that works right for your business and get the transaction done to your Chinese supplier without involving any risk.
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