A T/T payment is a common way to pay Chinese suppliers, but what is this payment type, how to make one, and what FAQs do importers have about the process? In addition, when you’re ready to pay a supplier, what kinds of payment terms might you negotiate with them?
What is a T/T payment?
T/T payment stands for ‘Telegraphic Transfer.’ In other words, an international wire of funds from the buyer’s bank to the seller’s bank.
When a Chinese supplier asks for a T/T payment, what they really mean is they want a wire transfer. (Technically, a T/T is not exactly the same as a wire transfer through the SWIFT system, but the vast majority of people think of them as the same thing.)
A wire transfer based on SWIFT is the most common payment method in international trade with Asian countries. It typically takes 3-5 working days to clear, and generally costs between 25 and 50 USD, depending on your agreement with the commercial department in your bank.
How to make a T/T payment?
Contact the commercial department of your bank, tell them you need to wire (for example) 25,000 USD to a company in China, and they will generally give you a form to fill out. If you do T/Ts frequently, your bank probably has an ‘internet banking’ application that will save you time.
Your supplier will probably send you a pro forma invoice that includes their bank account information. I strongly suggest you ask for that information earlier (as part of your pre-qualification of a potential supplier). Many buyers have been scammed by hackers who send invoices with their own bank account information…
What is the most common payment term requested by Chinese suppliers?
The most common payment method is a bank wire that works this way:
- You have the supplier develop sample(s) until you are confident they know exactly what you want.
- You send a 30% deposit (by T/T) before production starts.
- Your supplier (the manufacturer & exporter) purchases the components and/or materials and arranges the production
- You work with a quality assurance firm to inspect product quality (this is optional but usually a good idea).
- You send the remaining 70% (by T/T) before shipment.
- The supplier ships the goods and sends you the documents by express courier.