Payment Terms When Ordering Packaging from China: T/T, LC, PayPal and Escrow

Payment terms are one of the biggest concerns for first-time buyers ordering from China. Understanding what is standard, what is negotiable and what protects you prevents costly disputes.

T/T (Telegraphic Transfer / Wire Transfer)

T/T is the most common payment method for China factory orders. The standard split for packaging orders is:

• 30% deposit before production starts
• 70% balance before shipment (after you approve pre-shipment inspection photos)

Some factories offer 50/50. Larger orders (over USD 50,000) may negotiate 30/70 with the balance after receipt, backed by a formal contract. BestPackFactory's standard terms: 30% T/T deposit, 70% T/T before shipment.

Letter of Credit (L/C)

An L/C is a bank instrument guaranteeing payment when shipping documents are presented correctly. It protects both parties. Most appropriate for orders over USD 30,000. Requires the factory to have L/C capability (bank credit line). BestPackFactory accepts L/C at sight for orders over USD 20,000.

PayPal

Convenient for samples and small orders under USD 2,000. Factory bears a 3–4% PayPal fee which is typically passed to the buyer. PayPal buyer protection applies, which gives buyers strong recourse. However, factories dislike PayPal for large orders due to chargeback risk.

Alibaba Trade Assurance

An escrow-style service where Alibaba holds payment until the buyer confirms receipt or raises a dispute. Good for first orders with new suppliers. Factory cannot access payment until delivery is confirmed. Adds 2–4 weeks to cash flow cycle for the factory, so some factories apply a premium.

How to Protect Yourself

• Request pre-production samples before paying the balance
• Request pre-shipment inspection photos of packed cartons
• Use a third-party inspection company (SGS, Bureau Veritas) for orders over USD 10,000
• Confirm the factory's bank account details by phone before wiring — email fraud (BEC) is common