How to Pay Chinese Suppliers: Payment Methods for Importers

Paying a supplier in China is the moment a Thai importer is most exposed. Before the transfer, you hold the money and the supplier holds the goods; after it, the balance of power shifts. Most problems in China sourcing, from short shipments and quality disputes to outright fraud, end up as payment questions: how much was paid, when, to whom, and what you held back. Yet payment is often decided by habit or by whatever the supplier proposes. This guide explains the four methods Thai importers commonly use: telegraphic transfer in a deposit and balance, Alibaba.com Trade Assurance, paying through an agent, and letters of credit. It shows how each one ties to production, inspection and the shipping documents that release your cargo, then covers the red flags to check before any money leaves your account, how payment records interact with Thai customs, and how currency and bank charges affect the transfer.

What are the main ways to pay a Chinese supplier?

Most Thai importers pay by telegraphic transfer in a deposit and a balance, through Alibaba.com Trade Assurance, through a payment agent, or, for larger and more formal orders, by letter of credit.

A telegraphic transfer (TT, also called a wire transfer or T/T) is a bank-to-bank international payment sent through the SWIFT network from your Thai bank account to the supplier's bank account. It is the most common method for China trade because it is simple, widely accepted and does not need a credit facility. On its own, a TT gives no protection: once the money arrives, getting it back depends on the supplier's goodwill or on legal action in China. The protection comes from how you structure it, usually as a deposit with the order and a balance later.

Alibaba.com Trade Assurance is an order-protection service on the Alibaba.com marketplace. You place the order on the platform and pay through the platform's checkout or to the payment account the platform designates for that order. If the supplier fails to ship on time or the goods do not match what the order specified, you can raise a claim through the platform's dispute process.

A payment agent is a third party, sometimes a sourcing agent, a cargo-shipping company or a money-transfer business, that receives baht from you and pays the supplier in China, often in Chinese yuan. It is popular with small buyers because it is convenient, but it removes the direct bank record between you and the supplier.

A letter of credit (L/C) is a written undertaking by your bank to pay the supplier when the supplier presents documents that comply exactly with the credit's terms. It moves the trust from the supplier to the banks, at the cost of fees, paperwork and the need for a credit facility.

A fifth method, documentary collection (documents against payment, D/P), sits between TT and L/C and is less common with Chinese suppliers. It is covered briefly below. The matrix after this section compares the four main methods on who holds the money, what controls the documents and what recourse you have.

How does a deposit-and-balance TT work, and what control do you keep?

You pay a deposit when the order is confirmed so the supplier can buy materials, then pay the balance after production, normally once the goods have passed inspection and you have seen copies of the shipping documents; the balance is your main leverage.

The deposit-and-balance structure is the default in China trade. The split is negotiated per order and depends on the product, the supplier's material costs and your relationship; a new buyer usually has less room to negotiate than a repeat customer. What matters more than the exact split is when the balance falls due and what has to happen before you release it.

There are three common balance triggers, each giving a different level of control:

• Balance before shipment. The supplier asks for full payment before loading. You lose leverage before the goods are even in a container. If you accept this, insist on a pre-shipment inspection first, so at least you have checked quantity and quality before paying.
• Balance against copies of the shipping documents. The goods are loaded, the bill of lading is issued, and the supplier sends you copies of the B/L, commercial invoice and packing list. You pay the balance; the supplier then releases the original B/L or arranges a telex release. This keeps leverage until the goods are on board, and the B/L copy proves they shipped.
• Balance on arrival or after delivery. Possible with long-standing suppliers, but rare for new relationships.

The documents are the hinge. Under a sea shipment with an original bill of lading, the carrier releases the cargo at destination only against the original B/L or an authorised release. As long as the supplier holds the original or controls the telex release, the supplier has security for the balance; once you pay, they hand over that control. If the shipment travels on a sea waybill, which needs no original for release, or if your own forwarder controls the house B/L, the leverage works differently, so agree the release mechanism in the purchase contract. Our guides to telex release, surrender B/L and sea waybills explain each option.

The deposit is the part with no protection. Keep it proportionate to the supplier's genuine material commitment, pay it only to a verified company account, and do not increase it under time pressure. For a first order, many importers combine a modest deposit with a pre-shipment inspection by an independent inspection company before the balance, as described in our guide to pre-shipment inspection of Chinese suppliers.

How does Alibaba Trade Assurance protect a payment?

Trade Assurance protects an order placed and paid through Alibaba.com against late shipment or goods that do not match the order terms, through the platform's claim process; it only works if the order and the payment both stay on the platform.

For buyers who find suppliers on Alibaba.com, Trade Assurance is often the simplest form of protection for a first order. The mechanics are straightforward. You agree the product, specification, quantity, price, shipping date and quality terms with the supplier, and the supplier issues a Trade Assurance order on the platform. You pay through the platform's checkout or by bank transfer to the account the platform designates for that order. The payment is linked to the order record, and the order record is what any claim is judged against.

That last point is why the order details matter. If the specification in the order is vague, for example "good quality" with no material, dimension or tolerance, a claim about quality has little to stand on. Write the important specifications into the order itself, attach drawings or approved sample references, and state the agreed shipping date. If you plan a pre-shipment inspection, say so in the order.

The protection ends where the platform ends. Suppliers sometimes suggest paying them directly to save a fee or speed things up. Doing so takes the payment outside Trade Assurance, and with it your ability to use the platform's claim process for that money. Treat any request to move payment off the platform with the same caution as a change of bank details.

Trade Assurance also has limits you should understand before relying on it. There are time windows for raising claims, the platform's mediation decides outcomes according to its own rules, and the scope of coverage, including which payment methods and order types qualify, is set by Alibaba.com and can change. Read the current terms on the platform before placing a large order. Our guide to Alibaba shipping to Thailand for business covers the logistics side of buying on the platform, including how to choose Incoterms and who books the freight.

Is it safe to pay a Chinese supplier through a payment agent?

It can work, but it carries real risks: you lose the direct bank record with the supplier, your money passes through a third party, and unlicensed transfer channels can expose you to frozen funds and legal problems, so use only licensed providers and keep full records.

Many small Thai importers pay suppliers through an intermediary: a sourcing agent who buys on their behalf, a China cargo-shipping company that offers payment as an add-on service, or a business that advertises transfers to China (often called ฝากโอนเงินไปจีน). The attraction is convenience. You pay in baht to a Thai account, the agent pays the supplier in yuan, often to a domestic Chinese account, and the supplier is happy because it is paid locally.

The risks are structural, not just about the honesty of one agent:

• No direct proof of payment. Your bank record shows a payment to the agent, not to the supplier. If there is a dispute with the supplier, or if Thai Customs or your accountant asks for proof that you paid the invoice value, the evidence chain is weaker.
• Counterparty risk. Until the agent pays the supplier, your money sits with the agent. If the agent fails, delays or disappears, you have a claim against the agent, not a payment to the supplier.
• Licensing and legality. Cross-border money transfer is a regulated activity. Transfers through providers that are not licensed for that service can be caught up in investigations, with accounts frozen along the chain. Ask whether the provider is a bank or a licensed payment or remittance business, and check with your bank if unsure.
• Mismatched documents. The supplier's invoice is addressed to you, but the payment comes from someone else. This can complicate your accounting and your ability to show the transaction value.

If you use a sourcing agent who genuinely buys on your behalf, make sure the arrangement is written down: who the buyer of record is, whose name is on the commercial invoice used for Thai import, how the agent's fee is shown, and what records you will receive. Our guide to sourcing agents versus freight forwarders explains the difference in roles. For a growing import business, moving to direct bank transfers to the supplier's company account, or to Trade Assurance, is usually worth the extra effort.

When does a letter of credit make sense for a Thai importer?

A letter of credit makes sense for larger orders, new supplier relationships where neither side wants to pay or ship first, and buyers with a bank credit facility; it protects you by making payment depend on exact documents, not on the quality of the goods.

Under a documentary letter of credit, your bank (the issuing bank) commits to pay the supplier when the supplier presents documents that comply with the credit's terms. The credit is usually advised to the supplier through a bank in China. Most letters of credit are issued subject to UCP 600, the International Chamber of Commerce rules for documentary credits. The key principle is that banks deal in documents, not goods: if the documents comply, the bank pays, even if the goods turn out to be wrong.

That principle shapes how you use an L/C. Its strength is timing and document control. The supplier knows a bank will pay if they ship and present the right documents, so they are comfortable producing without a large deposit. You know payment will only be made against a bill of lading showing shipment, the agreed commercial invoice and packing list, and whatever other documents you require. If you want protection on quality, you must require a document that speaks to quality, typically an inspection certificate issued by an inspection company you nominate. If you need the certificate of origin for an FTA preference, such as a Form E under the ASEAN–China FTA, require it in the credit too.

The costs are real. Your bank will usually issue an L/C only against a credit facility or collateral, there are issuing and amendment fees, and the documentary process is slow and strict. Small discrepancies, such as a spelling difference or a late shipment date, can lead to refusals, amendments and delay. Suppliers may also price the extra work into the order. For these reasons, L/Cs are more common for machinery, large production orders and formal supply contracts than for small repeat purchases. Our guide to letters of credit versus telegraphic transfer compares the two in depth, and the same principles apply whether you are importing or exporting.

What about documentary collection (D/P) with Chinese suppliers?

Documentary collection, or documents against payment (D/P), sends the shipping documents through the banks and releases them to you only when you pay; it is cheaper than an L/C but gives the supplier no bank commitment to pay, so Chinese suppliers rarely accept it for new buyers.

Under a documentary collection, the supplier ships the goods and hands the documents, including the original bill of lading, to its bank, which forwards them to your bank with instructions. Under D/P, your bank releases the documents when you pay. Under documents against acceptance (D/A), it releases them when you accept a bill of exchange promising to pay later. Collections are generally handled under the ICC's Uniform Rules for Collections (URC 522).

For the importer, D/P is attractive: you pay only when the goods have shipped and the documents are in your bank, with no deposit. For the supplier, the risk is that you refuse the documents and leave the cargo at the destination port, so it has to sell elsewhere or ship back. That is why most Chinese suppliers prefer TT with a deposit, and why D/P tends to appear only in established relationships. If a supplier accepts D/P, make sure the documents include everything you need for Thai import, and remember that the banks are only handling documents, not checking the goods.

How does each payment method tie to the shipping documents and cargo release?

The payment method decides who controls the documents that release your cargo: under TT the supplier releases the B/L or telex release after the balance, under an L/C or D/P the banks hand over documents against payment, and under Trade Assurance the order terms set the shipment obligations.

It helps to think of every import as two parallel flows: money moving from you to the supplier, and control of the goods moving from the supplier to you. The bill of lading is the main instrument for control of sea cargo. An original B/L is a document of title: whoever holds it, properly endorsed, can claim the cargo. A telex release or surrender means the originals have been surrendered at origin and the carrier's office at destination may release to the consignee without them. A sea waybill is not a document of title; the carrier releases to the named consignee without any original.

The Incoterm you agree also matters. Under FOB or FCA, you or your forwarder book the main freight, so your forwarder often issues a house bill of lading and has visibility of the cargo from origin. Under CIF or CFR, the supplier books the freight and controls the carrier's documents until the balance is paid. Under EXW, you collect from the factory, and the supplier's leverage after payment is limited to the goods still sitting in its warehouse. Choose the Incoterm and the payment trigger together; our guide to choosing Incoterms for China imports explains the trade-offs.

Don't forget the documents you need for Thai import, not just for release. The commercial invoice and packing list must match what Thai Customs will see; a Form E or other certificate of origin is needed if you want an FTA preference, and it has to be issued correctly and in time; product licences or test reports may be required for regulated goods. Make delivery of these documents part of the balance condition. A supplier who has been paid in full has much less reason to fix a mistake on a Form E.

Which red flags should you check before paying a Chinese supplier?

Check that the beneficiary is the company named as seller on the invoice, that the bank details have not changed by email, that you are not being asked to pay a personal or unexplained third-country account, and that nobody is pushing you to pay urgently or to split the price off the invoice.

The most common pattern is business email compromise: a fraudster gains access to a supplier's or buyer's email, watches the conversation, and at the moment a payment is due sends a convincing message saying the bank account has changed. The invoice looks right, the email address looks right or nearly right, and the money goes to the fraudster. Recovery after the transfer is difficult.

A simple discipline prevents most of this:

• Match the beneficiary name to the seller. The account holder name in the payment instruction should be the same legal entity that issues the invoice and appears in the contract. A Hong Kong or offshore account for a mainland Chinese factory can be legitimate if the Hong Kong company is the contracting and invoicing entity, but then the invoice and contract should name that company too.
• Verify every change of bank details out of band. Call the supplier on a phone number you already have, not one in the email that announced the change, and confirm with someone you know. Treat a change made just before a payment as suspicious by default.
• Refuse personal accounts for company sales unless you understand exactly why and accept the risk; a personal account makes the payment record weak and may conflict with the supplier's own foreign-exchange obligations in China.
• Be wary of urgency. Pressure to pay today to hold a price or a production slot is a classic tactic in both fraud and hard selling.
• Never split the price between an invoice and a separate payment. A supplier offering a low invoice for customs plus a side transfer is proposing a false declaration that exposes you, as importer, in Thailand.

Also verify the company itself before the first payment: business registration details, the address, whether it is a factory or a trading company, and whether the people you deal with actually work there. Our guide to China trading companies versus factories covers that check.

How do payment records affect Thai customs and your accounts?

Thai Customs values imports primarily on the transaction value, the price actually paid or payable, so your payment records should match the commercial invoice you declare; mismatches can lead to valuation questions, and clean records also support your accounting and tax filings.

The link between payment and customs is often overlooked. Under the customs valuation rules Thailand applies, the starting point for the customs value is the price actually paid or payable for the goods, with certain adjustments. If you declare an invoice value but your bank records show you paid more, or paid additional amounts to the supplier or on the supplier's behalf, the declared value is open to challenge. Customs can request proof of payment during clearance or in a later audit. Our guide to customs valuation in Thailand explains which costs are added to the price and how the methods work.

That is why the payment method matters beyond fraud risk. A direct TT from your company account to the supplier's company account, referencing the invoice number, creates a clean, verifiable record. Payments through agents, personal accounts or mixed transfers covering several orders make the record harder to read. If you pay a deposit and a balance, keep both remittance advices with the invoice; if a price is adjusted after inspection, document the adjustment and issue or obtain a revised invoice before import, not after.

Your Thai bank will also ask for supporting documents for outward payments for imports, typically the invoice or purchase contract, as part of foreign-exchange reporting under Bank of Thailand rules. Requirements differ by bank and amount, so ask your bank what it needs before the first payment. Finally, your accountant will need the same documents to record the purchase, match it to the import declaration and support VAT credits on import.

How do currency and bank charges affect a payment to China?

You can usually pay in US dollars or Chinese yuan; the currency, the exchange rate your bank applies and the charge option you choose (OUR, SHA or BEN) all change how much leaves your account and how much the supplier receives, so agree them in the contract.

Two practical questions come up on almost every payment. The first is currency. Many Chinese suppliers quote in US dollars, and many also accept yuan. Paying in yuan can avoid a double conversion (baht to dollars, then dollars to yuan at the supplier's bank), but it depends on your bank's offer and on whether the supplier's account can receive it. Agree the invoicing currency in the contract, because a mismatch between the invoice currency and the payment currency creates rate differences that someone has to absorb.

The second is bank charges. An international transfer can pass through intermediary banks, each of which may deduct a fee. The charge option on a SWIFT payment decides who pays: OUR means you pay all charges, so the supplier should receive the full amount; SHA means you pay your bank's charges and the supplier pays the receiving side; BEN means all charges are deducted from the amount sent. Shortfalls caused by deducted charges are a common source of small disputes, with the supplier saying the balance is not fully paid. Agree the charge option in the contract and check the remittance advice.

Timing matters too. International transfers take time to arrive, and payments made late on a Friday or before a holiday in either country may not be credited until later. If a balance must arrive before a vessel's release, allow for that. Ask your bank for current rates, fees and cut-off times; this article does not quote them because they change.

How do you choose the right payment method and run it safely?

Match the method to the supplier's track record and the order size, then follow the same routine every time: verify the company and account, write payment triggers into the contract, inspect before the balance, check document copies, and keep every record.

There is no single best method. For a first order with a supplier found on Alibaba.com, Trade Assurance with clear specifications in the order is often the easiest protection. For a first order outside the platform, a modest deposit by TT with the balance paid only after a pre-shipment inspection and against copies of the shipping documents keeps most of the leverage on your side. For a large order, a machinery purchase or a formal supply contract, a letter of credit with an inspection certificate among the required documents can justify its cost. For an established supplier, TT deposit and balance is efficient, provided you keep verifying account details, because fraud targets long relationships precisely because nobody checks any more.

A routine that works for any method:

• Verify the supplier's company details and the bank account before the first payment, and confirm the beneficiary matches the seller on the invoice.
• Put the payment terms in the purchase contract: amounts or split, currency, charge option, balance trigger, inspection, documents required and the release method.
• Pay only from your company account to the supplier's company account, quoting the invoice number.
• Inspect before paying the balance, and do not waive the inspection under time pressure.
• Check copies of the B/L, invoice, packing list and Form E draft before paying the balance, and make sure they match what you will declare in Thailand.
• Confirm any change of bank details by phone with a known contact before paying.
• File the remittance advice with the invoice and import declaration.

Thai Global Freight (TGF) does not handle supplier payments, but it can coordinate booking, documents and the customs handoff so that the release of the B/L and the arrival of the cargo line up with the payment terms you have agreed.