Category: Payments

Even to this day, we keep receiving reports from importers getting scammed by anonymous traders in China. In many cases, they have one thing in common – the buyer sends money using Western Union.

While Western Union as a company is legit, it was never intended as a platform for paying Chinese suppliers.

In this article, I explain why and how scammers exploit Western Union to defraud importers, and which payment methods you should use instead.

What’s the benefit of using Western Union?

Western Union operates a global payment network that enables individuals to transfer money from one place to another, in a matter of hours. While payment services like PayPal and TransferWise offer fast payments today, that was not the case until only a few years ago.

At a time when telegraphic transfers, normally taking 4 to 5 days to arrive, was the only option, Western Union was the go-to place for fast payments.

While they may not be the only option for fast payments these days, they still have a strong position across the globe. Especially when you need to send emergency funds to a friend or family member that lost their credit card or passport in a foreign country.

Continue reading Paying Chinese Suppliers Using Western Union: A Complete Guide

Escrow payment solutions require the supplier to meet certain conditions (e.g., ship products) before the funds are released. In theory, Escrow payments ensure that the buyer is not scammed and that products are actually shipped.

In practice, however, Escrow payments are only as good as the ‘money release conditions’ the supplier is forced to comply with. Keep reading, and learn how Escrow payments in China work, and the various solutions available for importers.
Continue reading Escrow Payments to Chinese Suppliers: A Complete Guide

Sending money through telegraphic transfer (T/T), or paying by letter of credit (L/C), is slow and relatively complicated.

The wrong beneficiary name, or even address, can delay the payment for weeks, and there is no effective way to request a refund in case you get scammed by a supplier.

So, why aren’t more importers using payment services such as PayPal, that can send money instantly to suppliers – while also offering the chance of getting the money back if the products are not matching the specifications?

Keep reading, and learn why many suppliers refuse to accept PayPal payments, and what you can do to change their mind.

1. Most suppliers only accept PayPal payments when ordering product samples

PayPal is available to both businesses and individuals in both Mainland China and Hong Kong. Opening an account only takes minutes, and is as easy as anywhere else on the planet.

Yet, many Chinese suppliers, both factories and trading companies, don’t accept payments via PayPal.

Why is that?

First, it’s a matter of old habits.

Most suppliers are accustomed to the established payment methods, such as telegraphic transfer and letter of credit – while they are quick to dismiss newer payment methods.

The suppliers that do accept PayPal payments tend to restrict it to sample invoice payments only. As such, most suppliers don’t accept PayPal payments for larger orders. Continue reading How to Pay China Factories By PayPal: 5 Things You Must Know

By default, most Chinese manufacturers require a 30% deposit before production. When, something turns out to not go as planned, the deposit, as if by magic, suddenly turns into a non-refundable down payment, never to be seen again. To avoid undertaking such risks, many importers rely Letters of Credit (L/C) to pay their suppliers, which requires no such deposit. Instead, the payment is released only when the goods are shipped.

In this article, we explain how a Letter of Credit can act as an extra layer of security when buying from China – but also why importers cannot blindly rely on an L/C as the ultimate safety mechanism.

How a Letter of Credit Can Protect Your Business

Unlike a regular T/T transaction, an L/C guarantees that a seller, for example a Chinese manufacturer, will receive a payment in full once certain conditions has been met. For importers, an L/C removes the risk of making an upfront deposit payment, before production, while the supplier can be sure that they will indeed receive the money when the batch is completed. Well, that’s at least how it works in theory. Continue reading Payment By Letter of Credit in China – A Complete Guide