I have been scammed several times, I just can’t get it – is there a safe way to send money to suppliers in China? I will never ever use Western Union again. What payment methods in general are safe when dealing with suppliers from China?

It really doesn’t matter whatever your potential supplier is based in China, United States (US) or United Kingdom (UK) – scammers work by a similar principles all around the world. Sure, you’ll have to face higher risk when dealing with suppliers from abroad as in most cases you won’t be able to verify their businesses, location & stock.

There are few things you have to understand about Chinese suppliers:

•    First off – credit cards are very rare so you can’t expect to be able to pay with your VISA. Some companies from Mainland China have offices in Hong Kong (HK) and they may accept credit cards as well as PayPal.

•    Secondly – there is no such a thing as 100% safe payment method. Well, only if you can go to China in person, collect stock and pay in cash. Even credit card won’t protect you in every situation so always, always take extra mile to verify supplier you want to deal with.

So in first place – make sure you have no doubts whatsoever about the company you’ll deal. When dealing with new suppliers, always place a small, test order to see how it goes. In the worst case of scenario you’ll lose just a small amount of money.

Back to your question – if possible, ask your supplier if they accept credit cards or PayPal. Although rarely, there’s a chance for a positive response. If you pay via PayPal, make sure to choose your “credit card” as a funding source as only this way you’re protected (by your credit card company – if something goes wrong, you can file a charge back dispute and get your money back).

When dealing with HK based suppliers, PayPal shouldn’t be a problem. If it is, investigate it.

But for China – standard payment method you’ll use with most suppliers is Telegraphic Transfer (T/T) or as we call it – Wire Transfer. Wire Transfer is simply an international money transfer you make from your bank account to supplier’s account.

Keep in mind – there’s no protection with Wire Transfer method! Once you send the money, there’s no way back – you won’t be able to cancel transaction if supplier scams you. Always make sure that you send money to company’s bank account and NOT a private one (don’t believe any stories about “boss’s sickness”etc.)

If your supplier can’t provide company’s bank account, I would stay away from dealing with them.

Western Union (WU) is the most popular payment method amongst all scammers. You should never send large amounts of money via WU and generally avoid it when dealing with suppliers (it can be used with verified suppliers to pay for samples to avoid high bank fees.  But only when you know who you deal with.)

Letter of Credit (L/C) is one of the safest payment method to deal with suppliers abroad but unfortunately it’s used only with large volume orders (20k +). With L/C bank guarantees that it will release money to supplier once goods have been received and inspected.

Some selling platforms, like (DHGate.com) also offers Escrow service which basically means that funds will be frozen until both parties complete transaction. There are 3rd party escrow services available like Escrow.com but they aren’t popular in China so I really doubt any supplier will agree to use any of those services.

To summarize up – make sure to do your home work with verifying your potential business partner so that you don’t have to think much about what payment method you’ll use. But be prepared to use Wire Transfer as a standard payment method.

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