How to Pay Chinese Suppliers: Wise vs PayPal vs T/T Wire vs Letter of Credit

Once you've negotiated a deal with a Chinese supplier, you have to pay them. The method matters more than first-time importers expect: fees, transit times, fraud protection, and supplier preferences all differ significantly.

This guide compares the five main options, with practical recommendations by order size.

The five main payment methods

1. T/T wire transfer (Telegraphic Transfer) — standard bank wire
2. Wise (formerly TransferWise) — fintech alternative with lower FX margins
3. PayPal — generally avoid for B2B
4. Alibaba Trade Assurance (with credit card or T/T) — escrow-based
5. Letter of Credit — for large orders only

Plus less-common options: Western Union (avoid), crypto (avoid for legitimate suppliers), and PingPong/payoneer (mid-tier alternative).

1. T/T wire transfer

The workhorse for Chinese supplier payments above ~$5,000. T/T (telegraphic transfer) is a bank wire from your bank to the supplier's Chinese (or Hong Kong) bank account.

How it works. You initiate a wire from your bank to the supplier's named account. The transaction routes through SWIFT and correspondent banks; arrival typically takes 1–3 business days.

Fees.

• Outbound wire fee: $25–$45 from major banks
• Correspondent bank fees: $15–$30 (often deducted from the amount, so the supplier receives slightly less than you sent)
• Receiving bank fee: $0–$15 (charged to supplier; sometimes passed back to you)
• FX margin: typically 1–3% if your bank converts your home currency to USD or RMB. This is often the largest hidden cost.

For a $20,000 wire, total cost is typically $200–$600 all-in.

Security. Decent — banks document transactions and have some fraud-recovery capability for fast-detected issues. But once funds are received and withdrawn at the destination, recovery is essentially impossible.

When to use. Standard for orders $5k–$50k+. Universally accepted by Chinese suppliers. Familiar to your accounting.

Pitfalls.

• Wire to verified company accounts only (never personal, never an account that doesn't match the proforma invoice exactly).
• Don't accept last-minute account-change requests (the most common wire-fraud pattern — see our scams guide).
• Use bank wire reference: the proforma invoice number, so the supplier can match the payment to your order.

2. Wise (formerly TransferWise)

Fintech wire alternative. Sends money via local-bank rails on both ends instead of SWIFT, dramatically reducing FX margins.

How it works. You wire to Wise's local account (or pay by debit card / direct debit), Wise wires to the supplier's RMB or USD account at the mid-market FX rate.

Fees.

• Wise fee: 0.3–0.6% of the amount, plus a small flat fee
• FX margin: ~0.3% (vs banks' 1–3%)
• Total all-in: typically 0.4–0.7% (vs 1–3% for bank wire)

For a $20,000 transfer, total cost is typically $80–$140.

Security. Wise is a regulated financial institution (FCA, FinCEN, etc.). Transaction records are detailed. Some fraud protection but less than bank wires for B2B disputes.

When to use. Excellent for orders under $20,000. Above that, the absolute fee savings start mattering less and corporate banking advantages of T/T (transaction documentation, easier accounting) start mattering more.

Pitfalls.

• Wise has business-account verification requirements; allow 1–2 weeks for first-time setup.
• Some Chinese suppliers accept Wise readily; some prefer traditional T/T. Confirm before assuming.
• Limits: Wise has per-transaction limits (varies by jurisdiction; typically $50k–$1M for verified business accounts).

3. PayPal

Generally avoid for B2B Chinese supplier payments.

Fees. PayPal charges:

• Receiver fee: 4.4% + $0.30 per transaction for international payments
• Currency conversion: 3–4% margin

Combined, PayPal cost is typically 7–8% of the transaction. For a $20,000 payment, that's $1,400–$1,600 — vastly more than T/T or Wise.

Why suppliers don't like it. PayPal:

• Charges the supplier the receiver fee (so the supplier nets 4–5% less than you pay)
• Has reversed many B2C-style charge-back disputes from buyers, leaving suppliers stuck
• Holds large transactions for extended review periods (sometimes 30+ days)

When to use. Almost never for serious B2B. The exceptions:

• Sample purchases under $500 where you want chargeback protection
• Sending small quick payments to existing trusted suppliers
• When the supplier specifically requests it (rare)

4. Alibaba Trade Assurance

Escrow-based payment via Alibaba's payment system. Funds are held in escrow until shipment, providing buyer protection.

How it works. You pay Alibaba (via T/T to Alibaba's escrow account, or by credit card for smaller amounts). Alibaba holds the funds. Upon shipment confirmation, funds release to the supplier (minus Alibaba's small commission).

Fees.

• Alibaba's service fee: typically 0% to the buyer (paid by the supplier from their proceeds)
• T/T fee to Alibaba's escrow: standard wire fees
• Credit card option: usually 2.5–3% surcharge for credit card payment

Security. Strong. Buyer protection mechanism via dispute resolution. See our Trade Assurance guide for the full mechanics.

When to use. Default for orders $1,000–$50,000 from Alibaba-listed suppliers. Particularly important for first orders with new suppliers.

Pitfalls.

• Funds release on shipment confirmation, not on receipt — see Trade Assurance guide for what this means for disputes.
• Trade Assurance only protects orders placed through the platform (not direct WeChat orders).

5. Letter of Credit (LC)

Bank-mediated payment instrument used for large orders. The buyer's bank guarantees payment to the supplier upon presentation of specified shipping documents.

How it works. Buyer's bank issues the LC to the supplier's bank. Supplier ships and presents documents (B/L, commercial invoice, certificate of origin, etc.) to their bank. Documents are forwarded to the buyer's bank, which examines compliance and releases payment.

Fees.

• LC issuance fee: 0.1–0.4% of LC value (minimum $200–$500)
• Document examination fees: $100–$300
• Discrepancy fees (if documents don't match exactly): $80–$150 per discrepancy
• Total: typically $1,500–$5,000 all-in for a $200k LC

Security. Very strong. Supplier gets paid on document presentation; buyer gets paid only upon receiving correct documents. Documents stand for the goods themselves.

When to use. For orders over $100k where:

• Buyer wants strong payment-on-documents security
• Supplier is in a relationship that warrants it
• The fees can be justified by the order size

Pitfalls.

• Heavy admin: every document must be exactly correct. Discrepancies are very common (10–20% of LCs have at least one) and can delay payment.
• Bank-to-bank document examination takes 5–10 business days.
• Not protective against quality issues (LC pays on documents, not goods).
• Requires strong relationship with your bank, including credit lines.

Worked example: $20,000 order

Wise wins on cost. T/T is comparable for buyers who already have bank wire infrastructure. Trade Assurance adds escrow protection at no additional cost when buying from Alibaba. PayPal is ~10× more expensive — never use it for serious B2B.

What about WeChat Pay / Alipay

These are domestic Chinese payment systems. Foreign individuals can now link foreign cards to both, primarily for in-China spending (taxis, hotels, retail). They aren't generally usable for B2B factory payments — Chinese factories don't process WeChat Pay for cross-border B2B.

For in-China cash flow during sourcing trips, WeChat Pay is essential. For paying invoices, use T/T, Wise, or Trade Assurance.

What about crypto

Some Chinese suppliers will quote crypto-payment options, particularly USDT (Tether). Avoid for legitimate businesses:

• Crypto payments to Chinese accounts are technically illegal under Chinese capital controls
• The supplier can't legally book the income, meaning the transaction is off-the-books
• Off-the-books transactions mean no recourse if something goes wrong
• Crypto-paying suppliers are disproportionately scammers or operating illegitimately

Stick to traditional banking rails. The slight inconvenience is more than worth the legal protections.

What about Western Union, MoneyGram

Don't. These are designed for personal remittances, not B2B. Suppliers asking to be paid by Western Union are almost always either:

• Operating outside the Chinese banking system (red flag)
• Setting you up for a scam
• Both

Same applies to "money mule" arrangements where you wire to an intermediary.

Recommendations by order size

Under $5,000 (samples or small orders):

• First choice: Wise (lowest fee)
• Acceptable: Bank T/T (more documentation if you're VAT-registered)
• For Alibaba purchases: Trade Assurance with credit card

$5,000–$50,000 (typical B2B orders):

• First choice: Bank T/T via Trade Assurance escrow
• Direct T/T (without Trade Assurance) for established suppliers
• Wise for cost-sensitive orders if supplier accepts it

$50,000–$200,000:

• First choice: T/T 30/70 (30% deposit, 70% balance against B/L copy)
• Trade Assurance Pro for higher coverage limits
• Letter of Credit for buyers wanting maximum payment-side security

Above $200,000:

• Letter of Credit (if buyer-side security is critical)
• T/T 30/70 with strong supplier verification (most common for established relationships)

Common payment terms

The standard B2B payment structure for Chinese supplier orders:

30/70 T/T: 30% deposit on order placement, 70% balance against B/L copy (i.e., upon shipment). Standard for most B2B orders.

50/50 T/T: 50% deposit, 50% balance against B/L. Used for orders requiring substantial up-front material commitment.

100% T/T before production: Used for very small orders or first orders where the factory wants payment certainty. Higher buyer risk; mitigate with Trade Assurance escrow.

LC at sight: Letter of Credit payable on document presentation. Used for large orders.

Open account: Net 30 / Net 60 terms — buyer pays after receiving goods. Only for established long-term relationships; very rare for first orders.

For most relationships, 30/70 T/T (with the deposit going to Trade Assurance escrow if available) is the right structure.

The bottom line

For most importers in 2026: T/T via Trade Assurance is the default. Wise is excellent for smaller orders. Letters of Credit for large orders only. PayPal almost never for B2B. Avoid Western Union, crypto, and personal-account payments.

Match the method to the order size, prioritise security and recoverability, and never deviate from the bank account named on the proforma invoice.

If you'd like our team to advise on payment terms structuring for a specific order, get a quote — payment-terms negotiation is part of every sourcing project we run.

Related: Trade Assurance complete guide · Wire fraud and scams · 30-point supplier verification