Payment Terms for Importing from China: T/T, Trade Assurance & L/C

Agents & Fees · 2026 · 8 min read

Payment terms are where importers either protect their money or hand it over. The structure you agree with a Chinese factory determines who holds the leverage during production: the standard 30% deposit with 70% due after inspection gives the factory cash to start and gives you the means to enforce quality. This guide explains the common payment methods, the safe structures, and the red flags that separate normal practice from trouble.

The one rule that overrides everything else: never pay a personal account, and never pay off-platform because someone offered a discount for it. Nearly every catastrophic loss in importing starts with one of those two decisions.

Which payment methods will you actually meet?

Method	How it works	Protection level
Trade Assurance (Alibaba)	Alibaba holds payment and arbitrates off-spec or late shipments in English	High, if specs are in the contract
T/T bank transfer	Direct wire to the factory’s company account, usually 30/70	Medium: depends entirely on contract and inspection gates
Through a sourcing agent	You pay the agent domestically; the agent pays the factory locally	High: agent enforces terms on the ground
Letter of Credit (L/C)	Banks guarantee payment against shipping documents	High but heavy: only economical for large orders
PayPal / card	Card or wallet payment, sometimes accepted for samples	Good for chargebacks, rarely offered for production

For most orders the realistic choice is between Trade Assurance and T/T, and both should follow the same payment structure: a deposit that funds materials, and a balance gated on inspection.

Why does the 30/70 structure work?

The market-standard split is 30% deposit with order placement, 70% balance after pre-shipment inspection passes, before shipment. Each side gets what it needs: the deposit covers the factory’s material outlay so production can start; the unpaid balance is your leverage, because a factory with 70% pending fixes problems fast. Change the ratio and you change behavior: 100% upfront removes every incentive to correct defects, and 0% deposit asks the factory to finance your materials, which reputable factories refuse.

For long production runs, a three-stage split (30% deposit, 40% mid-production, 30% after inspection) matches cash flow to progress. What matters is the principle: every payment stage is tied to a verifiable milestone, and the final payment comes after the goods are proven, not promised.

How do you get the specs into the payment?

Payment structure only protects you if the contract defines what “acceptable goods” means. Before any deposit: sign a purchase contract carrying your full specification as an annex (materials, dimensions, colors, packaging, tolerances), state the inspection standard (AQL levels, who bears re-inspection cost), and keep the conversation record on-platform if you use Trade Assurance. A spec that lives in a WeChat thread does not exist in a dispute. The full sequence, from contract to inspection to balance, is in our complete importing guide.

What are the red flags in payment requests?

• Requests to pay a personal bank account, or to a company whose name does not match your contract.
• Moves to take negotiation off-platform with a discount for paying outside Trade Assurance.
• 100% upfront on a first order, or a “verification fee”, “agency fee” or deposit to “reserve the price”.
• Bank account changes by email late in the order: verify by phone with a known contact before wiring; account-switch fraud is common and effective.

When you buy through an agent, the payment structure simplifies: you pay the agent in your currency against itemized invoices, and the agent holds the factory to the 30/70-with-inspection structure locally. How that fee works is in sourcing commissions explained.

How does the schedule shift as the relationship grows?

The 30/70 split is not a permanent rule. It is the starting point for a first order, when the factory knows nothing about you and you know almost nothing about the factory. Once you have completed two or three orders with clean inspections and on-time payments, the schedule becomes a negotiation rather than a formula.

For repeat orders, many suppliers keep 30/70 but shorten the timeline: the deposit still books the production slot, but they will accept the balance after a passed inspection rather than before documents are issued. For larger orders, expect the factory to ask for a milestone schedule instead. A common structure on orders above roughly $50,000 is 30/40/30: thirty percent to start production, forty percent when goods are finished and packed (verified by inspection), and thirty percent against the Bill of Lading copy. This spreads your risk instead of concentrating it at one moment.

Letters of Credit enter the conversation around $100,000 and above. A sight LC through your bank means the factory gets paid when they present shipping documents that meet the credit’s terms, and you never release money against nothing. The trade-off is paperwork discipline: every detail on the LC must match the documents exactly, and banks charge roughly 0.5 to 1.5 percent of the value. Most small and mid-size importers stay with T/T plus an inspection gate and save the LC for genuinely large contracts.

How do you actually send the money?

Most deposits travel by telegraphic transfer, or T/T. Your bank sends USD to the factory’s account, usually in one to three working days. Expect two kinds of fees: your bank’s flat charge (typically $20 to $50) and intermediary bank deductions, which can shave another $10 to $40 off the amount that arrives. Confirm on the proforma invoice whether the factory requires the full invoiced amount to land in their account, and add a few dollars to cover the intermediaries if so.

Before you pay anything, check the beneficiary name. It must match the legal name on the proforma invoice and the business license, character for character. A personal-name account, or a company name that does not match the invoice, is a stop-and-ask moment. Hong Kong company accounts are common and legitimate in the trading world, but the entity on the invoice, the entity on the account, and the entity on your contract should still be the same. If they are not, get the relationship explained in writing before money moves.

Currency is simpler than it looks. Export contracts are almost always quoted and settled in USD. Some factories will quote in RMB if you pay through a domestic channel, which introduces an exchange-rate question you do not want on a first order. If you do agree an RMB price, fix a reference rate in the proforma invoice so a currency move between signing and payment cannot silently change your cost. For sample fees and tiny amounts, Alipay or WeChat Pay through the Alibaba platform is normal and low risk. Incoterms decide what the price includes, and the payment method decides when you hand over the money. Keep those two decisions separate.

How do you keep leverage after the deposit leaves?

The deposit is the moment leverage flips. Before it arrives, the factory wants your order. After it arrives, you are waiting on them. Good importers plan for that flip instead of pretending it will not happen.

• Sign a proforma invoice that lists the exact specifications, packaging, marking, and delivery window the deposit buys. Attach photos of the approved golden sample.
• Write the balance payment trigger into the same document: balance due only after a passed pre-shipment inspection, or after specific documents are provided.
• For orders where the deposit is a serious sum, split the balance into two steps: a larger share after inspection passes, a smaller share against the shipping documents.
• Use an inspection report, not a factory photo gallery, as your evidence. Third-party inspection exists precisely because you cannot stand on the factory floor yourself. See the four inspection checkpoints for how that works.

Importers who work with a sourcing agent get one more layer of protection: the agent controls the factory relationship and often pays suppliers only after quality checks clear. Because the factory wants the agent’s repeat business across many clients, the leverage that a single buyer lacks on one order becomes real. This is one of the quiet reasons the agent commission model pays for itself on first orders.

How do the payment methods compare at a glance?

Method	Typical use	Speed	Cost to you	Protection
T/T 30/70	Standard orders with any established factory	1 to 3 days	$30 to $90 in bank fees	Moderate, deposit is at risk until delivery
Trade Assurance	First orders placed through Alibaba	1 to 3 days	Free to buyer	Moderate to good, platform dispute process
Letter of Credit	Contracts around $100k and above	1 to 2 weeks to open	0.5 to 1.5 percent of value	Strong, bank controls release against documents
PayPal	Sample fees only	Instant	3.5 to 4.5 percent	Good, but most factories refuse it for orders
Pay through an agent	Buyers without a China track record	1 to 2 days	Included in agent commission	Strong, payment released after quality checks

FAQ

Is Trade Assurance enough on its own?

It protects the payment against the signed contract. It does not write the contract: if your spec is vague, Trade Assurance arbitrates a vague case. The protection is only as good as the specification behind it.

What deposit should a first order have?

30% is standard. A factory demanding 50?100% upfront on a first order is telling you how they handle cash flow risk, and you should price that into the decision.

Can I pay after delivery?

Net terms exist for long relationships with credit history, rarely for new buyers. The realistic version of “pay after” for a first order is: balance after inspection, before shipment.

How do I verify a factory’s bank account?

The account name must match the business license name exactly. Request the license, compare, and confirm by phone or video with a contact you have verified across multiple conversations.

Related guides

• How to import from China: the complete 2027 guide
• Sourcing agent commissions explained
• How to negotiate with Chinese suppliers
• AQL inspection guide: sampling rules

Written by the Yinhan Sourcing team: our payment structures put every balance payment after a passing inspection report.