What Is a Telegraphic Transfer?
A telegraphic transfer (T/T), also called a wire transfer, is an electronic method of transferring funds between banks. It's the most common payment method for paying Chinese suppliers for large orders.
Key facts:
- Bank-to-bank electronic transfer
- Takes 1-5 business days internationally
- Irreversible once processed
- Standard for B2B China trade
How T/T Payments Work
- Supplier provides bank details (beneficiary name, bank name, SWIFT code, account number)
- You initiate transfer at your bank with payment details
- Your bank sends to intermediary (correspondent bank)
- Funds arrive at supplier's bank in China
- Supplier confirms receipt and begins production
Common T/T Terms:
| Term | Meaning |
|---|---|
| 30% T/T deposit | 30% upfront, balance before shipping |
| T/T against B/L | Balance paid when Bill of Lading received |
| 100% T/T advance | Full payment upfront (risky for buyers) |
Costs Involved
- Sending bank fee: $15-50 per transfer
- Correspondent bank fee: $10-30 (may be deducted from amount)
- Receiving bank fee: $5-20 (supplier's side)
- Exchange rate spread: 0.5-2% (varies by bank)
Total cost: Typically $50-100+ per transaction, plus exchange rate markup.
Risks and Protection
Risks:
- Irreversible - can't recall funds once sent
- Fraud risk - verify bank details carefully (email hacking is common)
- No buyer protection - unlike credit cards or escrow
Protection strategies:
- Verify bank details by phone call to a known number
- Start with small test payment to new suppliers
- Use 30/70 payment terms (30% deposit, 70% after inspection)
- Consider Trade Assurance or letter of credit for new relationships
Best Practices for T/T Payments
- Verify bank details independently - call supplier on known number
- Use proper payment references - include PO/invoice numbers
- Keep all records - transfer receipts, confirmations
- Negotiate payment terms - avoid 100% upfront
- Consider alternatives for first orders - L/C, Trade Assurance
- Check exchange rates - compare banks vs. transfer services