Telegraphic transfer is the default for paying a Chinese factory: fast, irreversible, and unconditional. This guide surveys the methods an importer actually meets, including 30/70 deposit terms, Alibaba Trade Assurance, letters of credit, cards and PayPal, and milestone release, with the China-specific realities that decide which fits, from paying a Hong Kong entity to the mainland payout and the deposit norm.
You have found a factory, agreed a price, and now the supplier sends a pro forma invoice with bank details and a line that says 30% deposit, balance before shipment. The question of how to pay is not a footnote. It decides how much of the order value is at risk, and for how long, before anything you can inspect exists. For a first order with a supplier you have never traded with, that is the whole exposure.
Here is what an importer actually chooses between, and where each one leaves you.
Telegraphic transfer (T/T) is the default
A telegraphic transfer is a bank wire, and it is how the large majority of China orders get paid. The factory quotes T/T terms, gives you a beneficiary name and a SWIFT code, and you send the money from your bank. It clears in one to three business days and it works for any order size.
It is also unconditional. Once the wire settles there is no chargeback, no dispute button, and no third party who can pull it back. That is exactly why factories like it and why it carries all the risk for you: the protection you have is the paperwork you agreed to before sending, and nothing after. A telegraphic transfer that leaves your account is gone until the factory chooses to act.
One China-specific wrinkle lives inside the T/T. The beneficiary is often not the mainland factory but a trading company or a Hong Kong entity, and the currency is frequently USD rather than CNY. Paying a Hong Kong company that then settles with the mainland workshop is normal and not a red flag by itself, but the name on the invoice should match a company you have checked, and it should be consistent from quote to invoice to bank details. A beneficiary that changes at the last minute is the single most common sign of an intercepted email.
30/70 deposit terms
The standard structure is 30% on order, 70% before shipment against a bill of lading, both paid by T/T. The deposit funds the factory's materials purchase; the balance is timed to when the goods leave. Neither half was designed to protect you, and the balance in particular is triggered by a document that proves a container shipped, not that it holds what you ordered. We cover what 30/70 really costs and how to reshape it in a separate piece. For now, treat 30/70 as the norm you are negotiating against rather than a safe default.
Alibaba Trade Assurance
If you found the supplier on Alibaba and pay through the platform, Trade Assurance holds the transaction inside Alibaba's own dispute system. You get a defined process if the goods do not match the contract, which is real protection a bare wire does not give you. The limits are just as real: it only works while you stay on-platform, in the platform's payment flow, for a supplier who is a verified Trade Assurance member. The moment a factory asks you to pay their bank directly to skip fees, or you move to a supplier you found off Alibaba, the cover is gone. It suits early orders placed entirely through the marketplace and does nothing for the relationship once it moves to direct terms.
Letter of credit
A letter of credit puts your bank between you and the factory: the bank pays the supplier only when they present the documents the credit specifies. It is genuine, bank-grade protection, and for large orders, roughly six figures and up, it is the established instrument. The cost is friction. Letters of credit carry bank fees on both sides, demand exact documentary compliance, and take real time to open and amend. Small factories often cannot or will not handle one. For a US$8,000 first order it is the wrong tool; for a US$200,000 order with an unfamiliar supplier it earns its overhead.
Cards and PayPal
Some suppliers accept credit cards or PayPal, usually for samples or small amounts. The buyer-side fee is heavy, commonly 3% to 5% passed straight to you, and most production factories decline it outright for full orders because they carry the same fee and face chargeback risk. Where a factory does accept PayPal for a sample, the buyer protection is worth having on a small sum. Do not plan a production payment around it; you will usually be told to wire instead.
Milestone or escrow release
Here the order value is committed up front and released to the factory in stages, each stage tied to a piece of agreed evidence: the signed PO, a third-party inspection report, the bill of lading. It aims at the gap the plain T/T leaves, which is that your largest payment lands against a logistics document rather than a check of the goods. The trade-off is setup: both sides agree the milestones and the evidence in advance, and a factory hearing "escrow" for the first time may read it as distrust until they see the release conditions.
A rough guide by scenario
| Situation | Reasonable choice |
|---|---|
| Sample or under ~US$2,000 | Card or PayPal for the buyer protection |
| First order, on Alibaba | Trade Assurance, stay on-platform |
| First order, mid-size, direct | Milestone release against inspection |
| Large order, unfamiliar supplier | Letter of credit |
| Repeat supplier you trust | T/T on negotiated terms |
The pattern is that risk tracks how new the relationship is and how large the order is, not the payment rail itself. A bare T/T to a factory you have shipped with ten times is fine. The same wire to a supplier you met three weeks ago, for the balance on a container you have not inspected, is where importers lose money.
Where milestone-gated payout fits
The awkward case is the common one: a first or second order, mid-size, direct with the factory, too small for a letter of credit and already off the marketplace. A plain T/T leaves the balance triggered by a shipping document, and asking for a lower deposit just asks the factory to fund more materials themselves.
Tranchio is built for that case. You commit the whole order up front, and each tranche releases only against agreed evidence, a signed PO, a third-party inspection report, a bill of lading, plus your approval. Tranchio does not hold or move the money; it gates each release against that evidence and keeps a tamper-evident record of what was approved and when, while a licensed payment provider executes the payout. That payment execution goes live at launch; no provider is engaged yet and no funds move through the platform today. The factory gets every tranche in full and pays nothing; the fee is 1.5% for a new seller, dropping to 0.9% past US$50,000, and it sits on the buyer's side. If you are paying a factory in Shenzhen through a Hong Kong entity, that flow is exactly the Hong Kong to China corridor this is designed around. Full terms are on the pricing page.
The right method is the one that matches your exposure. For a repeat supplier, wire and move on. For a first order you cannot yet inspect, put a document about the goods between your money and the factory's account.