As we all know, Pay My Chinese Supplier is very important in doing foreign trading business.
The common payment methods are letters of credit, remittances, Western Union, PayPal, MoneyGram, and OA. Only after we know the advantages and disadvantages of these payment methods, can we choose the most suitable payment method for both buyers and sellers.
Letter of Credit
The Letter of Credit (L/C) refers to a written certificate that guarantees the responsibility of paying payment to the exporter (seller) according to the request of the importer (buyer). In the letter of credit, the bank authorizes the exporter under the conditions stipulated by the letter of credit, and the bank or its designated bank as the payer shall be issued by the bank or its designated bank.
Simply, credit is a written document that has a conditional commitment to pay for a Chinese supplier.
Advantages: Bank credit, is more secure and beneficiaries (exporters) are guaranteed (especially when exporters know less about importers)
Disadvantages: complex procedures, stricter document requirements, and high banking costs.
Remittance
The exchange refers to a business processing method that the payer uses various settlement tools to actively remit the money to the receiver. There are usually four basic parties in the remittance business: remittances, remittances, Beneficiary banks, and Beneficiaries. The remittances mainly include Telegraphic Transfer (T/T), Mail Transfer (M/T), and Demand Draft (D/D).
Advantage: convenient, fast, flexible, and simple, less intermediate program
Disadvantages: poor security and risk of not delivering exporters
Western Union
Western Union remittance is the abbreviation of international remittance company (Western Union). It is the world’s leading express remittance company. It has the world’s largest and most advanced electronic exchange financial network. The handling fee for remittances of the West Union was issued by the payer.
China Everbright Bank, China Postal Savings Bank, China Construction Bank, Zhejiang Chouzhou Commercial Bank, Jilin Bank, Harbin Bank, Fujian Straits Bank, Yantai Bank, Longjiang Bank, Wenzhou Bank, Huishang Bank, Pudong Development Bank, other banks are Western Union remittance Chinese partner. It takes about 15 minutes to pay this way.
Advantages: safe, first get money, then delivery, the most beneficial to the merchant
Disadvantages: Payment first and then shipping, it is easy to generate distrust, high commission when the amount is large, and limited by 50,000RMB in domestic amount
PayPal
PayPal is a wholly-owned subsidiary of EBAY company in the United States. As the world’s most well-known payment tool, PayPal has wide coverage, can be used in 45 countries, has more than 100 million users, and has high international recognition and practicality.
Advantages: wide users, strong brand effects, great influence, fast funds, and a complete security system
Disadvantages: High -number of business fees, high risk of fraud, frozen funds, not easy to log in
MoneyGram
MoneyGram is a kind of global rapid remittance business between individuals. It can complete the remittance process from the remittance to the recipient within more than ten minutes, which has the characteristics of being fast and convenient. It is a remittance agency similar to the West Union
Advantages: fast remittance speed, reasonable charges, simple procedures
Disadvantages: restrictions on the US dollar account, the scope of service is limited by the number of cooperation between professional remittance companies and banks, and operations need to be handled to the outlets. The convenience is not high
OA 30/60/90/120 DAYS ( Sinosure)
OA means credit. It is based on Sinosure.
China Export & Credit Insurance Corporation (hereinafter referred to as “SINOSURE”) is a state-funded and policy-oriented insurance company established and supported by the state to promote China’s foreign economic and trade development and cooperation.
As an independent legal person, SINOSURE was officially launched and put into operation on December 18, 2001, its service network now covers the whole country.
SINOSURE, a policy-oriented financial institution established to meet the demands of economic globalization and the development of China’s foreign economy and trade, will closely focus on the goal of serving national strategies.
Guided by the policy and centered on customers, SINOSURE will strive to build the company into a more responsible and reliable policy-oriented export credit insurance institution that enjoys global impacts, making greater and new contributions to China’s new round of high-level opening up.
Policy advantage: Sinosure Insurance is a state-owned policy insurance company established by the state and has an independent legal person status;
Professional advantages: Sinosure has a complete product service system to comprehensively meet the needs of the diversified credit risk management of the enterprise;
Information advantage: Sinosure’s information network covers more than 200 countries and regions, and the global corporate credit database is increasingly perfect;
Market advantage: Sinosure Insurance is the only financial institution in the mainland that is engaged in the export credit insurance business, and the service network covers the country.
The different payment methods for a Chinese Supplier have been introduced above, I hope it will be helpful to you. For our company, our strongest advantage is OA payment. This is the safest and most effective payment method, which can provide 30/60/90/120 account terms.
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