Thursday 13 Dec 2018

Payment Options

To pay your supplier, you can use one of several payment options.

Wire transfers (also called T/T or telegraph transfer) are the most popular payment option on the site.  You can directly transfer funds from your bank account to your supplier’s bank account – or use services like Western Union and MoneyGram.  The downside is that once you wire the money, it’s very difficult to stop the transaction (which is why scammers insist on wire transfers).

Escrow payments are a safer way of paying your suppliers.  You deposit your payment with a third-party escrow agent and only release funds when you’re satisfied with your supplier’s products – or with his progress.  Suppliers, however, typically ask for an initial payment to get started. Not all suppliers will agree to escrow payments, but you should insist on them because they offer you the best protection against fraud. runs its own escrow service, which is convenient for both you and your supplier (see Figure 14-1).

Paypal is a decent payment option for small orders.  It offers you some control over the release of funds.  Plus, Paypal freezes the accounts of suspected scammers, allowing victims to reclaim their money.  However, many suppliers refuse to use Paypal because Paypal freezes accounts without warning – even for legitimate businesses.

Alipay, a subsidiary of the Alibaba Group, is the Chinese version of Paypal.  Most Chinese suppliers have Alipay accounts, but it’s still not very popular outside of China.  Plus, its transaction fees are very high (over 10%).

Moneybookers is a popular European payment processor that operates in a similar way to Paypal.  Moneybookers offers some protection against scammers, because it requires a photo ID and proof of address to open an account.

Credit cards are accepted by some suppliers.  But for security reasons, it’s not advisable to use this payment method.  The threat of credit card fraud in countries like China is just too high.

Finally, letters of credit are another payment option if you have an established relationship with your bank.  Your bank acts as a kind of escrow agent, guaranteeing payment to your supplier, as long as it delivers satisfactory products.  This is the safest payment method of all, but is usually only available for larger transactions.


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