How to Pay Chinese Suppliers Safely: T/T, L/C and Alibaba Compared
By Hasan Olwan, in Yiwu since 2009 · Last updated: November 3, 2026
The short answer: no payment method protects you by itself. Bank transfer (T/T) is the most common way to pay Chinese suppliers, and it’s safer when you check the account holder and keep part of the money until goods pass inspection. A letter of credit ties payment to documents. Alibaba Trade Assurance protects eligible orders paid through the platform.
Before you compare methods, decide which risk you’re trying to reduce: sending money to a scammer, the goods never shipping, getting the wrong goods, or paying the balance before anyone checks them. Each risk needs a different tool.
Method, terms and protection are three different things
These three often appear together on one invoice:
- Payment method: how the money moves, such as a bank transfer or a card.
- Payment terms: when each amount is due, and what must happen first.
- Extra protection: a bank’s promise tied to documents, or a platform’s program for eligible orders.
So “T/T” alone doesn’t mean you pay everything up front. It only tells you how the money moves. Always read the terms written next to it.
What T/T covers, and what it doesn't
T/T means telegraphic transfer: a bank wire to a named account. You might use it for a deposit, a balance, or both.
A wire carries no bank promise that the supplier will make or ship what you ordered. The US International Trade Administration rates paying cash in advance as the least attractive option for a buyer, because of the risk that the goods may not be sent.
Your protection comes from how you set it up. Take two orders, both paid by T/T. In the first, the balance is due when the supplier says production is done. In the second, it’s due after an inspection report that meets written standards. The method is the same, but in the second order you can still stop and check before the last payment leaves.
How the main options compare
| Option | How it works | What it adds | What it doesn’t guarantee |
|---|---|---|---|
| Direct T/T | Wire to the supplier’s account on agreed dates | Proof the transfer happened | That the goods are right, or a refund |
| T/T through Trade Assurance | Wire on an eligible order, using Alibaba’s official bank details | The program’s protection, under its terms | That every claim succeeds |
| Letter of credit (L/C) | Bank promises payment against matching documents | Payment tied to written document terms | The real quality of the goods |
| Documentary collection (D/P, D/A) | Banks exchange documents for payment or acceptance | A bank channel for the documents | Payment, or any verification of them |
| PayPal or card | Online payment with possible dispute rights | A dispute route, if you qualify | Coverage of every business purchase |
Fees, eligibility and requirements vary, so confirm them with your bank or the platform before you commit.
Letter of credit: protection by documents, not by inspection
A letter of credit is a bank’s commitment to pay once the listed terms are met, as shown by the required documents. Banks deal in documents, so a set of matching papers can still sit on top of a problem with the goods.
If inspection matters, agree beforehand how an inspection certificate goes into the L/C, who issues it and what it must say. “Excellent quality” gives a bank nothing to check. Ask your bank for the fees and the cost of amendments too, because there’s no single price.
Trade Assurance: paying through the platform isn’t paying outside it
Alibaba lets you pay by bank transfer with protection, as long as you use the official bank details Alibaba provides. It also tells buyers never to pay outside the platform. So take the account details from your order on Alibaba, not from a message the supplier sends you.
Write your specs, quantity, packaging and dates into the order itself. Don’t assume a general description covers details you only discussed in chat. Our guide to Alibaba Gold and Verified suppliers explains why this protection is about your order, not the company’s badge.
Documentary collection: banks help, but don’t promise
With D/P, documents are released against payment. With D/A, they’re released against a promise to pay later. The US International Trade Administration notes that banks act as facilitators here and that collections offer no verification process, with limited recourse. Don’t treat this as a cheaper letter of credit.
PayPal and cards: check before you assume
Don’t assume a well-known service covers an import order. PayPal’s US Purchase Protection policy, last updated January 26, 2026, excludes items intended for resale, and “Significantly Not as Described” claims on wholly or partly custom-made items. Those are the two things most importers buy.
That’s the US version, so check the policy for your own country. Card chargebacks follow separate rules and aren’t guaranteed either.
Which setup fits your order?
Use this as a starting point with your supplier and bank:
| Your situation | What to consider | What to settle first |
|---|---|---|
| New supplier, eligible Alibaba order | Keep payment inside the protected route | Specs, eligibility, official account, claim steps |
| Direct order that needs document control | Discuss an L/C with your bank and the supplier | Documents both sides can really produce |
| Repeat supplier with clear terms | T/T with a schedule and checkpoints | Keep checking the account and the quality |
| Custom product | Payment plus change and inspection terms | Exclusions in any protection program |
| Sample or small purchase | Any method that suits the transaction | Cost and eligibility |
No rule says an order above a certain amount needs an L/C. It depends on how much you could lose, how complex the documents are, what it costs, and whether both sides can run it.
Checklist before the deposit and the balance
Before the deposit
- Confirm the legal name of the company you’re contracting with, not just a trade name in chat.
- Check the beneficiary name, account, bank and currency against your documents.
- If the account holder is a different company, stop until you understand and document why. It’s not automatic fraud, but it needs an answer.
- Fix the specs, quantity, packaging, reference sample and dates.
- Write what each payment is for and what makes it due.
- On a platform, get the payment details from your account and the official order.
Our guide on how to verify a Chinese supplier covers the company checks, and our contract guide covers the paperwork.
Before the balance
Match the payment request to your terms, then review the evidence you agreed on: the inspection result, shipping documents, or both.
If payment depends on inspection, define it first: who inspects, what’s covered, the acceptance standard, and what happens on a fail. Don’t leave “after inspection” undefined. It could mean an inspection took place, or that the goods passed it. Our quality inspection happens before you pay the balance, and you get a photo report.
Keep one file for each order
Save the agreement, invoice, specs, inspection results, beneficiary details, transfer receipts and approved changes together. In a company with more than one person, have someone other than the person sending the money check any account change.
Mistakes that make a good method fail
- Treating “after inspection” and “against shipping documents” as the same. One is about the goods, the other about paper.
- Treating the deposit split as protection. A 30/70 split doesn’t tell you when the balance is due or what happens if goods don’t match.
- Paying outside the platform and assuming you’re still protected. Alibaba tells you not to.
- Keeping specs general. “Strong packaging” and “good material” are hard to compare against a sample or argue in a dispute.
What to do if the bank account changes, or you suspect fraud
If you haven’t paid: stop. Call a number you already had on file, not the one in the new message. Then check the beneficiary and documents. The FBI’s advice on business email compromise is the same: confirm payment changes using a known number, not email alone.
If you’ve already paid:
- Call your bank or transfer provider immediately and say you suspect fraud.
- Ask them to try to stop or recall the transfer.
- Keep the transaction number, messages, invoices and account details.
- Report it to the platform if one was involved, and to the authorities in your country.
- Don’t send more money to “release” or recover the funds.
Acting fast helps, but recovery isn’t guaranteed.
Frequently asked questions
What does T/T mean on a Chinese supplier’s invoice?
It means a bank wire to a named account. It doesn’t set the deposit or the timing of the balance, so read the payment terms written beside it.
Is a letter of credit safer than T/T?
It adds a bank’s promise tied to matching documents, but it doesn’t guarantee the real quality of the goods. Whether it fits depends on the risk you want to reduce, the terms, and if both sides can run it.
Can I pay by bank transfer and still use Trade Assurance?
Yes, on an eligible order, using the official bank details Alibaba gives you. A wire to an account the supplier sent you outside the platform is a different thing.
Is a 30% deposit and 70% balance enough?
No. The split doesn’t prove the supplier is reliable or say what makes the balance due. Check the timing, specs, inspection and the steps if goods don’t match.
Does PayPal protect goods for resale or custom products?
Don’t count on it. The US policy excludes items for resale, and “not as described” claims on custom items. Check the policy for your country.
How do you handle payments at OLWAN?
You pay for the goods and our commission together by bank transfer, and we inspect before you pay the balance. We don’t offer credit or deferred payment. How we work has the details.
Summary
- Decide which risk you want to reduce before picking a method.
- T/T is only a method. Your protection comes from the terms.
- An L/C checks documents, not goods.
- Trade Assurance only covers eligible orders paid through its official route.
- Check PayPal exclusions before relying on it for business goods.
- Keep money back until inspection passes, and verify every account change by phone.
Want someone on the ground to check the supplier and the goods before your money leaves? That’s what we do in Yiwu, for small orders and full containers.