General

In the process of foreign trade customer development and follow-up, negotiating with customers on product prices and foreign trade payment methods is a big test for foreign trade salesmen, as it is a decisive factor that directly determines whether an order can be concluded to a certain extent, and also directly affects their own profit and risk control.

Today, we will briefly list several common foreign trade payment methods and choose the one that is most suitable for us.

T/T (Telegraphic Transfer)

Wire transfer is a method of settlement in the form of foreign exchange cash. The customer of a foreign trade enterprise transfers the payment to the foreign exchange bank account designated by the enterprise. After the foreign trade enterprise receives the payment from the customer, it can directly send the documents to the place designated by the customer without passing through the bank.

T/T telegraphic transfer is divided into two types, one is called pre TT (pre T/T). In the international trade industry, when the shipper pays 100% of the payment before shipping, they are all called pre TT (pre T/T). This payment method is the safest trade method in international trade compared to the seller, because the seller does not need to bear any risk. As long as the seller receives the money, he will ship the goods, and if he does not receive the money, he will not ship the goods.

The second method of payment is post TT (post T/T). "Post TT (Post T/T) payment method is defined in the line as: After the shipment is completed, the buyer pays the balance.". How did the buyer pay off the balance? Generally, the balance is paid off based on a copy of the B/L (BL) bill of lading after TT (after T/T).

Letter of Credit, L/C

A letter of credit is a documentary evidence of a conditional commitment to payment issued by a bank. In international trade activities, the buyer and the seller may not trust each other, and the buyer is concerned that after the advance payment, the seller does not deliver goods in accordance with the contract requirements; The seller is also concerned that the buyer will not pay after shipping or submitting shipping documents. Therefore, it is necessary for two banks to act as guarantors for both buyers and sellers to collect and deliver documents on behalf of them, replacing commercial credit with bank credit (which is higher than commercial credit). The tool used by banks in this activity is the letter of credit.

This method has gradually become the most common foreign trade payment method in overseas trade, and the bank credit certificate is even higher than the commercial credit of both parties. It should be noted that the shipment of foreign trade export goods must be carried out within the validity period of the letter of credit, and the document delivery period of the letter of credit cannot be later than the validity date of the letter of credit.

O/A(Open Account）

"O/A (Open Account) bookkeeping, also known as credit sales, is commonly referred to as credit release.". The seller delivers the goods to the buyer when the buyer promises to pay for the goods quarterly, semi-annually, or annually (typically 90 or 180 days). It is one of the most important foreign trade payment methods in international trade.

Under the O/A settlement method, some banks can provide financing to traders, pay for factory goods, and have insurance companies provide guarantees. However, this does not mean that O/A is completely reliable, because once the importer goes bankrupt or other reasons cannot make payment or delay payment, the insurance company is unlikely to make 100% compensation. In addition, the insurance company's claim settlement process will be very lengthy, requiring a lot of manpower and time. In addition, the financing provided by the bank has the right of recourse. If the customer's payment for the goods has not been received or has not been received in a timely manner, the bank has the right to recover the full payment for the goods from the traders or the difference between the payment made by the insurance company and the payment for the goods.

Western Union remittance, also known as West Union

As a traditional trading method, almost most countries are using it. The handling fee for Western Union remittance is paid by the payer, so the cost of collection is zero. Many banks, such as Everbright Bank, China Construction Bank, and Pudong Development Bank, are partners of Western Union. This method is also more suitable for small payments, which can take up to ten minutes to make.

PayPal, also known as PayPal

It is an online payment service platform, which should not be unfamiliar to everyone. It is also a very popular payment method in foreign countries. Compared to other payment methods, it prefers small payment. PayPal's service fees are presented in a hierarchical manner, which is based on a certain proportion and integrated with service fees. It is recommended that you consult the staff when using them.

BIYAPAY

A brand new digital payment tool that covers a wide area and can be used in any country. With 30+users, it has a high international recognition and practicality.

Possessing complete KYC authentication to identify users and ensure the security of funds between users; Avoid traditional methods of mailing checks or remittances. When transferring funds using this payment method, BIYAPAY will charge a certain amount of handling fees, but there are significant advantages in terms of price; BIYAPAY has also established a unique secured transaction platform for both parties involved in foreign trade transactions. The payment for goods from both parties will be frozen in the BIYAPAY platform. Without my confirmation, it will not be transferred to the payee's account, and the platform will not interfere with this. After the transaction is completed, the payer confirms that the deposit will be automatically returned to their respective accounts, and the payment for goods will also be transferred to the payee's account. It not only ensures that the interests of both parties are not damaged, but also makes payment more secure.

Common foreign trade payment methods are also commonly used in daily life. I hope you can choose a suitable foreign trade payment method through the above understanding.