How to make a TT payment to China: A complete guide

TransferWise
15.05.18
9 minute read

If you’re a business owner or entrepreneur in the UK and want to pay your supplier based in China, then you might be considering making the payment by telegraphic transfer (T/T or TT for short). This is a popular way to send funds in Asia — but there are a few potential issues you should be aware of.

There are some practical problems which can arise when working with a Chinese supplier.

For example, Chinese company names are often very long, and if your bank isn’t used to making TT payments to China, there might simply not be the space on the payment form to complete the full company name. A seemingly small issue — but one which could result in a failed payment and delays to your business.

And then, of course, there are also the costs involved with TT payments. As suppliers in China will expect to be paid the full invoiced amount, you’ll need to make sure you cover all of the fees which are removed as the payment makes its way through the system. This can be complex, and costly.

If you’re looking to save money, then it’s a smart idea to check out TransferWise, as you might be able to make the same payment for less. Or many payments at once for less. More on that later.

Let’s get you started. Here’s a beginner's guide to safely making payments to China.

What is a TT payment? Why is it necessary for a transfer to China?

TT payments are a popular way to send money to China and elsewhere in Asia. It’s a traditional route to get money safely from one country to another — but it’s not cheap, and there are some issues which are often encountered by importers in the UK navigating their way.

TT payment methods

When you’re arranging payment to your supplier, they may use a different name for a TT payment, as different banks call these payments different things. You might be asked for any of the following:

  • Telegraphic transfer
  • TT payment or transfer
  • T/T payment or transfer
  • Telex transfer
  • Wire transfer
  • International money transfer
  • SWIFT transfer

To make the payment you can either arrange to transfer funds via your regular bank or use a specialist provider like TransferWise. If you’re planning on transferring funds via your regular bank, you may be able to do so by visiting a branch, on the telephone, or through online banking. Every bank has their own requirements, so it’s worth checking the process with your own bank well in advance.

If you choose to use a specialist provider like TransferWise, then you can arrange payment online or via an app for a safe transfer with maximum convenience.

You could make life even easier, by opening a TransferWise borderless multi-currency account. These smart new accounts let you hold your money in dozens of currencies all in one account, and switch between them when you need to. You’ll always get the best exchange rate available, and there’s just a small upfront fee to pay.

You can also get paid like a local in regions like the UK, the US, the EU, and Australia with local bank account details, and there’s no charge to open or manage your account.

How to make a TT payment to China step by step

Here’s all you need to know, to process that first TT payment to China.

Step 1: Check what information and documents your bank or international money transfer service requires to make the TT payment

To make a TT payment safely, you’ll need to give the bank or international money transfer service information about where the money is headed. Different banks in different countries could ask for slightly different information, so check with your own bank in advance to make sure you have everything you need.

For yourself, when you first sign up you will need to go through a normally one-time verification process for both yourself and, if sending on behalf of your business, also have your UK business verified.

Once the verification process is complete, which may take anywhere from 20 minutes to several business days, you will then need to input your Chinese recipient’s information.

Through TransferWise, if you’re making the payment to your Chinese supplier from the UK in US Dollars — US$ or USD for short — this is what you’ll need:

  • Recipient contact info — your recipient’s email so they know when your money will arrive, as well as their full address
  • Chinese bank info — your Chinese recipient’s SWIFT code and account number

If you’re reading this article from the US instead of the UK, you’ll want to follow our instructions on sending a USD-to-USD transfer with TransferWise.

Through TransferWise, if you’re making the payment to your Chinese supplier from the UK in Chinese Yuan Renminbi — CNY or RMB for short — this is what you’ll need:

  • Recipient contact info — your recipient’s email so they know when your money will arrive as well as their phone number
  • Business info — name of the Chinese business or charity as well as their business registration number
  • Chinese bank info — bank name, branch name, branch province, branch city
  • Account info — the bank account number of the business account, which must be denominated in CNY/RMB

Step 2: Gather up the recipient company information needed — and watch out for common pitfalls

Once you’re confident of the information your bank or money transfer service will need, you can start to collect it. At this stage, there are a few common headaches you’ll want to watch out for.

As mentioned above, Chinese company names are often long — and must be completed in full for most bank TT payments. Otherwise you risk the payment failing. In this case, your money can be held for a period of time while the Chinese tries to work out the details with the recipient. If that doesn’t work, however, then your money is normally returned to you minus the charges which have been deducted along the way. Not only is this an unnecessary cost, it’s also wasted time for your business.

You also need to make sure you’re paying the correct company. While this sounds simple, some small companies collect payment via export agencies, and larger ones might ask for payment to be routed via a holding company in Hong Kong. This increases the risk of error and fraud, so it’s best to be wary and make double sure you have all the correct details before processing payment.

Step 3: Process the payment in person, online or on the telephone

After you’ve gathered all of the necessary information you can process the payment according to rules that govern your service provider. Depending on the amount you’re sending in the UK, or if you’re located in the United States, some banks insist that you make international payments in person. Which may mean you’ll have to go to the bank branch. Other services may allow you to arrange the TT payment online or on the phone.

If you’re using TransferWise, you’ll be asked to complete your personal details and fill in the recipient information online, or using the app.

Step 4: Make sure you pay all the transaction fees

When a supplier in China sends an invoice, the payment amount will be what they expect to receive. However, with normal international transfers through your bank, there are always fees and costs which can reduce the amount the recipient eventually gets. If the supplier hasn’t been paid in full, then you can bet it may delay your purchase and cause a headache for your business.

International SWIFT payments through your bank normally come with the following costs:

  • Upfront fee — sending bank
  • Intermediary bank fees — up to 3 intermediary banks will likely charge their own fixed fees
  • Exchange rate markup — an often hidden cost, on average, banks add a 4-6% spread to the real exchange rate when your money gets converted
  • Recipient bank fee — generally charged for incoming international transfers

If you’re placing a telegraphic transfer with your bank, you can at least pay your own bank upfront fees. Many banks may offer you the option to pay the intermediary as well as the recipient bank fees, which is a help.

However, a bulk of where the cost often comes in international transfers is in the exchange rate. Most banks and transfer services hide most of their profit in the exchange rate they use. It allows them to claim that they charge only low fees, while still pocketing a good slice of your cash.

You’re likely better off using a specialist service like TransferWise rather than sending money through your bank. All TransferWise transfers use the real exchange rate — like the one you see on Google — with no hidden fees. Just a low, transparent, and upfront cost.

Step 5: Make a record of the transaction for reference, and send it to your supplier

Once your payment has been processed, make sure you have some proof of the transaction and send it to your supplier. Your bank or the money transfer service should be able to provide you with a receipt or something showing that your payment was made. If you did the transaction online, you may just be able to take a screenshot. This shows that the payment is on its way and helps you and your supplier track it.

How safe are telegraphic transfers? Is there any way to mitigate some of the risk?

The process of making a TT payment is fairly safe. However, there are risks, as outlined above in the section on common pitfalls.

If you’re working with a legitimate supplier, then you need to make sure you have all the details correct and give the bank or money transfer service all of the information required to process the transfer. This should ensure it all goes smoothly. If there’s an error in the documentation and the payment can’t be made, then the money will be sent back to you, but this will not only take time, but it will cost you more money because oftentimes the fees and charges aren’t returned.

All that said, there have been businesses in the UK which have fallen foul of scams involving paying Chinese suppliers by TT payment. If anything looks odd or unusual about what you’re being asked to do, then be wary. There’s no reason you should be asked to send money to a private bank account, for example. This should set alarm bells ringing. Similarly, if the company requests payment to a different business, then you should understand why. It could be perfectly legitimate, such as a supplier working with an export agency — but it pays to be careful and double check.

LC or Letters of credit: What are they? And do I need one?

Letters of credit are commonly used for transactions over USD 50,000. Although they’re considered to be a very safe method of payment, they come with high charges and complex paperwork. Usually, you’ll need to take specialist advice to arrange a letter of credit, at least until you’re comfortable with the process.

For smaller transactions, or if you’re working with a smaller supplier, then these LCs aren’t usually used.

Want more info on telegraphic transfers?

If you’re new to the world of telegraphic transfers, then you might be looking for some more information. We are here to help.

Here are some other resources which could help you navigate the world of TT payments, and make sure your transactions go smoothly and safely:

If you’re worried about the charges and want to find a way to make a safe and quick transfer to China, without the exorbitant fees, check out TransferWise to see if you can get a better deal.

This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

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