So you’ve found a supplier–now how will you pay them?

Sending thousands of dollars overseas to someone who you’ve probably never met, can be a scary, if not downright sketchy step. Though most suppliers in China prefer direct transfers, this is not the safest way. Not to mention, even if you do have a trustworthy supplier, you’re likely to drown in fees. Lucky for you, we’ve made hundreds of transactions and tested a dozen different services to figure out the best way to potentially save you thousands of dollars on your next purchase.

Disclaimer: Keep in mind that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. We try our best to keep things fair and balanced, in order to help you make the best choice for you.

Avoid Direct Bank Transfer to avoid outrageous fees

For most purchases the default payment method is direct bank transfer, however, due to outrageous fees, this may be the worst way to send money. Example: we sent a payment of $38,000 USD via Wells Fargo and got slapped with $3,100 USD in fees. No, this is not a typo–that’s over 8%! If you’re looking at Citi, Bank of America or any other major banks, you can expect the same exorbitant fees.

Negotiate in the local currency

China’s currency is the Renminbi and the units are the Yuan. As of this writing, the exchange rate is 6.375 CNY to 1 USD (https://xe.com/currencycharts/?from=USD&to=CNY). It’s important to keep this in mind as most factories give prices in CNY so you’ll have to convert all amounts yourself. Also, when you ask for a quote in USD they’ll usually choose an exchange rate and one that, not surprisingly favors them over you.

I personally negotiate and ask for all quotes in CNY since it’s easier for Chinese factories to work in their own currency, but I give quotes to clients in USD. I always use the most recent quote from xe.com for my exchange rates. We at Cosmo have a transparent sourcing process and all payments are made by you directly to the factory. We can help all our clients with the payment process and can even handle the payment when requested.

Use PayPal for small purchases or samples



When it comes to the payment you have options. PayPal is adequate for small purchases, such as samples, as It’s quick and buyer friendly. Consider it a red-flag if the factory does not accept this method since PayPal will verify both parties and ban fraudulent suppliers. However, keep in mind that Paypal charges fees (~3-4%) and they do not offer the best exchange rate. For this reason, Paypal is not recommended for large orders.

Never use:

Western Union is not reliable and if the factory scams you, you are not protected. Also, they do not convert currencies. Typical fee ranges from 7-12% depending on the amount. Note: this is a favorite method among scammers and frauds.

Bank to bank transfer is not a good option because not only are you paying those absurd fees, but there isn’t much protection with the buyer. In addition, this may take several days and you can only transfer to certain banks (for instance Wells Fargo only can transfer to the Agricultural Bank).

OK but not recommended:

PayPal is not recommended for large purchases due to the high fees, however, its a decent option for the first purchase and samples as it can act as an insurance. One downside is that PayPal often freezes accounts for both parties for various reason and has been known to lock people's money (including mine). Though the benefit is that payment is instant.

T/T wire transfers are the most commonly requested form of payment. However, because it’s a bank to bank transfer there is no buyer protection. We only recommend this method when paying trusted clients you’ve worked with before. This method takes 3-5 days.

Alibaba Trade Assurance , which is Alibaba’s in-house escrow service. The money is sent and held by Alibaba and transferred to the seller once Alibaba confirms your products have been shipped. This is a popular choice, as it’s much safer especially for first-time buyers who are unsure of the factory. But in order to get money to Alibaba, you need to make a transfer and they only accept bank transfer, e-check, and T/T. Even if you don’t use Trade Assurance, it’s important to check if they accept this as it’s an easy way to figure out if a supplier is legitimate or not.

Letters of Credit: this is the preferred purchasing method for large corporations making transactions in the millions of dollars. However, it’s extremely complicated and can be risky, requiring the banks of both parties to cooperate and often accruing high fees; particularly for small buyers. https://www.investopedia.com/terms/l/letterofcredit.asp

What we do recommend:

Veem, Transferwise, and OFX are the three services we use most at Cosmo. Wyre and Xoom, though we have not used them personally, come highly recommended. From our research these have the lowest fees; some of these services don’t charge a fee and make their money off the exchange rate. We currently use Veem for most purchases in China and Transferwise and OFX for purchases elsewhere such as Vietnam, Mexico, Colombia, Indonesia and more.

Veem specializes in sending payments to China. Remember that both parties must be signed up with Veem, though we haven’t had a problem convincing almost every factory we’ve worked with to sign up. Veem also has a customer service office in China. Now, we use it the majority of our transactions. Example: a $20,000 payment had only about $100 in fees. That’s an incredible rate at only .5%

OFX offers transfer service to 55 different currencies and has ties with 115 banks. OFX, along with Transferwise, works best for non-China business.

Transferwise is another solid way to send money and was previously my preferred way of paying factories in China.

Wyre - Though I have not personally used Wyre, it’s been recommended to me by several people and companies I trust. According to our own analysis, they have the second lowest rates behind Veem. I may set up an account and make a transfer to test them out and update this post accordingly.

Xoom is a service by PayPal made for sending money to China. It has better rates than Paypal and the recipient only needs to have a UnionPay account set up (if they have a bank account in China they will have UnionPay). The catch is that it’s limited to just $5,000 per payment; although you can send multiple payments. Be mindful that the exchange rate is not the best.

How much does it cost to send 10,000USD to China?

Estimates Sending $10,000 to China, with a current exchange rate of 1USD = 6.3942 CNY