Paying a Chinese Supplier by Bank Transfer: A Step-by-Step Guide

Almost every China production order is paid by T/T — a telegraphic transfer, which is simply an international bank wire. The concept is easy, but a few mechanics trip up nearly every first-time importer, and one of them quietly causes an argument over money on most first orders. Here is the whole process, in order.

Step 1: get a proforma invoice first

Never send money against a chat message. Ask for a proforma invoice (PI) — a formal document the supplier issues before production. It is what your bank may ask to see, and it is your written record of the deal. A usable PI shows the supplier’s full registered company name and address, your company details, an invoice number and date, a line for each item with specification, quantity and unit price, the total, the Incoterm (EXW, FOB or CIF) and named port, the lead time, the payment terms, and the full bank details. If any of that is missing, ask before paying.

Step 2: check the beneficiary name matches

Chinese banks are strict about this. The beneficiary name on your transfer must match the account name exactly as registered — not a trading name, not an abbreviation, not the name of a salesperson. Compare it against the business licence. If the invoice says one company and the bank details say another, stop and ask why; sometimes there is a legitimate reason such as a separate export entity, but you want that explained in writing before you send money, not after. A payment to an individual rather than a company is a serious warning sign.

Step 3: collect the right bank details

• Beneficiary company name, exactly as registered.
• Bank account number.
• SWIFT / BIC code of the beneficiary bank.
• Bank name and full branch address.
• For payments in RMB, the CNAPS code may also be required.
• A payment reference — usually the PI number, which Chinese banks often need to release the funds.

Step 4: choose the fee option — this is the one that matters

Your bank will ask how charges are shared. The three options are OUR, SHA and BEN, and the choice decides how much money actually reaches your supplier.

• OUR — you pay every charge, including intermediary banks. The supplier receives the exact invoice amount.
• SHA (shared) — you pay your own bank’s fee; every bank in the chain deducts theirs from the transfer. This is the usual default.
• BEN — all charges come out of the transfer; the supplier receives the least.

Why did my supplier receive less than I sent?

Because you almost certainly sent SHA. A USD payment to China does not go directly; it passes through one or two correspondent banks, and each deducts a handling fee, typically 15 to 50 US dollars in total. Your supplier then reports a shortfall against the invoice and asks you to top it up — which costs another wire fee. This is not the supplier being difficult and it is not a scam; it is how SHA works. Two ways to avoid it: send OUR so the full amount arrives, or agree in advance in writing that bank charges are shared and the small shortfall is settled with the final balance rather than by a separate wire.

Step 5: how long does it take?

One to three business days is normal, occasionally up to five when a correspondent bank queries something. Weekends and Chinese public holidays do not count, which matters enormously around Chinese New Year and the October National Day week. Bank cut-off times also mean a payment sent late in the afternoon often leaves the next working day. If production is meant to start on deposit receipt, send the money earlier than you think you need to — factories schedule capacity from the day the funds land, not the day you clicked send.

Should you pay in USD or RMB?

Most China export quotes are in USD and paying in USD is the simplest route. Paying in RMB (CNY) is sometimes cheaper overall, because you convert at your own provider’s rate rather than the supplier’s bank rate, but it needs the correct RMB account details and your bank must support it. The important point is to fix which currency the contract is in: if the price is in USD, the exchange risk is yours; if it is in RMB, it is the supplier’s. Agree that in the PI so neither side reopens the price when the rate moves.

What does each payment method really cost?

• Bank T/T — typically a flat 15 to 50 US dollars per wire plus your bank’s exchange margin, often 1 to 3 percent. Cheapest in percentage terms for large amounts.
• Specialist transfer services — usually a much smaller exchange margin and a low fee; check they support business payments to China and your amount before relying on one.
• PayPal — convenient but expensive internationally, commonly around 4 to 5 percent once currency conversion is included. Sensible for samples, not for production balances.
• Credit card — roughly 3 to 4 percent where a supplier accepts it, with the benefit of a chargeback route.
• Marketplace escrow — fees built into the platform order; funds are held until you confirm receipt, but it only covers orders placed on that platform.

Step 6: confirm the money arrived

Ask your bank for the SWIFT confirmation (an MT103 message) once the payment is sent. It is the proof the transfer left and can be traced, and Chinese banks will often ask for it if funds seem delayed. Send a copy to your supplier — it lets them chase their own bank with a reference number instead of waiting. Keep it with the PI in your order file.

What if the payment does not arrive?

Delays are usually mundane: a mismatched beneficiary name, a missing payment reference, or a compliance check at a correspondent bank. Start with your own bank and give them the MT103 to trace. Most issues resolve within a few days once the missing detail is supplied. If the money is genuinely returned, it comes back minus fees and at whatever the exchange rate is that day, which is another reason to get the details right the first time.

The security rules that actually matter

• Confirm bank details by voice with a known contact before the first payment, on a number you already had.
• Treat any mid-order email announcing changed bank details as fraudulent until confirmed by phone — this is the single most costly scam in importing.
• Never pay to a personal account.
• Keep the deposit and balance staged; avoid paying 100 percent up front to a new supplier.
• Ask for inspection photos, or a third-party inspection report, before releasing the balance.

A practical order of operations

Agree the specification and price, receive the PI, verify the company and bank details, phone to confirm the account, send the deposit as OUR, forward the MT103, confirm production has started, review inspection photos when production finishes, then release the balance and receive the shipping documents. Following that sequence removes nearly every payment problem importers actually encounter — none of it is complicated, but skipping a step is what turns a routine order into a dispute.