Paying for the products you order from a Christmas Products Supplier is one of the biggest headaches when you’re just starting out with a supplier. If you want to import goods from China, figuring out the best payment method can save your business time and money. If you are still wondering what payment method is the best way to pay Christmas Products Supplier in China, take a look at our article.
Four international payment methods
International wire transfer
This is the most direct way to Christmas Products Supplier in China, and one of the most common. If you already have a business bank account, you don’t need to set up anything else to process this payment.
Most of the time, you just go through your bank’s electronic banking portal and make the transfer there.
Generally, bank wire transfers are normal business practice. Especially for smaller factories, this is their most familiar and favorite payment method. This payment method is acceptable to both parties.
When making a wire transfer, in general, you should have the following information ready about your order:
·Reference number on the invoice
· Payment amount on the invoice
·The number of items you ordered
·Name of the company handling the shipment
This payment method is widely accepted by buyers and sellers. However, fees can be high as you need to factor in your bank’s foreign exchange rate and pay a flat fee for each transaction. The recipient may also have to pay some kind of fixed fee when they receive the money. These costs may come from:
· Your bank’s international transfer fees
·SWIFT correspondent bank charges
· Currency conversion fees
· Fees of the beneficiary bank
Since processing these transactions can take two to five business days, Christmas products suppliers are also exposed to the risk of currency exchange rate fluctuations from the time the payment order is signed to the day the payment is deposited in the supplier’s bank.
While there is no built-in payment protection here, banks usually do some kind of identity check on businesses and people with accounts with them, so this is considered a safer payment method than many other payment methods.
If you pay suppliers in installments, you can protect yourself against risk when using this payment method – for example, a 30% deposit when placing an order and a 70% deposit after quality inspection and shipping.
Letter of Credit (LOC)
A letter of credit in layman’s terms is an insurance issued by your bank for your shipment. Larger suppliers and international trading companies are usually acceptable letters of credit. Letters of credit are best for large companies with high order volumes, as high fees can cut into thin margins for smaller companies with small orders. Usually because of the additional language barrier, many small and medium-sized factories may not be willing to accept this payment method.
Letters of credit reduce the supplier’s risk of non-payment by the buyer. As a buyer, a letter of credit can also give you peace of mind that the supplier will abide by any terms you agree to. But the paperwork is very complicated. Therefore, it is crucial to get professional advice on your first transaction.
Alibaba Trade Assurance
Alibaba is a trade transaction platform, and if you have not worked with a supplier before, using a service like Alibaba Trade Assurance may give you more peace of mind.
Alibaba trade assurance is such a process:
You wire the money to Alibaba and they hold it. Once you’re happy with the final product, they release the funds to the suppliers you need to work with. You can withhold payment or even get it back from escrow if the product is poor quality or the parties to the transaction disagree.
While this system is attractive to many Western businesses, most Chinese suppliers will not accept this form of payment. To use it to facilitate payments, Alibaba takes a cut of their profits. Typically, only larger, reputable Chinese suppliers use it.
This payment method is suitable for small orders or only for initial samples. Because not only does PayPal have higher transfer fees, but it also charges a currency conversion fee on each transaction. Here you have to be extra careful not to deposit money into personal accounts.
The biggest advantage of Paypal is that the payment is fast, but the fee is higher. Their payment protection policy is complicated, so read the fine print before making any large payments via PayPal.
So what’s the best way to pay your Chinese suppliers?
The above transactions are relatively common. But generally speaking, many suppliers will choose wire transfer, because wire transfer is the most direct, so it is the most popular. In fact, only larger, more established companies have the flexibility to support other payment methods — especially when working with Western providers like PayPal.
Seller Union supports suppliers with multiple payment methods. We are a company that can do transactions with customers from various countries. The company has been established for 26 years. If you have not found a Christmas Products Supplier that suits your payment method, you can contact us .