Payment options

If you are buying through Alibaba use the escrow service. If you have met the supplier outside of Alibaba I recommend either going with a letter of credit (L/C at sight) or with a 20-30% down payment by telegraphic transfer (TT).

We also cover all other payment options under the chapter “ALIBABA.”

My recommendation for a first-time importer would be TT payment with a 30% down payment, and the rest after you have received the copy of the shipment documents. This option is generally safe and should be used for any amount from 1,000-20,000USD.

If you have a large order above 20,000USD I recommend the option L/C. This is safe for both sides as you only pay once the supplier has shipped all goods. On the other hand a supplier can use the copy of your L/C draft (the bank will send you this draft) to purchase raw material so he can get going and has his production costs covered. Once you release the shipment the bank will release the funds from the L/C to the supplier’s bank.
For smaller amounts I would go with either PayPal or Western Union.

If in doubt about your supplier’s credibility or if he insists on 100% upfront payment STAY AWAY. It is not a good sign if he wants payment upfront. He may be in financial trouble or he might end up scamming you out of your money. Again, any supplier will agree with 30% down payment or L/C.


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