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Published: 2026‑08‑13 | Polasourcing Sourcing | Reading Time: 8 minutes
Key Takeaways
- There are 5 mainstream payment methods for Chinese suppliers: T/T Wire Transfer, PayPal, Alibaba Trade Assurance, Western Union, L/C Letter of Credit. Each varies in risk protection and transaction fees.
- Industry standard safe payment term: 50% deposit upon order placement, remaining 50% balance only after pre-shipment AQL2.5 inspection is passed. Never pay 100% upfront.
- Always verify the beneficiary bank name before payment. It must fully match the legal company name shown on the supplier’s business license. Requests for personal bank accounts are major red flags.
- Warning red flags: requests for WeChat / Alipay transfers, demand for full prepayment, prices far below market rate, unverified personal accounts.
- Immediate actions if scammed: contact your bank, payment platform and relevant authorities in China. Fund recovery is difficult. Prevention is far better than post-fraud remedies.
Comparison of 5 Payment Methods
| Payment Method | Best For | Protection Level | Fees | Main Drawbacks |
|---|---|---|---|---|
| T/T Wire Transfer | Most orders over USD 1,000 | Low, hard to reverse after transfer | Small fixed bank charges | Almost no recourse if fraud occurs |
| PayPal | Samples & small orders | High, strong buyer protection | ~4% + fixed fee | High cost for large orders; many factories decline PayPal |
| Alibaba Trade Assurance | Orders placed on Alibaba | Escrow protection | Low or free | Only works for Alibaba platform orders; not for offline direct factory deals |
| Western Union | Not recommended for B2B trade | Almost no protection | Variable fees | Frequently used by scammers; extremely high risk |
| L/C Letter of Credit | Large orders above USD 30,000 | Bank guarantee | High bank fees | Complicated workflow & long lead time; not cost-effective for small orders |
Brief Introduction to Each Method
- T/T Wire Transfer: The most common payment method for China sourcing. USD or CNY bank transfer, arrives in 2‑5 working days. Use only verified corporate accounts. Stick to the 50‑50 payment structure.
- PayPal: Ideal for samples and small orders with new suppliers. High transaction fees for large-volume purchases.
- Alibaba Trade Assurance: Third-party escrow service. Funds are released to the seller only after buyer confirmation. Dispute resolution available, limited to Alibaba platform orders.
- Western Union: Can send money to individuals with zero trade protection. Avoid for B2B sourcing.
- L/C Letter of Credit: Bank-backed guarantee. Payment is triggered once compliant shipping documents are submitted. Suitable for institutional large buyers; too cumbersome for small orders.
Industry Standard 50/50 Payment Terms
Pay 50% deposit when placing the purchase order to cover the factory’s raw material cost. Pay the remaining 50% balance after pre-shipment QC inspection and before shipment. This structure protects both buyers and sellers. Sourcing commission can be settled together with the balance or invoiced separately. All payment terms must be confirmed in writing before any transfer.
Bank Account Verification Process
Cross-check the beneficiary name before payment. It must exactly match the full legal company name from the supplier’s business license. You may retrieve the license from China National Enterprise Credit Information Publicity System to verify company name, registered address and business scope. Stop the transaction immediately if they provide a personal account or mismatched company name. This is the most common tactic for sourcing fraud.
Red Flags to Stop the Transaction
- Asking for payment to personal bank accounts instead of corporate accounts
- Demanding 100% full payment before production and QC inspection
- Requesting B2B goods payment via personal tools like WeChat or Alipay
- Quotation price more than 30% lower than the market benchmark
- Creating urgency to force immediate payment or order cancellation
- Refusing to provide business license or customer references
Escrow Alternative Option
If you prefer not to send funds directly to the factory, you can work with Polasourcing as an informal escrow agent. The buyer pays Polasourcing, and Polasourcing releases payment to the factory only after QC inspection is approved. This works well for first-time cooperation with unknown suppliers.
Steps to Take If You Get Scammed
- PayPal: File a dispute within the 180-day window.
- Trade Assurance: Raise a dispute on the Alibaba platform.
- T/T Wire Transfer: Contact your bank immediately to attempt recall (only possible if funds are not yet withdrawn). Report to Chinese authorities and your local embassy.
- Preserve all evidence: contracts, chat history, bank slips and supplier business license.
> Note: Recovering stolen funds after fraud is challenging. Supplier verification, staged payment and third-party QC are reliable safeguards.
Related Sourcing Guides
‑ How Much Do China Sourcing Agents Charge?
‑ Import from China: Step‑by‑Step Guide
‑ How to Order Samples from China
‑ Polasourcing China Sourcing Agent for Amazon FBA (USA)
‑ Polasourcing China Sourcing Agent for Europe
